Relief for Air Passengers : Cancellation Rules Simplified

In a significant relief to fliers, the Directorate General of Civil Aviation (DGCA) has capped ticket cancellation charges and barred airlines from levying additional amount for refund process.

The new cancellation rules are effective from August 1 to ensure more transparency. This is along with the issuance of revised Civil Aviation Requirement (CAR) by DGCA chief M Sathiyavathy. The key points are :

Director General Civil Aviation, M. Sathiyavathy
Director General Civil Aviation, M. Sathiyavathy
  • Airlines cannot levy cancellation charges of more than the basic fare plus fuel surcharge.
  • Airlines have also been mandated to refund all statutory taxes and user development fee (UDF)/airport development fee (ADF)/passenger service fee (PSF) to the passengers in case of “cancellation/non-utilisation of tickets or no show”.
  • This provision (of refunding statutory taxes) shall also be applicable for all types of fares offered including promos/special fares and where the basic fare is non-refundable.
  • Airlines have been barred from imposing refund processing fee, which is generally Rs 200 per ticket for most airlines on domestic sector.
  • Airlines would also be required to indicate in an unambiguous manner the refund amount in case of cancellations. The amount and its break-up may be indicated on the ticket itself or through separate form used for the purpose.
  • The policy and amount of refund shall be displayed by the airlines on their respective websites.
  • Airline shall not levy any additional charge for correction in name of the same person, when error in his name spelling is pointed out by the passenger to the airline after booking of his ticket.
  • For tickets booked through travel agents or portal, the onus of refund would be on the airlines and the refund has to be completed within 30 days.
  • Passengers can choose whether the refund money should be kept in the airline’s credit shell or not. The option of holding the refund amount in credit shell by the airlines shall be the prerogative of the passenger and not a default practice of the airline.

As per the current rules, airlines were required to refund only PSF collected by them in case of cancellation.

The move might trigger a legal recourse as the airlines had strongly opposed it.

download28829“We believe this will not be a legally tenable proposition because this will be a contract between a travel agent and passenger,” SpiceJet Chairman and Managing Director Ajay Singh had said last month.

Presently, SpiceJet levies a fee of Rs 2,250 per passenger per sector per change for any change/cancellation; IndiGo also levies charges of Rs 2,250 for any change/cancellation up to 2 hours before scheduled departure and more than 4 hours for international flights.

These cancellation charges are now set to reduce to the level of base fare plus fuel surcharge and the airlines will have to refund all statutory taxes. Earlier, the Ministrynepal-earthquake-airport-crowd-chaos of Civil Aviation had proposed that airlines’ cancellation charges be at the base fare, but in final rules the carriers can also deduct fuel surcharge.

The move will enable airlines to charge up to Rs 400-500 extra for a cancelled ticket. However, the cancellation charges will still be considerably less than the present fee levied by both airlines and travel agents. This is, indeed, a welcome relief for the flier !

 

Coming Up : Ahmedabad-London-Newark; Delhi-Madrid Flights from Air India

The National airline of India, Air India (AI), will launch Ahmedabad-London-Newark flight from August 15, 2016 and Delhi-Madrid in December 2016.

“We will be launching the Ahmedabad-London-Newark flight from August 15 and Delhi-Madrid from December as part of our growth plan,” Air India Chairman and Managing Director (CMD) Ashwini Lohani said in Bhopal. Mr. Lohani arrived in Bhopal to take part in a programme on the occasion of opening of AI area manager’s office, which was inaugurated by Madhya Pradesh Chief Secretary Antony DeSa.

“We have launched a number of new flights. We have already launched flights from Delhi for San Francisco and Vienna. Next year we are planning to launch five-six more flights, including Washington, Scandinavian countries and Africa. We are heading towards growth,” Mr. Lohani said, replying to a question on the issue of profitability.

The objective is to connect more global destinations.

Air India also plans to expand its fleet size in next four years. The CMD said at present there were 133 aircraft in the Air India group. “In next four years we will have 232 planes,” he said.

Air India has ordered for 27 Dreamliners and has so far received 21 planes and six more are in the pipeline. Referring to the issues related to Dreamliner planes, he said there were some problems in its design since the beginning, but it was sorted out.

On the issue of connectivity with Bhopal, Mr. Lohani said Air India would make its hub in the State so that more flights will originate from here.

