The Tata group-owned Air India has been fined $1.4 million as a civil penalty over delay in refunds amounting to $121.5 million over late or cancelled flights, under an order by the US department of transportation.
Under US law, airlines and ticket agents have a legal obligation to refund consumers if the airline cancels or significantly changes a flight to, from and within the US, and the passenger does not wish to accept the alternative offered.
According to US rules, it is unlawful for an airline to decline refunds and instead provide vouchers to such consumers.
The US department of transportation received a large number of complaints from air travellers about airlines’ failures to provide timely refunds after cancellations or significant changes in flights.
The US department has fined six airlines over delayed refunds, in what it termed as a “historic” enforcement action. The six airlines have collectively paid more than half a billion dollars to people who were owed a refund due to a cancelled or significantly changed flight, the US department said.
According to the consent order issued on 14 November, the Office of Aviation Consumer Protection of the US department of transportation determined that Air India routinely failed to provide timely refunds to passengers for flights to and from the US. Since March 2020, the department has received more than 1,900 complaints alleging that Air India failed to provide timely refunds.
While Air India’s stated policy has been to provide refunds to consumers for flights cancelled or changed, a review by the US department shows that, in practice, the airline took more than 100 days to process most of the refund requests.