US orders AI to refund $121m for cancelled America flights to customers; fines it $1.4m for delay – Times of India

NEW DELHI: The United States has ordered Air India to pay $121.5 million as refunds and $1.4 million as penalties for extreme delays in giving refunds to passengers for flights mostly cancelled during Covid. Apart from AI, the America’s department of transportation (DoT) has asked five more foreign airlines — Frontier, TAP Portugal, Aero Mexico, EI AI, and Avianca — to collectively pay $600 million in refunds and penalties.
“The US DoT… has determined that Air India routinely failed to provide timely refunds to passengers for flights to and from the US that the carrier cancelled or significantly changed.… Since March 2020… (we) received over 1,900 complaints (regarding AI refunds). AI’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 AI took more than 100 days to process most of the refund requests that it received,” the DoT order dated November 14, 2022, says.
It adds that AI admitted failing to “provide timely refunds” to passengers who requested refunds and that the airline has been directed “to cease and desist from future similar violations.” Maharaja’s refund mostly cases date back from its penurious state-owned days. The Tatas took over the airline this January. Confirming the DoT fine, AI said in a statement: “We very much regret that customers were inconvenienced and accept the fine. Since AI was privatised in January 2022, every effort has been made to clear all backlogged refunds, with more than 25,000 cases totalling $18.3 million 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. We have publicly invited anyone who feels they have a refund due from Air India to contact us at ,” the AI statement added.
The DoT order says AI took more than 100 days to process more than half of the 1,900 refund complaints filed with it for US flights that were cancelled or significantly changed. “Irrespective of AI’s stated refund policy, in practice AI did not provide timely refunds. As a result, consumers experienced significant harm from the extreme delay in receiving their refunds.”
The airline has told DoT it has a “liberal refund-on-demand” policy. “AI asserts that it has waived applicable change, cancellation, and no-show penalties for ticket refunds worth over $98 million, resulting in passengers receiving full refunds who were not otherwise entitled to them. AI states that it faced extraordinary hardships during the early stages of Covid-19, including repeated closures of its India offices, border closures, and travel bans, which significantly hindered its ability to process refunds,” the order says.
“AI argues that because it did not mislead passengers about their rights and because its refund-on-demand policy is more liberal than that required by the regulation, its penalty should be reduced. Nevertheless, AI has agreed to this settlement in the interest of avoiding litigation,” it adds.

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