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 !


Airbus Clinches $12.5 bn Order from Air Asia

Malaysian budget carrier AirAsia Berhad has announced a $12.5-billion firm order to buy 100 A321neo aircraft from Airbus on a rainy second day of the 2016 Farnborough air show. The airline co-owns AirAsia India, the Bengaluru-based airline which operates domestic flights to 10 destinations in India.

Addressing a press conference, Tony Fernandes, CEO, AirAsia Group, said that it was the first time that AirAsia has ordered this aircraft. “Low-cost airlines generally operate around 180-seat aircraft. AirAsia’s A320s are 180 seaters, but now we have moved in a new direction. The A321 aircraft can accommodate 240 seats, but AirAsia A321s will have 236 seats for passenger comfort,” said Fernandes.

The A321 induction begins only in 2019.

This happened in the midst of Farnborough air show participants reporting a lower level of deal making than in recent years. Trade experts expect turbulence ahead. They are analysing growing risks to the global economy – from slowing economic growth in China to Britain’s decision to leave the EU. This could dry up orders or even result in some cancellations.

AirAsia Berhad is the largest A320 operator in the world. The budget airline operated 199 Airbus planes as of the end of March 2016 in India, Malaysia, Thailand, Indonesia and the Philippines and is poised to start in Japan. This purchase brings AirAsia’s total orders for A320-series planes from Airbus to 575 aircraft.

It is now under speculation whether the A321s will be brought into the Indian market.

Amar Abrol, CEO, AirAsia India, said: “The option is there to draw on the parent. However, every decision will be evaluated commercially.” For now, AirAsia will concentrate on growing its aircraft fleet to 20 so as to begin international operations. “I already have a board-approved target to get to 20 aircraft. I don’t need to wait for A321 to get to 20 aircraft. In the next 24 months, we will certainly get to 20 aircraft,” said Abrol.

Asian budget carriers, following the growth of AirAsia, have purchased hundreds of jet airplanes from Europe’s Airbus Group SE and its US rival Boeing Co.

  • In 2013, Indonesia’s PT Lion Mentari Airlines ordered 234 planes from Airbus, the carrier’s second purchase contract for more than 200 aircraft.
  • India’s Go Airlines India Pvt. ordered 72 A321neos from Airbus, doubling its total purchases of the model. 
  • In 2015, Indian budget airline IndiGo ordered 250 Airbus planes for $27 billion.
  • India’s Spicejet, too, is poised to place orders for 100 planes in an attempt to catch up with its competitors.

Budget airlines in the Asia-Pacific region are expanding amid a burgeoning travel demand underscoring their ambitious growth plans. The 10-year old budget carrier, IndiGo has become the largest airline in India by market share surpassing everybody. China Southern Airlines Corp. is Asia’s biggest carrier by fleet size, with more than 600 planes.

Air Asia doesn’t want to lag behind and is anticipating that economic growth from India, China and Vietnam will encourage millions of new fliers in Asia – the world’s most populous continent. AirAsia has become a pan-Asian budget airline that has grabbed significant market share from other full-service airlines like Singapore Airlines Ltd. and Malaysia Airlines Ltd.

As per Simon Elsegood, an analyst at CAPA Centre for Aviation in Sydney, the Asia-Pacific is going to account for at least a third of all aircraft demand over the next 20 years based on planemakers’ forecasts. There’s particularly strong demand for intra-regional connectivity in Southeast Asia and North Asia, and then there’s very, very strong demand within China itself for domestic flights.



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.