Tata-led Air India ordered by US to pay $121.5 million as refund to passengers

Washington: According to officials, the US has ordered Air India, which is controlled by the Tata group, to pay a staggering $121.5 million in refunds and $1.4 million in penalties for severe delays in giving reimbursements to passengers owing to flight cancellations or changes, largely during the pandemic.

According to the US Department of Transportation, Air India is one of the six airlines that have agreed to pay back a total of more than $600 million.

Air India's policy of "refund on request" is contrary to the Department of Transportation policy, which mandates air carriers to legally refund tickets in the case of cancellation or change in flight, officials said.

The cases in which Air India was asked to pay the refund and agreed to pay the penalty were before the national carrier was acquired by the Tatas.

According to an official investigation, Air India took more than 100 days to process more than half of the 1,900 refund complaints filed with the Department of Transportation for flights that the carrier cancelled or significantly changed.

Air India could not provide the agency with information regarding the time it took to process refunds to passengers who filed complaints and requested refunds directly with the carrier.

"Irrespective of Air India's stated refund policy, in practice Air India did not provide timely refunds. As a result, consumers experienced significant harm from the extreme delay in receiving their refunds," the US Department of Transportation said, PTI reported.

In addition to Air India, the other airlines that were slapped with fines include Frontier, TAP Portugal, Aero Mexico, EI AI, and Avianca.

The Department of Transportation said Air India was ordered to pay $121.5 million in refunds to its passengers and pay $1.4 million as a fine.

Frontier was ordered to pay $222 million in refunds and $2.2 million in penalty. TAP Portugal will pay $126.5 million as a refund and $1.1 million in penalty; Avianca ($76.8 million in refund and $750,000 in penalty), EI AI ($61.9 million in refund and $900,000 as penalty) and Aero Mexico ($13.6 million in refund and $900,00 as penalty).

In addition to the more than $600 million as refunds that airlines have paid, the Department of Transportation announced that it is assessing more than $7.25 million in civil penalties against these six airlines for extreme delays in providing refunds.

With Monday's fines, the Department's Office of Aviation Consumer Protection has assessed $8.1 million in civil penalties in 2022, the largest amount ever issued in a single year by that office, a media release said.

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.

It is unlawful for an airline to refuse refunds and instead provide vouchers to such consumers, the Department of Transportation said.

"When a flight gets cancelled, passengers seeking refunds should be paid back promptly. Whenever that doesn't happen, we will act to hold airlines accountable on behalf of American travellers and get passengers their money back," said US Transportation Secretary Pete Buttigieg.

"A flight cancellation is frustrating enough, and you shouldn't also have to haggle or wait months to get your refund," he said.