Bejon Misra
International Consumer Policy Expert
The story of Indian aviation is less about isolated mismanagement and more about a systemic cycle where ambition collides with structural fragility, leaving passengers stranded and trust eroded. Since liberalization in the 1990s, carriers from East-West and Damania to Kingfisher, Jet Airways, and Go First have risen with ambition only to collapse.
It is very difficult to start and operate a private airline in India. We have witnessed the failure of many private airlines – East-West, Kingfisher, Jet Airways, Air Costa, Go First. The key reasons are unsustainable business models, aggressive expansion without matching revenues, and financial mismanagement. Aviation is capital-intensive: all expenses are paid in dollars while revenues come in rupees. Fuel accounts for 40% of operating expenses and is taxed heavily.
Chronic cancellations and sudden route withdrawals become visible before the final shutdown. When pilots strike over pay, it's usually the final stage. Extremely low-priced tickets from a struggling airline are often just a way to generate quick cash. Delays in refund indicate cash crunch. Frequent technical cancellations, crew shortages, and delayed salaries are clear indicators.
The immediate impact is chaos and confusion. Passengers are left stranded – unable to reach doctor's appointments, business meetings, job interviews, or weddings. Loss of prepaid ticket money. Those who can afford buy last-minute tickets at 5x the price, while those who can't face unresponsive helplines. In the longer term, competition shrinks, fares rise, and consumer trust erodes.
Technically there are many safeguards – but mostly on paper. The DGCA's passenger charter mandates meals, accommodation, rebooking, and compensation. Yet enforcement is patchy. Airlines often delay or deny entitlements. The problem is not the absence of rules but the weakness of enforcement. Without automatic penalties, airlines treat these obligations as optional.
DGCA should act on early warning signs instead of waiting till collapse. There is an urgent need to create a Passenger Protection Escrow Account. The foremost requirement is to prevent airlines from misusing consumer funds. DGCA should conduct quarterly solvency audits and ask airlines to keep a percentage of advance ticket sales in a separate account.
The process begins with the airline's refund channels, but documentation is essential – PNR, receipts, and disruption notices. If the airline fails, escalation to DGCA grievance portals or the National Consumer Helpline should be made. Under DGCA rules, airlines must refund within 7 days for credit card or 21 days for portal bookings. But these processes are long drawn and cumbersome.
This is a major policy loophole. No legal requirements exist to ring-fence ticket revenue. Airlines use advance booking revenue to fund operations. When they fail, that money has been spent. The law treats passengers as unsecured creditors – last in queue after banks, employees, and government. This is not just a financial loophole – it is a systemic abuse of consumer trust.