Should Govt bailout airlines? Why and Why not?

Should national governments spend taxpayers money to rescue airlines in distress due to corona virus breakout? Are there any real benefits of this act or is it sheer wastage of public money? In this article let us try to assess the situation and weigh the pros and cons of possible govt bailout to private airlines.

Arguments against govt support to private airlines:
Those who oppose any kind of Govt funding to private airlines offer following justifications/points to support their point of view:

• Flying is a luxury, not an essential service.
• Airlines never share their profits with Govt. Why privatize profits but publicize loss?
• Why prioritize airlines? There're dozens of other industries that are in distress
• As such airline industry is capital intensive, low margin and high competition. Probability of airlines making profit is low even after govt bailout. Why waste public money?
• I want my taxes to be spent on poor people, to build hospitals and other social welfare measures, NOT to subsidize someone's holiday travel

These are fair points. Prima-facie it appears fair. Majority of India's people may not feel the difference if airlines fly or not. We'll park these thoughts aside and proceed with next sub topic:

What is expected to happen with India's aviation industry without Govt support?

This detailed CAPA report says many Indian airlines will shut shop within few months without govt support. Situation is similar all around the globe. Below is the current numbers for India- fleet size and market share

#	Airline	Current fleet	Domestic Market Share (%)
1	Air India group (AI, AI Express, Alliance Air)	166	11.6
2	Indigo	261	48
3	Spicejet	114	16.5
4	Go Air	57	9.8
5	Vistara	41	6.5
6	Air Asia India	30	7
7	Others (Star Air, Trujet etc)	7	0.6

• Of the above, Air India is anyway in a loss and will continue to be supported by Govt with or without bailout, till a buyer could be found. So Air India is mostly likely to survive this crisis. But will Govt manage to find a buyer? Will they decide to keep pumping money forever or would it make sense to shut down Air India over a period of time? We don't know.
• Indigo has strong balance sheet, has initiated salary cuts and other measures and will most probably survive the crisis assuming things improve within a few months.
• Spicejet & GoAir seem to be most vulnerable among India's airlines.
• Vistara and Air Asia India will most likely survive the crisis- Both of these companies have less aircrafts (30-40 each) and have backing of major corporate houses (Tata Group, Singapore Airlines, Air Asia Malaysia). So assuming corona virus crisis ends in a few months, Vistara and Air Asia will mostly manage but may have to cut routes and halt expansion.

Assuming two airlines shut down and others cut their network significantly to cut losses, below will be the impact:

• Ticket Price will shoot upwards, particularly for non metros. Surviving airline will try to extract its pound of flesh from passengers who do not have any options
• Unemployment for employees of failed airlines and its ripple effect on secondary businesses (catering, ground handling etc) and subsequent impact to govt (reduced tax collection) and other industries (like hotels)
• Airport fees may increase: Airports will not have to recover their fees from lesser number of passengers, so per passenger fee will go up.
• Losses to banks, lenders and investors: When airlines go bankrupt, Banks that have loaned money will have to write off, other lenders also need to salvage the situation. Investors need to take the hit, including retail investors who have bought airline shares.

Why won't promoters pump in more money?
Airline owners are usually rich people. But they are pure businessmen and not charity workers. They always look for potential profits before pumping more good money after bad. If they feel it is not worth, they are happy to let an airline collapse. They all have enough personal wealth to live comfortably for rest of their life somewhere far away (say London) and many not have any motive to invest more. Even if they want to, airline is a capital intensive industry- a few crores won't work- hundreds crores will be needed. Any investor will hesitate to pump so much money.

Arguments in favor of Govt bailout for airlines
While companies run with pure commercial motive of making money for their investors, Govts have larger obligations- to keep people employed, to keep economy running and to ensure essential services keep functioning. Current Corona Virus crisis is not personal fault of airlines. It is a global problem. Only well funded Govts can assist major industries in recovery.

If a government infused funding prevents an airline from collapsing, below are the direct and indirect benefits.

Direct benefits:

• Jobs preserved: Depending on the size of an airline, several thousand jobs will be saved
• Indirect jobs supported: When an airline keeps flying and people travel, thousands of indirect jobs can sustain-such as
• Taxi drivers, 
• Hotel staff, 
• Airport staff, 
• Airport store employees, 
• Ground handling, 
• Travel agents & travel/holiday portals
• Domestic help/people employed above people in Aviation industry
• Increased Tax Collection: A part of funds induced by govt comes back to the govt in the form of tax. 
• Employees pay income tax, 
• Various services like tickets, hotels, airport/in-flight purchases, taxi booking are all taxed at various levels, 
• Petrol filled by taxi driver after dropping off a passenger brings tax.
• Business generated by travel results in tax and so on
• All these potential tax revenue will vanish if air travel doesn't happen
• Less stress on economy: If an airline keeps running, banks don't have to declare existing loans as NPA. With travel and tourism resumed lots of money circulation happens and economy will keep going

Indirect benefits

• Prevents cartelization: If only two airlines remain, they can cartelize the market, increase prices and exploit passengers. Having at least 3-4 players in the market sustains competition and keeps prices in check
• Country's reputation: Allowing major corporations to fail spoils a country's image as investment destination.