When asked if it will be in Bhopal or Indore, he replied at present Air India had more contact with the State capital.

The CMD welcomed the relaxation in 5/20 rule for launching international operations. He said that ultimately it will benefit the passengers as competition will increase.

“It is a good decision as it will enhance competition and will ultimately benefit air passengers. Now any airline having 20 aircraft can launch international operations straightaway,” he said. On the issue of launching international flights from Bhopal or Indore, he said it will not be available for Bhopal, but it may start for Dubai from Indore in near future.

0.33 Million High-end Jobs in Indian Civil Aviation by 2025

Civil Aviation Minister Ashok Gajapathi Raju
Civil Aviation Minister Ashok Gajapathi Raju

The new National Civil Aviation Policy (NCAP) aims to transform the aviation in India. As per the Civil Aviation Minister Ashok Gajapathi Raju, the NCAP will create about 0.33 million high end jobs in India in the field of civil aviation . It is the estimated direct additional employment requirement of the Civil Aviation sector by 2025. This will give a boost to the employment sector. 

“Apart from this a large number of jobs will get created in allied sector and in tourism sector too as the growth of the aviation is directly related to tourism. Tourism will get a huge boost through the upcoming new airports and new airlines,” he has said.  “All training in non-licensed category will conform to National Skill Qualification Framework standards. Ministry of Civil Aviation will provide full support to the Aviation Sector Skill Council and other similar organisations and agencies for imparting skills for the growing aviation industry. There are nearly 8,000 pilots holding CPL but who have not found any regular employment. MoCA will develop a scheme with budgetary support for type-rating of pilots. The detailed scheme will be worked out separately.” 

FDI norms liberalized.

Nine sectors have been thrown open to increased Foreign Direct Investment (FDI) and/or portfolio investment. There is an air of easy globalisation. It is generally in sectors where the entry of foreigners may not worry any domestic player of competition.

Economic Affairs Secretary Shaktikanta Das
Economic Affairs Secretary Shaktikanta Das

A certain positive in the FDI policy is that it is friendly to jobs.

As per Economic Affairs Secretary Shaktikanta Das, manufacturing and job generation will get a boost by the latest round of liberalisation in FDI norms that include doing away with dual clearances.

“With this FDI liberalisation, we expect manufacturing activity to come in…more activity in defence products. The driving force behind the whole thing is that all this investment should facilitate creation of jobs,” he told media.

He has welcomed the government’s move to approve 100% FDI in aviation, defence and e-commerce sectors, saying this initiative will boost employment.

“For civil aviation, this will be a very big game changer. A 100 percent FDI can come in. So, it will definitely assist the domestic aviation companies to strengthen themselves, to expand their network and also in the process create jobs for our youngsters in various capacities for repairs or as pilots or flight crew,” he told the media.

On FDI, the civil aviation secretary R.N. Choubey has said, “The government has flipped the coin.”

“Which country in the world is going to give them 22% growth rate? After all, the entire Gulf aviation sector… is built on the back of India’s strength. If that’s the case, why will they not come into India itself? If someone else is willing to put money in their country based on India’s business, then I can say it is even better, let them come, I open the doors of FDI, let them come and do business in India,” Choubey has stated.

The government is expecting big FDI inflows from West Asia in aviation. Air traffic to and from West Asia to India is critical for foreign airlines based in the Gulf.

The demand for flight services to key Gulf destinations from Tiruchi in India is so much that the Tiruchi Airport authorities have appealed to two Indian airlines to begin services in that sector and to operate flights in the domestic Tiruchi-Mumbai-Tiruchi sector as well.

The airport authorities conveyed their interest in this regard through separate letters forwarded to IndiGo and SpiceJet.

The request has been made at a time when there is a huge demand for operation of international flights to connect more West Asian countries from Tiruchi as well as to augment domestic connectivity. At present, Air India Express is the lone overseas carrier operating a daily service to Dubai.

If the expectations come true, it will mean a big infusion of money into the capital-starved domestic aviation sector, stimulating job opportunities and kick-starting the investment cycle in the economy.

Choubey said he has had interactions with several top international airlines operating in and out of India like Emirates, Qatar Airways who have evinced interest in investing in India’s aviation sector.

Industry welcomes FDI move.

