Airlines' 'zero cancellation fee' offers gaining popularity

'Zero-cancellation' offers on airline tickets made by the travel booking portals and sometimes by the carriers are increasingly gaining popularity among fliers, say industry experts.

Interestingly, most of the airlines have recently lowered their cancellation charges after being reprimanded by junior aviation minister Jayant Sinha, industry analysts claim.

According to an estimate by industry travel agents, around 15-20% of customers opt for 'zero-cancellation' offer at the time of booking as it offers them the freedom to cancel their tickets at later date.

The high cancellation charges are so discouraging for fliers that a couple of travel start-ups offering 'free cancellation' for a one-time payment of around Rs 5,000 annually have cropped up recently.

Industry experts claim that around 4-5% of total bookings end up getting cancelled.

Considering the fact that India is the third largest aviation market in terms of domestic passenger traffic with 100 million passengers flying in 2016, 4-5% cancellations is a huge number, experts say.

As per Aloke Bajpai, CEO and co-founder of travel booking portal Ixigo, a majority of users opting for this (scheme) are people booking a month or more in advance and consist of leisure travellers and frequent flyers (who self-book and want flexibility).

"It seems that the trend will grow as it gives consumers more flexibility. However, we have to wait and watch how this 'no-cancellation fee offer' will pick up keeping the recent DGCA (Directorate General of Civil Aviation), announcement on capping cancellation charges on flights," said Bajpai.

The industry insiders claim that cancellation charges are so high that it also discourages the passengers from making an early booking even if the ticket charges are very low.

In matured markets like the US and Europe, early booking is a norm as people tend to plan well in advance as cancellation charges are way lower.

Iqbal Mulla, chairman, Global Tourism Council (GTC), described the cancellation policy adopted by the Indian airlines to be 'draconian', discouraging the growth of prospective fliers. "High cancellation charges certainly benefit the airlines as the passenger hardly gets anything back. This is the reason schemes like zero-cancellation are gaining traction among the frequent fliers," he said.

The DGCA rules mandate that under no circumstances the airline shall levy cancellation charge more than the basic fare plus fuel charges.

However, the civil aviation ministry has been receiving hundreds of complaints every month about high cancellation charges being levied by almost all the airlines operating in India.

Even the paltry amount that is supposed to get returned to the passenger is delayed by the airline. Further, at times, the passengers complain that instead of returning the money, the airlines insist on adjusting the amount against future travel and that too within a limited period of time.

The issue of high cancellation charges was raised after junior aviation minister Jayant Sinha recently raised concern over the flat Rs 3,000 domestic cancellation fee, calling it too high.

DGCA, which then got into action, is believed to have written to the airlines, asking them to provide the data on the flight cancellation charges levied by them. This prompted the airlines to make changes and tweak their cancellation charges as per the DGCA guidelines.

A random check on the airline's website reveals that most of them now charge around Rs 3,000-3,500 or basic fare plus fuel charges, whichever is lower.

"In a move that will definitely bring holiday cheer to passengers, domestic airlines have revised their cancellation charges and shall now charge the base fare plus fuel surcharge or Rs 3,000 per passenger, whichever is lower. This move will come as a respite to flyers, especially to those who book their tickets well in advance in order to get cheaper prices. It will also benefit those who are travelling on shorter routes where the fares were lower than Rs 3,000 and should help in lowering customer grievances which are largely around the issue of the quantum of charges levied on cancellations," said Sharat Dhall, COO (B2C), of travel portal Yatra.com.