As Jet Airways Confusion Continues, Travel Agents Stuck Paying Refunds

CHANDIGARH, Punjab — When debt-strapped Jet Airways suspended all its operations last week, thousands of employees were left wondering how they would survive and stranded passengers had to scramble around for other options.

Add to the category of sufferers private travel agents, who have been forced to pay angry customers themselves after their ticket refunds, adding up to crores, have been held up indefinitely after the International Air Transport Association (IATA) suspended the airline’s membership on 18 April. The aggrieved agents say the airline worsened the problem by accepting bookings right till the day its membership was suspended by IATA.

Jet Airways did not respond to an email seeking comment.

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After it suspended all the ticket bookings and transactions of the cash-stripped airways, IATA asked its accredited travel agents to submit their refund claims through its global distribution system tool, the Billing and Settlement Plan (BSP). However, it has not guaranteed a full refund to the agents, who are now being forced to shell out money from their own pockets to customers.

Albert Tjoeng, IATA’s assistant director of corporate communications (Asia Pacific), told HuffPost India that accredited travel agents have been asked to submit their claims for refund through the BSP link system between April 23 and May 20.

“Each individual claim will then be need to be reviewed by Jet Airways, which will approve the amount that qualifies to be refunded (which may not be the same as the claim submitted). As the refund claim submission process is underway, we do not have visibility of the total claim amount,” said Tjoeng.

Jet Airways had been participating in over 73 BSP and 19 Cargo Accounts Settlement Systems (CASS) around the world. The 27-year-old airline had sought a Rs 400-crore emergency fund from its lenders, to whom it already owes over Rs 8,500 crore, but was refused as the Naresh Goyal-founded company was not ready to offer more collateral.

How did this happen?

Sameer Karnani, chairman of the Western chapter of the Travel Agents Association of India, told HuffPost India that the problem worsened because the airline, despite facing acute cash and staff shortage, kept accepting bookings till April 18, the day it was suspended from IATA.

“Hence we could not request for cancellation. Also, IATA refused to accept cancellation request after it suspended the airlines from its BSP system. It was only on April 23 that BSP started accepting cancellations but it has not guaranteed a full refund,” said Karnani.

The Economic Times had reported on 12 April that Jet owes more than Rs 3,500 crore to passengers whose flights have been cancelled, though this estimate was before the airline stopped its operations.

A person familiar with the matter told HuffPost India that only 10-15% of the bookings are yet to be refunded by Jet Airways, but that even this works out to almost Rs500 crore all over the country. HuffPost India couldn’t independently verify this number.

Baljit Singh Shergill, a Chandigarh-based travel agent, said that IATA should ensure full refund without levying any cancellation fee from customers. He added that IATA should also incorporate a way to alert an airline to stop future booking before suspending it from its BSP system.

Under the BSP process, an agent sells a ticket to the customer through IATA’s global distribution system tool, which manages the inventory. Every week, an agent makes a lump-sum payment into the system that goes into the airline’s account. In case of a refund, the agent raises a request and the money is refunded to the customer’s account after approval from the airline.

Since IATA suspended Jet Airways’ membership on April 18, agents could not use the tool to book or apply for cancellation of the pre-booked tickets. This created lot of confusion as passengers have booked tickets until June this year on national and international flights.

Following a huge protest by the passengers, the  travel agents are now forced to shell out money worth crores to refund the ticket cost to retain their customers. As per Tjoeng,  it may take  some months to refund the approved amount to the passengers. 

Also, Delhi based activist Bejon Kumar Misra  has filed a plea in the Delhi High court and asked the Ministry of Civil Aviation and Directorate General of Civil Aviation (DGCA) to adopt a redressal mechanism for all the affected passengers to get a full refund of their booking amount with reasonable compensation or to arrange an alternative mode of travel for them to reach their destination.

The plea came up for hearing on Wednesday.

A bench of Chief Justice Rajendra Menon and Justice AJ Bhambhani took note of the fact that even before the hearing, news of the petition had been widely reported in the media, but has asked the petitioners to appear again on 1 May.

 Col (retd.) DB Tingre, vice president of a Pune-based travel firm that caters to the personal travel needs of members of the armed forces, paramilitary forces and their families, says it has been forced to issue refunds on its own without waiting for the airline.

“Over 90% of the armed forces clients are Non-Commissioned (NCOs) and Junior Commissioned Officers (JCOs) who are unable to bear the average trip cost ranging between Rs 8,000 and Rs 12,000. Despite making repeated requests, the airlines did not return fare,” he said.

He added that the majority of the tickets were booked for Leave Travel Allowance (LTA) and LTC  (Leave Travel Concession), adding that over 8,000 clients of the firm are waiting for their refunds.