July 14, 2008

Booked a Flight? Pray the Airline Stays Afloat

By Saurabh Sinha

NEW DELHI: Cautious passengers who have bought tickets way in advance for a domestic carrier must keep their fingers crossed that the airline does not fold before their date of travel.

For while record oil prices and mounting losses have dented the airline industry worldwide, India - unlike the west - does not have any consumer protection law in place to protect passengers who hold the ticket of a company that has shut down. Invariably, they will have to queue up behind bigger creditors and wait for some kind of a refund.

The crisis has hit home, with government and industry waking up to potential shutdowns. Aviation secretary Ashok Chawla said the government would examine procedures for ticket refunds in other countries before arriving at a solution. Kingfisher EVP Hitesh Patel said he would take up the issue in the next industry meeting.

Usually, if a passenger holds a ticket of an airline which gets consolidated with some other carrier, s/he is allowed to travel on the merged entity. The problem arises if the airline goes belly up. "If an airline goes out of business in the US, other airlines, as a goodwill gesture, offer to carry such passengers on highly discounted rates. In India, we don't have any such practice. We'll raise this issue at the next industry meeting," said Patel.

Flyers now booking tickets closer to departure date

According to JetLite COO Rajeev Gupta, consumers in Europe are protected against such situations in two ways.

"There's an organization in Britain called ATOL that takes insurance from airlines and if someone goes out of business, that money will be used to protect passengers' interests. In Europe, there are agencies to whom a passenger or travel agent can pay a small premium that will insure them from such closures," Gupta said.

While some US carriers have already closed down, Indian carriers are also reeling under the impact of ever-increasing crude prices and some of them are now desperate for funding to remain afloat.

The surging air fares, however, seem to be helping passengers on this count. With advance tickets on absurdly low fares becoming history, Indian domestic passengers are now booking closer to date of departure and hence sparing themselves the risk of a long gap between date of booking and travel.

SpiceJet VP (marketing) Kamal Hingorani admitted the booking curve has shortened. "On sectors like Delhi-Mumbai and Ahmedabad- Mumbai, we are selling most of our seats just one day in advance. People know there's excess capacity and no need to rush." JetLite's Rajeev Gupta said 60% of the LCC's tickets were sold 72 hours prior to the flight's departure time.

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