What should be the right way to invest?
There is a perception that Govt bailout means giving free money to airlines. This is not necessarily true. There're multiple ways Govt can offer support:

• Option 1: Equity infusion: Govt invests money against shares. Later if airlines make profit and share prices go up, Govt will get good returns on the investment made.
• Option 2: Loan against collateral: Govt may ask banks to give loans against some kind of collateral. Assuming the collateral is good (like aircrafts, buildings or other assets), this is relatively low risk
• Option 3: Relaxed policies and taxes: By reducing tax, by removing some restrictions Govt can support just by taking a cut on its revenue and making travel cheaper
• Option 4: Provide other stimulus to encourage travel: Cheaper/easier visa norms, increased Leave travel Allowance, tourism campaigns to encourage more travel etc can also restore demand, without any direct infusion of money into airlines.

Why airlines? Why not other industries?

• Last year Automobile Industry made desperate plea for Govt help, but Govt turned a blind eye.
• Many other industries have also sought tax relief. 
• Govt did nothing when Kingfisher and Jet Airways went belly up.

Govt's funds are also limited, so it may not act unless absolutely necessary or until situation gets very desperate.

From a Govt's point of view, following factors hold importance

- We can't bail out everyone- what are the probability that everyone else will line up if we bail out this industry?

- How essential is this service? Can people manage without this industry?

- Positives of providing a bail out- will it help recover economy, will it save jobs?

- How bad is the risk of not doing anything? Can we get away without giving bailout?

- People's perception: Would a bailout be seen in wrong perception? Would it affect our votes?

What is happening around the world?
USA: Airlines are likely to get 60 billion $ out of 2 trillion govt bailout package
UK: Virgin Atlantic has sought Govt funding to sustain country's airlines
Norway: Norwegian has sought Govt lifeline to survive

Most airlines around the world are struggling and desperately counting on Govt lifeline to stay afloat. It remains to be seen which all govts will bailout their airlines and how many airlines will wind up.

Should govt fund all airlines?
I don't think so. Airlines that were in deep loss well before Corona Crisis, Airlines known for poor management or airlines that do not have much hope of recovery and profit in near future may probably be left to wrap up. If there's no reasonable hope for an airline to survive and turn profitable, providing temporary lifeline is waste of public money.

When will this Corona Virus Crisis end?
Assumption world wide is that crisis will be under control in 3-6 month timeline and travel may resume towards the end of this period. But this is only a hope and we need to see how things improve or worsen over time.

What are your thoughts? Would Govt of India bail out India's airline industry? Do you think it is good idea? Would you be fine if 3-4 airlines go bankrupt? 

My flight is canceled due to Coronavirus- What to do? Quick Reference Guide

India has declared lock down till mid April and both domestic and international flights are cancelled. Many of you have an upcoming flight are worried about getting your money back. If your flight is affected what to do? Here's a quick reference guide.

Before you proceed, keep following answers ready:

1. Which airline?
2. When did you make the booking?
3. When is your travel date?
4. Did you book directly with airline or a 3rd party site?
5. What do you prefer? Rescheduling? Credit points (money remains with airline but can be used for new booking within a time frame) or full refund?

How you are treated for your cancelled flight largely depends on your airline's policy. Here're major ones:

• Indigo's COVID-19 Policy: Indigo customers whose flights are cancelled or have tickets till April 30, 2020 can either get free reschedule (fare difference payable) or take a credit shell which needs to be used before Sep 30, 2020 (travel date can be for later, but booking should be done before Sep 30)
• Spicejet's Corona Virus Policy: Spicejet will NOT give refund, but will give full amount in a credit shell which needs to be used for a new booking by same person for travel before Feb 28, 2021 (this is for flights till April 14th only)
• Vistara: No need to rush- all PNRs for travel dates till April 30, 2020 remain valid till Dec 31st, 2020- you need to select a new date before this time frame and reschedule. No fare difference if new travel date is before end of 2020, else fare difference payable.
• GoAir Policy: For all travel till April 15th, even if you don't do anything, your ticket is preserved (similar to Vistara but fare difference is payable)
• Air India: Bit slow to update, as per this PDF, Air India is allowing one free rescheduling for all bookings with travel dates till 30th April, to be done before May 31st 2020. 
• Air Asia India: If your flight is cancelled by Air Asia India, you can take credit account (need to be used within an year) or reschedule your flight (No extra charges, new dates should be before Oct 31st 2020)

What is credit account/Credit Shell?

