Airlines unlikely to refund Rs 3,000 crore they owe to flyers

New Delhi: People who were issued credit shells against tickets cancelled for flights during and after the national lockdown may have to hold on to them longer, as cash-strapped airlines are unlikely to refund about ₹3,000 crore they owe to passengers.
Detailed data of refunds shared by airlines show they have issued credit shells worth ₹3,000 crore that can be used for travel at a future date. Estimates also show about ₹1,500 crore has been refunded to passengers — a substantial part through the utilisation of credit shells by passengers.

These estimates were part of the discussion between airlines and the government after the Supreme Court asked the government to look into the issue of refunds. Airline executives told ET that the industry is in a precarious financial position and refunding this amount to passengers would not be possible for many. “It is not that airlines have not returned the money,” said an airline executive who did not want to be identified. “The money has been put in a shell.”

The government is also of the view that airlines cannot be forced to pay these refunds, as they do not have funds.

“Airlines are going through their worst phase and forcing them to refund this amount would not be possible,” a government official said on a condition of anonymity. “There is a need to devise a solution that takes care of both airlines and passengers.”

ET got in touch with all domestic airlines, but some of them did not reply as the matter is in court.

SpiceJet said it has complied with all refund rules announced by the aviation regulator while an IndiGo spokesperson said the airline would comply with any decision taken for the industry. Airlines like Air India, Vistara, GoAir and Air Asia India did not respond to emails sent to them.

An airline executive, speaking on condition of anonymity, said refunding money would not be easy. “Some airlines may be comparatively comfortable with cash but that does not mean the airline has money to process refunds. Airlines are struggling to pay salaries and are laying off to reduce cost and losses.”

A third executive said airlines are flexible in terms of allowing passengers to utilise their credit shells. “There is a certain deadline given to passengers for utilisation of those credit shells but that is likely to be extended further and further to allow passengers to utilise the ticket,” the person said. “Money in these shells can be utilised anytime.”