Travel agents approach govt for refunds; ministry tells airlines to find solutions

Mumbai: Travel agents from across the country have asked the government to mandate airlines to refund cash deposits worth hundreds of crores for which no tickets were issued.

Top officials from the ministry of civil aviation met commercial chiefs of Indian carriers on Thursday and directed them to find solutions. The officials met CEOs on Wednesday. Another meeting will be held on Friday.

Agents have also raised issues on credit shells that airlines are giving for cancelled tickets and have instead, asked for cash refunds.

Indian airlines suspended all flights from March 24 after the nation went into a state of complete lockdown to curb the spread of the deadly Coronavirus pandemic.

India has around 50,000 travel agents of which 15-20 are big consolidators. About 75%-80% of air tickets in the country are booked via agents.

Travel agents deposit lumpsum amounts with airlines against which they issue air tickets to passengers. Bigger consolidators such as Riya Travels—who also sell smaller agents across the country—deposit daily amounts of Rs 5-6 crore while agents from smaller towns deposit about Rs 50,000-Rs 80,000. Agents have over Rs 300 crore deposited in these so called float accounts. No tickets were issued on these.

The other problem is on tickets that were issued and then cancelled due to the nationwide suspension of flights. Airlines in India, like their global peers, have given credit shells to passengers which they can utilise for travel once flights resume. The PNR is kept alive for a year.

Since the largest chunk of these are booked through agents, they are now demanding cash refunds instead of the shells.

“A lot of passengers have booked via agents but they have themselves got the shells. A huge chunk of corporates have booked via us. They make payments to us later while we have to make advance or upfront payments. So we lose a lot of money,” said Manoj Samuel, executive director at Riya Travels.

ET reported on April 11 that airlines have sold Rs 6,000 crore worth of tickets before the lockdown and are surviving on that cash.

Officials from the ministry met airline CEOs on Wednesday and discussed the issue of refunds.

“The catch is that if refunds are given to travel agents, a lot of them will use them for their own survival and it will never reach passengers. In a way, the money is more secure and traceable if it’s hoarded by airlines,” said a senior executive at a travel agent.

“We have told the officials that credit shells are going to be the norm. Not only can they be used for a year, fresh tickets can be booked on that shell beyond that period too,” said a senior airline executive who didn’t want to be named.