Air passengers’ right to claim refund amid the COVID-19 crisis in India: The legal position

The world has been dealing with an unprecedented situation for more than a couple of months now. The increasing risk of spread of the COVID-19 pandemic made it the need of the hour to call for a complete lockdown in India. The lockdown included cancellation of all domestic and international flight services across the nation.

While the step was highly necessary to prevent the country from being further exposed to the Coronavirus, it also left the passengers with a lot of ambiguity regarding their flight bookings for the cancellation period. The confusion kept increasing, with airlines changing their stand from promising refunds, to waiving off flight rescheduling fees, and finally freezing tickets for future rescheduling.

However, the passengers are still concerned with their money stuck with the flight companies. In this article, we seek to study the provisions regulating passenger rights, and the available legal recourses to passengers seeking refunds.

Passenger Charter of Rights

The Passenger Charter of Rights is a booklet released by the Ministry of Civil Aviation containing the rules and rights that apply to air travel. Although the booklet talks about refund for normal flight cancellations, it carves an exception for force majeure events.

The rules exempt the airlines from any liability to pay compensation in extraordinary circumstances beyond their control, including cancellation due to government regulation or order affecting the aircraft. The Charter of Rights reiterates paragraph 1.4 of Civil Aviation Requirements Section 3 – Air Transport Series ‘M’ Part IV Issue I, dated August 6, 2010.

In the present situation, the Ministry of Civil Aviation has released a notification suspending all airline services in light of the COVID-19 outbreak. Certainly, this classifies as a force majeure circumstance and passengers cannot claim compensation in this regard.

However, it is noteworthy that the Charter fails to discuss refund of the price of flight tickets that is stuck with the airline companies. The refund should simply be seen as the restoration of positions under a contract, which is different from compensation. It will be dealt with later in this article.

Civil Aviation Requirements under the DGCA Regulations and Guidelines

The Civil Aviation Requirements (CAR) of the Director General of Civil Aviation (DGCA) recognise the grievances against the policy of non-refund of the ticket amount. Most of the airlines have resorted to adjusting the cancellations against tickets to be purchased by the passenger for future travel in the same airline, that too valid for a limited period of time. Airlines have thus frozen the tickets for future rescheduling.

But again, while the CAR lays down the provisions for the method of refund, it fails to clear the air over refund for cancellation due to force majeure events. Furthermore, it highlights a policy of the non-interfering approach of the government in commercial practices of the airlines.

From both these provisions, it is clear that the airlines do not have any liability to compensate the passengers for cancellation of flights due to the COVID-19 crisis. However, both the passengers and the airlines are bound to each other through the contract of carriage, which gives rise to separate contractual liabilities.

Conditions of carriage for passengers

Most of the airline-passenger relations are governed through some terms and conditions set out by the airlines. It is usually referred to as conditions of carriage for passengers. These conditions work as a contract between the travellers and the airline.

After the flight cancellations amid the recent crisis, most of the airlines have decided to credit this amount for future travel. Even though the terms of carriage provide for crediting the ticket amount for future travel, this is provided as one of the alternative rights of the passenger in cases of cancellation, along with the right to choose a refund or re-booking onto an alternative flight at no additional costs.

The present crisis has led to a situation where this agreement between the passenger and the airline stands frustrated. The contractual liabilities have become impossible to be performed due to circumstances beyond the control of the airlines and the passengers, hence invoking Section 56 of the Indian Contract Act, making the contract void.

Obligation of person receiving advantage under a frustrated contract

Under Section 56, through the doctrine of frustration, a party may take a defence against the claims for performance. But if there is any unjust enrichment to that party, out of a void or voidable agreement, it attracts Section 65 of the Act.

Section 65 lays down the obligation of a person to restore the advantage received by one party to the other in case a contract becomes void. The essence of this rule is that there must be a common liability to pay money to a particular person, that the plaintiff has been compelled to pay it by law as mentioned in the contract (in this case, while making a flight reservation), and that the defendant is liable to pay that money after the non-performance. [Monmouthshire County Council v. Smith, (1957) 2 QB 154].

In Govindram Seksaria v. Edward Radbore, the analysis of Section 65 states that each of the parties to a contract are bound to restore to the other any advantage being received before the non-performance of the contract. The Court quoted Lord Russell in Chandler v. Webster, and said

“The money already paid in advance was recoverable, as having been paid for a consideration which had frustrated. The rule that on frustration the loss lies where it falls cannot apply in respect of the moneys paid in advance when the consideration moving from the payee for the payment has wholly failed, so as to deprive the payer of his right to recover moneys so paid as moneys received to his use; but the rule will, unless altered by legislation, apply in all other respects.”

Conclusion

The rights of passengers often become dependent on the whims of the airline companies when it comes to cancelling or rescheduling the flights. They levy upon the customers heavy charges when it comes to availing the services of cancellation or rescheduling.

However, the present situation is totally unprecedented. Although the pre-existing laws like the CAR and the Passengers Charter fail to address the issue unambiguously, a combined reading of Section 56 and Section 65 of the Indian Contract Act does appear to protect the contractual rights of the passengers.

Even though the flight companies can offer to create a future credit from the ticket charges already paid, they cannot deny refund of the full money if the passengers claim so. The frustration of contract of carriage due to the government orders in light of COVID-19 outbreak makes it obligatory for the airlines to restore the right of passengers without allowing any kind of unjust enrichment out of the millions of cancelled flight tickets.

Hence, although the passengers are not entitled to refund, they should be provided with an option to seek a refund in the manner prescribed by the DGCA.

Aastha Singh is a 3rd year student at Gujarat National Law University, Gandhinagar and Gaurav Kumar is a 3rd year student at Dr. Ram Manhar Lohiya National Law University, Lucknow.