DGCA plans overhaul of air ticket refund, cancellation rules
Flight ticket booking concept with downtown San Francisco skyline buildings
| Photo Credit:
Melpomenem
India’s aviation regulator has proposed an overhaul of airline ticket refund and cancellation norms.
The Directorate General of Civil Aviation (DGCA) has outlined a framework aimed at addressing long-standing passenger grievances over high cancellation charges, opaque fare structures, and delayed refunds.
Among the far-reaching measures, the DGCA has proposed that passengers be entitled to a 48-hour “look-in” period after booking a ticket.
This would allow passengers to cancel or modify their reservation without any additional charge — except for applicable fare differences — during that window.
At present, most airlines do not provide a penalty-free cancellation or modification option once a booking is confirmed. Any change or cancellation typically attracts a fee from the moment the ticket is issued, leaving passengers with little flexibility if plans change within hours of booking.
The other significant proposal is with regard to capping airline cancellation fees, with the DGCA stating that under no circumstances can airlines or their agents charge more than the basic fare plus the fuel surcharge.
Besides, any additional levy by travel agents must be fully disclosed at the time of booking, the draft stated.
Cancellation charges
Currently, cancellation charges are unregulated and vary widely across airlines. In several cases, the cancellation fee can exceed the base fare, effectively making refunds negligible.
The draft further stated that airlines must process credit card refunds within seven days of cancellation, while cash refunds must be made immediately at the airline’s office.
Furthermore, refunds for tickets purchased through travel agents or online portals must be completed within 21 working days.
Presently, refund timelines differ significantly among airlines, with passengers often waiting several weeks—especially for tickets booked through travel agents or aggregators.
The DGCA’s proposal seeks to standardise these timelines and make airlines accountable for delays, even when bookings are made through intermediaries.
As per the regulator’s proposal, all statutory taxes, including the User Development Fee (UDF) and Passenger Service Fee (PSF), must be refunded in case of cancellations or no-shows.
These components are frequently forfeited when a passenger cancels a ticket, even though the services corresponding to these fees are not utilised.
Notably, the regulator proposed that airlines cannot impose extra fees for processing refunds or correcting a passenger’s name within 24 hours of booking.
As of now, passengers may be charged separate administrative fees for refund processing or for making minor corrections in their names, even within a short period of booking.
The DGCA has also clarified that holding refund amounts in credit shells must be the passenger’s choice, not the airline’s default practice.
Sometimes airlines retain refund amounts as credit shells automatically, forcing passengers to reuse the credit within a limited time window.
In addition, the DGCA has said that refunds or credit shells will also be permitted in cases of medical emergencies, but only at the passenger’s discretion.
As of now, such refunds are handled on a case-by-case basis and depend largely on airlines’ goodwill.
“With this new policy, the biggest impact will be on online travel agents as they will now be required to hold a 48-hour reserve on passenger bookings without any escalation in price,” Mark Martin, Chief Executive of Martin Consulting told businessline.
“This will create a strong level playing field and protect consumers from predatory pricing by airlines.”
According to Jagannarayan Padmanabhan, Senior Director & Global Head, Consulting, Crisil Intelligence, the DGCA’s proposed overhaul brings India’s refund and cancellation rules closer to global best practices such as the US DOT and EU EC261 frameworks.
Published on November 4, 2025
