Let’s imagine some scenarios. Your cousin is getting married in another town. You know the date so you book air tickets for you and your family early enough.
Then, a week before the wedding is supposed to be held, disaster strikes. Your cousin’s father-in-law to-be falls ill. The wedding is postponed to some date to be decided later. Or, there are riots in the area where the wedding is scheduled to be held and there is a postponement.
You go to the airline you booked your tickets on and say that you want to cancel your trip.
If you have bought a relatively expensive ticket, the airline will offer to reschedule your ticket (at an extra charge, of course). You say you don’t know when the wedding will finally be held so you can’t pick a date for the rescheduled flight at the moment. Ok, the airline will say, you have to cancel the ticket then. It will proceed to deduct a large chunk of the fare as a cancellation charge before giving you back some money.
If you are on a cheap ticket, you will not be so lucky. The airline will tell you that your ticket is like a ticket to a movie show. You miss the show, you lose the money. There will be no rescheduling allowed and certainly no refund.
These are rules we have got used to. The airline has a seat ready for you. The plane will fly. How is it the airline’s problem if you choose not to occupy that seat?
As understanding as we are of the airline’s policies, many of us have been surprised to find the opposite is not true.
Assume you were booked on a flight this weekend. The airline, for obvious reasons, is not operating the flight. You, however, are ready and willing to fly. In most situations, the rule is that if airlines cancel flights, they offer full refunds. They have had to cancel the flights; it is not your fault.
The argument is simple: whoever withdraws first is liable. If you back out, you are responsible. If they cancel the flight, you get your money back.
It is a principle that works across the economy. If you order something on-line and pay for it, and if the vendor then can’t give it to you, he refunds your money. People pay for services in advance because they have a reasonable expectation of that service being delivered. Even at the cinema, if they don’t show the movie you bought a ticket for, they refund your money.
So it is with hotels. If you had paid for a room in advance and they were unable to provide it (say, because of overbooking) they always refunded your money.
It is a rule that the airlines are now breaking by trying to get out of full refunds.
Their defences are 1) these are special circumstances.
Well yes, of course, they are. But when we had special circumstances and had to cancel our flights, you told us it wasn’t your problem.
2) It is not our fault, say the airlines. Yups. But is isn’t our’s either. So how come you get to sit on our money? And we are the losers?
3) Our staff are suffering, they say. (At least two airlines, owned by millionaires, have stopped paying salaries.)
This is as true of passengers who also face pay-cuts in their own jobs and need the money.
Passengers are suffering too.
4) Everybody else is doing it during the lockdown, they insist.
This is a complete lie. We don’t do it at home. Do you tell your grocer that you won’t pay his bills because of the coronavirus?
It doesn’t matter that you face salary cuts or delays in payments. A decent person does his or her best to pay money owed to other people.
5) And the second lie in the “everybody is doing it” defence is that people are not actually doing it.
Cinemas are refunding ticket money. The nearest parallel to the aviation industry is the hotel industry which is capital-intensive and employs lakhs of people.
Hotels are closed and, therefore, nearly broke. But I can’t think of a single hotel chain that has told somebody who had paid for his or her booking that the money won’t be refunded. They have just paid it back. Even though the industry is losing crores every day.
This is what you would expect. I can’t see the Tatas stiffing people — either at Taj group or Vistara. Other hotel chains have been as honourable.
So, why do airlines, who must know that they are screwing their customers over, do this?
Well, because they need the cash. Even if (as I hope will happen) they have to offer full refunds eventually, they will have treated the money paid by passengers as an interest-free loan for several months.
That, perhaps, is why they keep opening the ticket windows to sell tickets for later dates; they want to get as much cash as they can without offering a single service. Of course the government steps in and tells them that the end of the aviation lockdown has not been announced. So they have to close reservations again.
But by then, they have got more cash.
Now there is a new factor at play. “Give us money” they tell the government. “Or the aviation industry will go under.”
I have some sympathy with this request but it is worth noting that these same guys did very little to support Jet Airways when it was in the crisis that led to its demise. Apparently some of the more influential ones tried to dissuade politicians from rescuing Jet.
Once Jet went under and thousands of its staff members were unemployed, the other airlines swooped in on the routes, leased Jet’s planes and hired the unemployed staff at a third of their old salaries.
This is a dog-eat-dog-game. Which is fine in a capitalistic economy. But Rottweilers do not make for convincing cocker spaniels. Nobody is fooled by their cries of helplessness.
For all that, I believe that the government should help the industry. But airlines should be asked to first refund the money they owe passengers. The best they are offering at the moment is that you can travel at a new date “after paying the fare difference.” And of course, the fare difference will be huge. So they’ll take even more cash off you.
That’s just not acceptable.
Do airlines have a greater moral right to demand taxpayer funds than say, the hotel industry, the backbone of our tourism sector?
I am not sure they do.
If they get government bail-outs, will they return the money once things go well?
I am not sure they will.
So, here’s my suggestion. The government should get an outside auditor to do a fair calculation of the net worth of each airline.
The government should then (through banks and financial institutions, perhaps) offer to buy shares or stakes in each airline company. That will give the airlines the cash they need to pay their employees. And low fuel rates will keep them flying once this lockdown is lifted.
That way, the taxpayer is secure. We have something of value to hold on to and our money is, if not guaranteed, then at least, much safer than it would be with a bail-out.And the jobs of airline employees are secured.
Once things return to normal the government can sell the stakes back to the airlines at fair market value. If the airlines don’t want to buy them, then they should be auctioned to the highest bidders. Either way, the tax payer should not have to suffer for keeping a bunch of millionaires in business.
Of course, the airlines will ask for the money as a gift. It would be a huge mistake to allow that. In fact, it would be a fraud on the people of India.
There is something about the airline business that gives its owners’ tunnel vision. I have always believed that the reason the Indian public turned against Vijay Mallya was because he refused to pay the salaries of Kingfisher staff.
It would have cost him nothing —- by his standards. Maybe he would have had to sell one of his many vacation homes. But the gesture would have prevented the public from seeing him as a heartless crook.
So it is with the airlines today. Don’t steal money from your passengers. Pay it back and your demands for a bail-out will have more public support.