US transport dept fines Air India $1.4 mn for delaying refunds of $121 mn

Refunds were on account of flights cancelled during Covid-19 pandemic; AI among six airlines that collectively forked out $600 mn in refunds and $7.25 mn in penalties

The US Department of Transportation (DOT) has fined Air India $1.4 million (around Rs 11.3 crore) for delaying refunds worth $121.5 million (around Rs 985 crore) to passengers whose flights were cancelled during the Covid-19 pandemic.

Air India is among the six airlines that were probed by the US government. Totally, over $600 million in refunds were paid and $7.25 million penalties imposed against six airlines for “extreme delays in providing refunds,” the US DOT said. Other airlines facing the DOT action include Frontier Airlines, TAP Portugal, Aeromexico, El Al Airlines and Avianca.

In a statement Air India said it had accepted the penalty. “Air India confirms that it has received a fine pertaining to delayed refunds which mostly pertain to the pandemic period during which Air India was a public-owned entity,” it said.

“Since Air India was privatised in January, every effort has been made to clear all backlogged refunds, with more than 25,000 cases totaling $18.30 million (Rs 148 crore) successfully processed. New systems have also been implemented to expedite the processing of new refunds which are now turned around, on average, within one week,” Air India said.

In its order the DOT said it had received over 1,900 complaints since March 2020 alleging that Air India failed to provide timely refunds after cancelling or significantly changing consumers’ flights to or from the United States.

“Air India’s stated policy has been to provide refunds to consumers for flights it cancelled or significantly changed. However, a review of the complaints filed with the Department revealed that in practice Air India took more than 100 days to process most of the refund requests that it received,” the US government department.

The DOT said cancelling or changing flights without refund amounts to an unfair practice and warned Air India from repeating it.

In response to the investigation, Air India stated that unlike many other carriers, it maintained a policy of providing refunds upon request regardless of whether a passenger chose not to travel or the carrier cancelled the flight, and made a good faith effort to comply with its obligations to provide timely refunds during the Covid-19 pandemic.

The airline also said extraordinary hardships during the early stages of the Covid-19 pandemic, including repeated closures of its India offices, border closures, and travel bans, significantly hindered its ability to process refunds.