Credit shell is like airline will not give cash refund, gets to keep your money but you get to book a new ticket for same value subject to certain rules

- Pay attention to use by date: Like you need to use the amount in credit shell before certain date fixed by airline (1 year for Air Asia, Sep 30 for Indigo etc)

- Fare difference need to be paid. If your current ticket is 5k, you will get credit of 5k. If same ticket costs 8k later, you have to pay 3k more. But if same ticket costs say 2.5k in future, you save.

- Restrictions- Spicejet needs new ticket to be booked in same passenger name. Indigo also restricts that new tickets should be in same passenger's name. These restrictions make it tough if the same person doesn't have the need to travel in future. AirAsia allows change of sector, passenger etc, provided you'd booked with your Big ID.

Why airlines are NOT providing full refund?

Twitter is full of frustrated customers asking for 100% refund. However India's airlines are adamant that they will only give credit account or rescheduling. Think of it from Airline's point of view:

- Corona Virus and subsequent low demand/willingness to cancel is not airline's fault

- Airlines are ready to fly but Govt of India has banned the flight

- If every booking is refunded, airlines will have no cash to survive and will have to go bankrupt.

- From airline's point of view, credit shell and free rescheduling options are fair compensation, customers shouldn't ask for refund and eat their head.

What is best for me? What should I do?

Scenario 1: My travel date is beyond April 30th, ticket value under 5000 INR

Best approach: Do not rush to cancel. If you cancel now you will have to pay regular cancellation fee. Wait till mid April to see if lock-down/ban gets extended or skies open up. If flight ban gets extended you will qualify for rescheduling/credit shell, which is better than paying around 3000 per person one way in cancellation charges.

Scenario 2: My travel date is beyond April 30th, ticket value above 5000 INR

If you have paid say 10000 per ticket and do not have any intention to travel, may be you want to cut your loss, pay cancellation, take back 7000 INR in cash. This is again your call. If lock-down continues you will qualify for free rescheduling or credit shell, so if you still want to travel, wait for clarity, but if you have no intention of traveling at all, taking refund at a loss might be worth it. We don't know which airline will survive this crisis- if your ticket is 6 months from now and the airline is not really financially strong, you've to make a tough call.

Scenario 3: My flight is cancelled (travel before April 14th)

Decide if you'd like to reschedule (i.e. postpone your trip) or take credit shell. If your destination is fixed and you've to go there anyway, then rescheduling is best, particularly if your ticket was relatively cheap.

If you are flexible on where to go, or if you've above average fare for your ticket then may be you can take credit shell. You can go somewhere else with same money or if price drops later, you can go to same destination for lesser amount.

Scenario 4: Flight between April 15th and April 30th

If you really really want to travel you can hold on and wait if situation improves and if flights resume.

If you don't want to travel then depending on your airline's policy, either reschedule or take credit shell

I want a refund- what can I do?

Right now there's no easy way- you can scream on social media but don't think airlines will budge. Their survival is at stake. (similar to how RBI put restrictions on Yes Bank/PMC bank account holders when bank was in trouble). We can try pressurize govt to make airlines give refund- don't think that would work as eventually Govt will have to rescue airlines anyway.

Find other affected passengers who are also desperate to get refund, plan further action such as legal course, class action lawsuits etc- these options take lots of time, effort and energy but if the amount involved is significant and rescheduling is not an option for you then proceed with legal option.

What is the best way to reach your airline?
Most call centres are overloaded, social media teams are overworked. Do not expect instant response and action. Do the following
- Understand airline's policy and identify what works best for you
- Try to use website/app or chatbot to the extent possible, this will take the load off human staff.
- Take advise from known travel bloggers/airline bloggers/aviation enthusiasts- they can give more realistic, practical way out than official channels which often parrot template replies and are not authorized to do certain things (like giving refund)
- If you have to contact the airline call them 3-4 days before travel date if possible. This will allow them to attend those who have more immediate travel disruptions.

My booking was done via MMT/Yatra/Cleartrip/Easemytrip/Goibibo etc- What to do?

Most of these portals have declared a policy "if airlines give refund we will give refund" knowing very well that airlines won't refund. So trying to fight with them will be waste of time.

See if you can get your ticket refunded/credit shell claimed directly on Airline website. For a few cases I tested, you can reschedule your ticket directly on airline website even if booking was made on 3rd party site. If it can't be done, with with your travel portal to get the rescheduling done. I am not very sure how credit shell works with travel agent/OTA bookings.

Update: OTAs are advising credit note will be automatically shared within few days and there's no need to cancel. However to avoid any tricks/confusion later, to ask for written communication and read the fine print.

It is best to deal directly with airline even if it costs a few rupees more. Less headache in the time of disruption.

