Published on 18/02/2019 5:24:01 PM | Source: HT Media

Opinion | Airlines` refund policy is all but guest-friendly

Posted in Expert Views| #Aviation Sector #Expert Views

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Operating airlines is a tough business—the costs are huge and customers finicky, to begin with. One would imagine advances in technology and increasing competition would make airlines’ customer engagement as much post-sales friendly as they are pre-sales. Not so. While all that has ensured great prices—yes, sometimes unbelievably low, too—it hasn’t yet created a 360-degree delight for the consumer. A key missing element of the puzzle is their cancellation and refund policy that continues to fleece fliers, the government’s promises to correct this notwithstanding. Some days ago, India’s second-largest airline, Jet Airways, announced a “guest-friendly framework". The airline, which is struggling to stay in the sky, said this would lower penalties in exchange for advance intimation for changes in bookings. The new cancellation policy is anything but guest-friendly. Passengers and industry experts point out under Jet’s new policy, passengers may quite often just be advised to choose a new airline without really bothering to cancel or reschedule their flight. Sadly, this is true for all airlines. Airlines in India charge as much as 50% to 90% of the total ticket cost in cancellation and rescheduling charges.

Refunds currently account for around 2.5% of the total passenger complaints, according to Directorate General of Civil Aviation data and compare favourably with a little over 3% for US airlines. That percentage may look small but in a country where the domestic passenger market grew 18.6% on an annualized basis in 2018 to 138.9 million, it makes for a large absolute number. Also, given that customer awareness of redressal forums is woefully inadequate in this country, that low percentage ought to be taken with a pinch of salt. Sure, at the time of booking a ticket, a customer has the option to pay a little extra to get the flexibility of rescheduling the ticket. A look at the cost of buying the flexibility to change the ticket schedule and the price of rescheduling/cancelling a booked ticket in case the option wasn’t availed of tells one that something is amiss. An airline ticket is a high-involvement purchase and any industry structure that unfairly makes the customer pay for a change in plan, even if the revision is being made months in advance, needs to be relooked. One must appreciate that an airline, once it has sold a ticket, becomes a monopoly supplier of the service. The passenger is at the mercy of the airline then. Hence, given the nature of the beast, government intervention may be the only option. However, efforts in this direction have been half-hearted.

Last May, the government had floated a draft paper that proposed not only full refund of the ticket charges but also sought to penalize the airline in case of flight delay. This may not be the best time to implement the latter idea, given the poor state of the sector, but the government would be well advised to impress upon airlines to stop this anti-consumer practice. Whether this comes through moral suasion or a diktat, the government needs to act to stop this. Given the advances in technology that enable more efficient load management, airlines could look at offering customers an option to fly with the airline before or after a certain period on payment of some charges, if not as per their immediate choice. At a time when the government is even subsidizing flights to help the common man fly through UDAN scheme, a parallel system that makes cancellation and rescheduling a revenue-earning mechanism should be nixed.