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Business News/ Companies / News/  Airline asked to give refunds; agents may tap NCLT for dues

Airline asked to give refunds; agents may tap NCLT for dues

The airline owes about ₹900 crore to travel service providers and passengers for advance flight bookings.

The issuance of credit notes has irked passengers. Premium
The issuance of credit notes has irked passengers.

As the civil aviation regulator asks Go FIRST airline to provide refunds to passengers impacted by suspension of the airline’s flights, some travel agents’ associations and service providers are contemplating applying to the National Company Law Tribunal (NCLT) to seek pending dues, three people aware of the development said.

“The airline has already been directed on 4 May to process refunds as per regulatory provisions," said a senior government official on condition of anonymity. “We have directed them to issue refunds to passengers if passenger so desires, instead of credit shell."

The airline owes about 900 crore to travel service providers and passengers for advance flight bookings.

The airline has issued credit shells, which can only be used to book Go FIRST flights, to passengers as well as travel agents after the sudden halt of flights since 3 May.

The issuance of credit notes has irked passengers and travel agents worldwide, as these credit notes are of no use since the airline has suspended operations.

“This is a very big concern for us, as the airline is trying to take away our and people’s money paid to them for bookings by moving for insolvency," Jyoti Mayal, president, Travel Agents Association of India told Mint. “It will set a very bad precedent, if the airline succeeds. We are tracking the situation in court and also speaking to our lawyers. We as an association are considering taking legal recourse, including moving NCLT."

Some travel agents are planning to move independently to NCLT to ensure their payments are protected.

“There should be a mechanism that ensures money paid by passengers is refunded in case of an airline failure," said Ajay Prakash, president, Travel Agents Federation of India. “This is happening too often in India and passengers and travel agents too lose a lot of money. Some of our members are contemplating to move to NCLT since we as an association cannot move but will provide all assistance to our members, if required."

Passengers should insist on actual refund since credit notes are worthless and use social media to amplify their claims, Prakash added.

The government, too, needs to seriously look at a mechanism like an insurance scheme to protect consumers in case of airline failure, he said.

The company has stated in its filing at NCLT that it has already cancelled 4,118 flights in the last 30 days with 77,500 passengers.

Travel agents will not be the first ones to take legal recourse against the airlines.

While the airline is awaiting an urgent admission of its plea in the NCLT, two pleas have already been filed against the airline. This includes one plea by a transport services provider SS Associates Services Private Ltd with respect to a claim of 3 crore and another by a pilot claiming dues of more than 1 crore.

Today, the airline also reached out to the NCLT seeking urgent order on its plea for moratorium after eight lessors approached the civil aviation regulator to de-register 20 aircraft on 4 May. The airline also told the tribunal that lessors are beginning to take possession of aircraft and it is now allowed access to the airplanes for maintenance.

Meanwhile, the travel industry is also approaching the government with a request to protect their money with GoAir by asking the airline to withdraw their application at the NCLT.

“We would want the ministry of civil aviation to resolve this. Go FIRST is saying that they will give the refund in the account of the agent and that cannot be used to refund passengers," Rajiv Mehra, President, Indian Association of Tour Operators said. The result of this whole episode would be that air fares would be abnormally high and that would remain the case during the entire summer, which is a heavy domestic season.

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Updated: 08 May 2023, 11:15 PM IST
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