Home Association TAFI raises concerns to MOCA/DGCA over Airline defaults

TAFI raises concerns to MOCA/DGCA over Airline defaults

In the Aviation business, there are many issues concerning the travel trade which are not being addressed by the competent authorities. One of the foremost remains refunds wherein passengers are losing money and likely to lose more money if no action is initiated. It is a matter of grave concern that the concerned authorities are silent and seem to be laying their hands off in these matters. It is about time the Government realise, intervened and brought about some constructive solutions.

The Travel Agent Federation of India (TAFI ) which represents the travel trade before official bodies of government, airlines, and other appropriate forums wanted to bring its member’s concerns to the only authority that can set things right. Thus, as an ‘Oversight Authority’, TAFI has sent a mail to Pradeep Singh Kharola – Secretary Ministry of Civil Aviation and Arun Kumar – Director General of Civil Aviation to address their immediate concerns.

In the aviation industry, a very delicate situation is prevalent now and earlier the travel agents have learnt from the bad situation that was created by Jet Airways default and closure, where only 8 per cent refund is being considered for payment by IATA, just because the International airline association did not keep an adequate deposit considering there was a possibility of a likely default.

Now, the big question has always been: who is responsible to pay the customer in case of Jet airways, with IATA raising its hands and MOCA keeping itself out of it? So basically, the biggest impact is borne by the customers who pay for the tickets to travel with good faith expecting that the airlines will honour the ‘Conditions of Carriage’. It is the passenger loss, the loss of an Indian citizen.

TAFI has also requested the Authority to create a fund to cover airlines facing bankruptcy situation, very much in case of LCC’s registered in India. Very recently, the Airport Authority of India (AAI) has decided to put SpiceJet on a ‘cash and carry’ mode as the airline’s pending dues have crossed Rs 200 crore. SpiceJet, which posted a loss of Rs 807 crore in the fourth quarter of last fiscal, had asked AAI for time to work out the modalities for implementing the ‘cash and carry’ mode. Thus, considering the precarious situation of Spicejet and the bad experience of Jet Airways, TAFI feels it was about time the Oversight Authority responded.

It is also seen that in case of International Airlines dealing with IATA, wherein IATA collects the funds from the travel agents and pays the airlines after due processing of the billing and is paid for doing so, but on the other hand, it is always avoiding the responsibility of any defaults by airlines. In the mail, TAFI mentions that a solution could be worked out whereby, an insurance cover cost is added into the fare and shown in the ticket wherein IATA has a process of identifying a code for Insurance premium collection on each ticket issued. Collectively, all Airlines can do the same if this is agreed to by DGCA and the request for a code has to be made by the National Carrier e.g. Air India. The collected amount under the specific code e.g. IP is held with IATA BSP and paid to the Insurance company as agreed between the airlines and the insurance company in India. This way the pax pays for the cover in case the Airline defaults and stops flying.

TAFI has also mentioned that any airline being suspect of being financially weak should not be allowed to repatriate dollars from India to their head office. In case, they default, who is responsible especially if funds are repatriated and refunds are due to be paid in India but not made available? This was a serious matter under FEMA. 

These were the few cases prevailing at present for which some authorities have to be responsible. As per reports, there are over Rs 3000 crore yet to be refunded to the passengers and this could be a big risk for refunds if the airlines shut down. Definitely, the passenger will lose his money. Finally, TAFI has also requested to make the ‘Passenger Charter’ effective.

Thus, we all hope the Ministry of Civil Aviation and Director General of Civil Aviation will look into these matters and work toward bringing out effective solutions.