Sivadath Madhu Menon
Government Law College, Thrissur
N. Arun Vaidyanath
School of Law, Sastra University
The Novel Coronavirus COVID 19, which was declared a pandemic by the World Health Organisation (WHO) in March 2020 has caused huge damage to human health and the global economy. It has caused a great depression to the World Economy and affected all kinds of people from rags to riches without sparing anybody. Strict quarantine protocol and travel ban have been imposed by the government to check the phenomenal growth of the global pandemic. On 24th March 2020, The Government of India headed by the Prime Minister Mr Narendra Modi ordered a 21 days nationwide lockdown which restricted the movement of 1.3 billion people of the country and almost all economic activities in the country, which resulted in a loss of 7-8 lakh crore for the economy1.
The imposition of a travel ban resulted in the suspension of non-essential public and private transport. India, which is considered the fastest-growing aviation market in the world according to the International Air Transport Association (IATA), is suffering from huge economic loss due to the lockdown. According to reports2The Aviation sector in India has suffered a loss of 3.3 to 3.6 billion USD in the first quarter of this financial year and the average loss per day stands at 75 to 90 crores per day. India is the world’s third-largest civil aviation market in terms of passengers, domestic and international combined. The depth of the economic crisis caused by the COVID 19 is massive all over the globe and India is no exception. Thousands of people get laid off everyday and many others are working without remuneration. In this difficult time, the approach of the airline companies towards their customers whom they claim to treat as their kings is very disappointing. The impact of the pandemic is not limited to the aviation industry alone, but to the entire industrial world. Other industries do not enjoy the privilege of holding on to the money rightfully due to the customers. but the Airline companies do enjoy the right and privilege of keeping their refund deductions with themselves. This does not mean that in such situations or circumstances they have the right to keep the money which is fully entitled to the customer as a credit shell for the time frame fixed by the airline companies themselves. In the present scenario, many people who have booked their Air tickets before the lockdown and during the lockdown are expressing their anxieties about the refund policies of their airline tickets by the companies. The Airline companies are transferring the amount which is due to the customers into their credit shell3 account which should be used within the time specified by airline companies.
The office memorandum4 dated 16 April 2020, directs the airlines to make a full refund to the customers who have booked their tickets during the initial lockdown. Further to this, the Central Government extended the lockdown from 15th April 2020 to 3rd of May 2020, and another order was issued by the Directorate General of Civil Aviation (DGCA) to all the Airlines to fully refund the money to those who have booked their tickets during the 2nd phase of lockdown. Even though passengers are the ones who have to decide on the transfer of money to the credit shell, the Airlines are transferring the money to the credit shell account of the customers without their consent. Airline companies are using this as an advantage and are transferring the amount to the customers’ credit account thereby ensuring that they do not lose any income from a ticket booked for a journey during the lockdown. Pursuant to the impugned notification issued by the DGCA, only the passengers falling in the first and second phase are entitled to a full refund of air ticket amount upon cancellation and the passengers in the third and fourth phase are arbitrarily excluded from availing the refund of air ticket amount from their respective airline companies. Moreover, on cancellation of the ticket by passengers falling in the third group contrary to the full refund, the full ticket amount goes into the credit shell of the passenger which he/she can avail within a period of 1 year. It is worth mentioning that the credit shell accounts are not transferable, i.e. only the same passenger can use it and further, the credit shell would elapse within a period of one year.
Responding to the petitions filed by Pravasi Legal Cell and others5 which sited that the approach of making credit shell mandatory by refusing the refund is in clear violation of the Civil Aviation Requirements Act, 2008 issued by the Directorate General of Civil Aviation (DGCA) which states that “The option of holding the refund amount in credit shell by the airlines shall be prerogative of the passenger and not a default practice of the airline”. The DGCA came up with a few proposals6 which were later accepted by the Supreme Court which mandates that the passengers who had made their booking during the lockdown for a travel between 24th March 2020 and 24th May were entitled to a full refund within three weeks if the airline has received the payment in the aforementioned time frame, if the tickets were booked through a travel agent in such cases the full refund was to be credited to the travel agent’s account which must be immediately transferred to the passenger’s account and for the tickets booked for a journey after 24th May 2020, the refund will be made according to the guidelines mentioned in the Civil Aviation Requirement Act, 2008. The Supreme Court bench comprising Justices Ashok Bhushan, Subhash Reddy and M R Shah further stated that airlines which are facing financial constraints may offer a credit shell which is valid up to 31st March 2021 and must refund the same to the passengers if it remains unused.
The above-mentioned approach of the airline companies towards their7 passengers is unfair and the method of classifying passengers based on their date of booking and date of travel vide office memorandum dated 16th April by the DGCA violates the basic fundamental right of equality available in the Indian Constitution. Article 14 of the constitution states “Equality before law- The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth”. Every person has the right to equality which means that the state has to treat “equals equally”, This, sadly, is not the case when Airlines are treating the customers unequally. The recent proposal of the DGCA has indeed provided relief for the passengers and the Airlines which are facing financial constraints during these uncertain times.
1. World’s Biggest Lockdown May Have Cost Rs 7-8 Lakh Crore to Indian Economy, Economic Times (Apr. 13, 2020, 09.00 PM), https://economictimes.indiatimes.com/news/economy/finance/worlds-biggest-lockdown-may-have-cost-rs-7-8-lakh-crore-to-indian-economy/articleshow/75123004.cms. ↩
2. Effect of Novel Coronavirus (COVID 19) on Civil Aviation: Economic Impact analysis, ICAO (Oct. 10, 2020, 9.30 PM), https://www.icao.int/sustainability/Documents/COVID-19/ICAO_Coronavirus_Econ_Impact.pdf ↩
3. GoIndigo, Know Your Credit Shell, Indigo Airlines (Oct. 9 , 2020, 11.00 PM), https://www.goindigo.in/information/credit-shell.html#:~:text=1.What%20is%20a%20credit,by%20us%20against%20your%20PNR. ↩
4. Usha Padhee, Office Memorandum, Directorate General of Civil Aviation (Oct. 9, 2020, 11.15 PM), https://dgca.gov.in/digigov-portal/jsp/dgca/homePage/viewPDF.jsp?page=topHeader/COVID/Circular%2016.4.2020.pdf ↩
5. Pravasi Legal Cell V. Union of India ICL 2020 (10) SC 457. ↩
6. Arpan Chaturvedi, Supreme Court Accepts DGCA Proposal for Flight Ticket Refunds, Bloomberg Quint (Oct. 9, 2020, 11.50 PM), https://www.bloombergquint.com/law-and-policy/supreme-court-accepts-dgca-proposal-for-flight-ticket-refunds. ↩
7. INDIA CONST. Art 14. ↩