Travel agents in trouble as flyers demand cash refunds

Customers demanding cash refunds for flights axed due to nationwide lockdown are putting the squeeze on India’s travel agents, who are only receiving virtual money from airlines solely to be used for future bookings.

Indian authorities have told airlines to repay passengers in cash for tickets booked during the lockdown, but there is no such obligation when it comes to travel agents. That leaves them digging into their own pockets to appease disgruntled customers. The default option for most travel agents in other countries is to give credit notes and only provide a refund if asked.

“My wallet balance is increasing, but the cash balance in my bank account is falling,” Easemytrip Chief Executive Officer Nishant Pitti said, referring to the credit he is accumulating from airlines. “It’s the travel-agent community that’s getting hurt,” he said in an interview with Bloomberg News.

Easemytrip, one of India’s leading online travel companies, has paid out about Rs 50 crore ($6.6 million) to customers in the past few weeks, while its wallet balance has ballooned to Rs 75 crore, Pitti said.

The strain India’s travel agents are under is yet another sign of the damage that the coronavirus is inflicting on aviation and related industries. The pandemic has led to drastic restrictions on movement and the grounding of airline fleets.

Countries such as China are seeing a rebound in domestic air travel, but that is not the case in India as flights have been banned since March 25. Hundreds of thousands of trips have had to be cancelled.

An Air India spokesman said the company has clearly mentioned its refund policy on its website, and it adheres to that for every customer. The policy states that the airline will waive no-show charges and protect the full value if a passenger holds a ticket for travel between March 23 and May 14. Passengers can reschedule their flights until September 30 without paying for a change in date, flight or route, and a full refund will be made if a booking was made during March 25-May 3 for travel during that time.

Last month, an organisation working for migrants rights filed a case in India’s top court seeking refunds for all flights cancelled due to the lockdown, not just those booked during the period. The court has issued notices to the Ministry of Civil Aviation and Directorate General of Civil Aviation about the matter.

“As the largest distribution arm of the airlines and a significant service provider to hotels and transportation services, travel agents and tour operators too seek lower taxes,” said Narula, a former vice president of the Travel Agents Association of India. Getting credit from suppliers is likely to get more demanding in future and a rise in insurance costs too is quite likely.

India is one of the world’s fastest-growing aviation markets, with low-cost operators like InterGlobe Aviation Ltd

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