Chandrajit Banerjee CII Director General
Chandrajit Banerjee, CII Director General

The government’s move to ease FDI norms in civil aviation, by permitting more investments under the automatic route will further help attract big investments and boost job creation. Chandrajit Banerjee CII Director General said, “Liberalisation of the FDI regulations reflects the government’s commitment to reforms and openness, and reassures investors that ease of doing business remains a high priority.” 

Terming the simplification of policy framework governing investments in strategic sectors like defence and aviation as a “huge positive for the economy”, Ficci Secretary General A Didar Singh said: “The Modi administration through these moves has once again highlighted that reform is a continuous process in order to capitalise on the potential India offers.”

Singh felt that “There is no doubt that India today is the most preferred investment destination in the world. While the attraction of our market is known to all, there is now even more reason for global investors to commit themselves for making and doing business in India”.

ASI and AAI sign MoU.

Aviation Strategies International (ASI), a Corporate Partner of the Royal Aeronautical Society,  recently signed a Memorandum of Understanding (MoU) with the Airports Authority of India(AAI), a government agency of the Ministry of Civil Aviation of India entrusted with the development, expansion and modernization of its air traffic services, passenger terminals, operational areas and cargo facilities.

Founded in 1998, ASI is recognized for providing strategic advice and competency development consulting services at the corporate level, in the field of civil aviation. Its multidisciplinary team of international aviation specialists offers objective, tailored recommendations that are aligned with industry best practice. ASI’s main offices are located in Montréal, with regional representations in Atlanta, Beijing, Melbourne and Ottawa.

AAI and ASI agree to work together through a broad cooperation framework to jointly implement world-class competency building initiatives that encompass training, research and technical cooperation. They will systematically address the professional development needs of AAI employees at all levels and will extend their NATS_building,_new_delhicooperation to the various training establishments of AAI, including the Indian Aviation Academy (NIAMAR), for the delivery of national, regional and international programs. They also plan to share their joint expertise and innovations in the development of human resources with industry stakeholders.

“The Indian aviation sector is growing at a phenomenal pace; one of the fastest in the world. AAI is poised to provide active leadership and make innovative professional contributions for the betterment of the aviation industry, both in India and globally. The new India National Civil Aviation policy provides an impetus for major investments in infrastructure and human capital over the coming years and we are indeed honoured to have been asked to actively support AAI’s goals by marshalling our expertise in the various targeted areas of excellence”, remarked Dr. Pierre Coutu, ASI’s President.

Dr. Pierre Coutu, ASI’s President.
Dr. Pierre Coutu, ASI’s President.

The new National Civil Aviation Policy aims to transform the aviation map of India by reviving numerous airports and airstrips that are either not operational or see little activity. As per the policy document, India has 450 airports and airstrips but only 75 have scheduled operations. A number of these belong to defence establishments while some others belong to State governments or private entities. Many of these airports or airstrips are not operational.  

Boosting regional air connectivity is a highlight of the policy – a job that may prove challenging given the present domestic passenger traffic trends at our airports. 

In June 2016, AAI released the air traffic data for April 2016 relating to 82 airports (international and domestic airports, apart from ones owned by state governments and private parties). It  reveals that :

  • Large Metro airports account for the bulk of the domestic traffic
  • Nearly 65% of the domestic passenger traffic totaling nearly 16 million was handled by just 6 airports – Delhi, Mumbai, Bangalore, Chennai, Kolkata and Hyderabad.
  • 26 airports recorded traffic exceeding 0.1 million domestic passengers. Between them, these airports accounted for over 90% of the total domestic traffic handled.

The Regional Connectivity Scheme, to be implemented from the second quarter of 2016-17, aims to revive the fortunes of un-served or under-served airports and routes. The government has offered several incentives to promote these under served locations.

The FDI policy is expected to boost the civil aviation sector further. It now permits  100% FDI under automatic route in brown field airport projects.

The policy outlines a “demand driven” approach to reviving these, “depending on firm demand from airline operators, as no-frills airports will be done at an indicative cost of Rs 500 million to Rs 1000 million, without insisting on its financial viability. Inputs from and willingness of the State Governments will be taken before revival of any airport is undertaken. AAI/State Govts can explore possibilities of developing these airports through PPP also.”

The Union Budget 2016-17 had also proposed to develop 160 non-functional airports at a cost of Rs 500 to 1000 million each.

It remains to be seen whether these policy measures will inject life into the various dormant airports and airstrips on India’s aviation map.