Coronavirus lockdown: Travel agents lock horns with airlines over air ticket refunds

• Airlines offering credit shells against cancelled bookings which have created a ruckus
• Distressed travel agents argue that credit shells are not acceptable by their clients
• Over Rs 8,000 crore are stuck with the airlines in the form of credit shells
• The government's intervention on the matter has not yielded results as yet

The worldwide lockdowns due to the coronavirus outbreak and the resultant grounding of international and domestic carriers have opened a Pandora's box for the travel agents in India. The cash-crunched airlines, as advised by global body IATA (International Air Transport Association), have taken an easy route of converting the cancelled tickets into credit shells. What's a credit shell? It's basically a note from the airlines against a cancelled ticket that can be used for future bookings.

The travel agents argue that they have paid the full amount in cash, and the airlines should refund them back in cash.

"We have clients sitting on our heads asking for cash refunds. If we offer them credit shells, they are not sure when and how to utilise them. In Punjab and some South Indian states, some of the clients have complained against our members to the police. We have burnt fingers with Kingfisher Airlines and Jet Airways' fiascos. We don't want to suffer again. We don't want our money to be repatriated outside of the country. The due amount has to be credited as cash into our systems," says Jyoti Mayal, president, TAAI.

Travel Agents Association of India (TAAI) is a travel agents' body with over 2,700 members, including OTA (online travel aggregators) like MakeMyTrip and Yatra.

Also Read: IndiGo to resume operations with about 65 planes post Lockdown 2.0

According to travel agents, barring a few airlines, all domestic carriers like IndiGo, SpiceJet, Air India along with IATA's 111 member airlines globally have refused to pay the refunds in cash. As a result, Rs 8,000 crore has stuck due to ongoing disputes with the airlines. Direct bookings from individuals and corporates would be over and above this number, the agents said.

Not just ticket refund amounts, some airlines, particularly low-cost carriers, are not even returning the advance money given by them which is as high as Rs 10 lakh, the travel agents alleged.

Meanwhile, some global carriers like Singapore Airlines and Emirates have started reviewing their refunds processes following the backlash from the agents.

"We don't know when the business is going to revive. The international travel segment could actually start from July onwards. If airlines have been stringent with their payment schedule, they should return us the refunds. We are not here to fund them. Some governments in the world have announced that airlines cannot offer credit shells. Our civil aviation ministry needs to be firm about it," says a travel agent.

Also Read: Airlines in coronavirus war mode: 7 lakh km, 626 flights, 4,300 tonnes cargo

In India, the travel and tourism market is highly unorganised. Though the sector contributes nearly 10 per cent to the GDP, it has about 8 lakh unorganised agents as compared to just 53,000 organised players.

Some experts believe that most of the airlines are so cash-crunched that they don't have the capacity to survive beyond two-three months. In India, for instance, IndiGo is probably the only carrier that has resources to survive the pandemic beyond three months. IATA has estimated that if airlines refund the $35 billion (owed to travelers for flights that could not or cannot take off) immediately, it may lead to many airlines going bankrupt. With that, an enormous number of jobs will also disappear.

In a conference, Rodney D'Cruz, Assistant Director, Passenger and Cargo Services, India, Nepal & Bhutan at IATA, said that it's never going to be the same again. "After the pandemic is over, a much better coordination is required between the government, the airlines, and the travel agents. IATA director general has written to various governments, including the Indian government, to provide direct support and tax relief to the airlines," he said.

In fact, upon the TAAI's request, Pradeep Singh Kharola, secretary in civil aviation ministry, had recently called for a meeting with travel agents and IATA.

As per travel agents, there's a specific force majeure clause in the passenger charter of the civil aviation ministry that says that airlines must refund the amount to all the passengers. "According to the charter, it's the prerogative of the passengers and the travel agents to demand credit shells. Airlines cannot issue themselves. Most airlines are not honouring the resolutions. We have written to IATA that under no circumstances, we will accept credit notes. Since we have made payments in cash for our corporate, group and individual clients, it has to be refunded fully," said Lokesh Bettaiah, MD of Triway Travels.