What about international flights?
Situation is largely similar worldwide, however process may vary depending on your airline. Most flights are cancelled, among those operating you need to be sure destination country will accept you. Best to postpone all international travel by minimum 3 months and watch how things go over next few weeks. Let me know if you face any peculiar situation.

Here's a post on how Air France and Amex are hand in glove to refuse refund to customers.

What will happen to flights booked via miles?
Miles status will mostly be frozen and miles will be restored - but I don't have too much experience/expertise on this, so check with your respective airline.

Will I be able to travel after April 15?
No one has answers for this. If the Corona Virus gets under control by mid April, countries around the world may remove travel restrictions. If not the ban may extend. Do not make any plans yet, also do not rush to cancel everything yet. Depending how situation is by say 10th April, take a judgement call.

India Aviation News Update19th March

Here's a quick roundup of India Aviation industry developments of the day

Flights over India as of now- from Flightradar24

1. All international flights banned from March 22nd till March 29th
Govt has banned all international flights for a week from March 22nd till March 29th. Those who are outside and wish to return home still have about 2 days. [News]

This is in addition to already announced bans on flight from Malaysia, Afghanistan, Philippines, Europe, UK etc.

At this moment if you are outside India, best is to stay in that country, isolate yourself and wait out till things get better. Don't rush to airport without confirmed itinerary. Do not worry about visa expiry- I am sure countries around the world understand the situation- it should be fine if you overstay your visa for a week or two.

2. Indigo announced pay cuts
Indigo has announced salary cuts across the board, from 25% to 5% in order to conserve cash. Indigo has good cash reserves and is most capable airline to withstand the current storm, but with no clarity how long the crisis will last, no amount of money is enough, so it helps to be conservative. [News]

3. Spicejet cuts international flights
Spicejet has announced curtailing most of their international flights, except for Dhaka. But even that will be suspended given Govt has banned international flights.

4. Govt readying package for Aviation Industry?
A 12000 crore package is being readied? This news report suggests

5. Stranded Indians in Kuala Lumpur and Iran
Several Indians are stranded in Kuala Lumpur as India banned flights from Malaysia. Several Corona Virus +ve people are stuck in Iran- these are testing times- every additional arrival carries a huge risk of someone in the group being Corona Virus +ve and then spreading it to dozen others while they return to India. Several individuals defy quarantine instructions and are caught traveling in train, roaming around in city, aiding in spread of the virus

6. GoAir and Vistara have already announced suspending international flights, which is anyway now not allowed since international flights are banned.

With international flights suspended, some nice widebody aircrafts are being flown on domestic route- Vistara flying dreamliner on Mumbai-Delhi route, Air India may fly them on some domestic routes as well.

Domestic flights continue to operate, with fares touching 30000-40000 INR one way on select routes.

You can now pay international fares and fly domestic

With Corona Virus crisis mounting, air fares to some under-served sectors have shot up. Flying to Imphal from Bengaluru now costs almost 30k one way- an amount with which you can reach all the way to Australia/UK or even USA.

Pune-Imphal 44k INR one way

BLR to Imphal (Manipur) now costs almost 28k one way, that too with 2-3 stops.

Of course last minute fares will be high, but I believe there should be an upper ceiling.
Delhi-Imphal

AMD-Imphal

Nothing beats Vistara's asking of 58k between Chennai and Port Blair some time ago.

Bulletin: 10 point updates on aviation industry you should know

Airline Industry is undergoing massive changes due to Corona Virus crisis. Unless you follow the industry closely, it is hard to keep a tab on all the news and developments that are going on. To help you stay updated, here are major airline industry updates of recent times that you as a potential future passenger should be aware of.

Flights in the air as of 7.30 PM IST, 16th March 2020

1. Airlines staring at possible bankruptcy
Several airlines were already in deep financial crisis before the Corona Virus and now their situation are even worsened. Following airlines are staring at bankruptcy, unless they get government help or some other miracles happen.

• Norwegian: Norwegian Air Shuttle, based Oslo had mastered the art of low cost long haul flights, connecting Europe to USA and Asia (Thailand), as well as within Europe short haul flights. I flew with them twice and it was great experience (they gave free in-flight WiFi back in 2013).  At present, Norwegian has 3000 flights, has fired half its staff and is seeking Government support to stay afloat. [Details]. Unless Norway Govt decides to roll out some funds, Norwegian may simply wind up.
• Flybe, UK's largest regional carrier has already shut down and declared bankruptcy.
• Virgin Atlantic has asked for a 7.5 billion pound bailout package from UK Govt [News]. Looks like this amount is not entirely for Virgin Atlantic alone but for entire UK aviation companies
• Unconfirmed new claims Iberia is staring at shutdown as Spain goes into lock down [source]

This report even suggests that most airlines will go bankrupt by end of May if Governments do not interfere.

2. Temporary suspension of all flights/Airport closures
Some airlines around the world are striving to conserve their cash and slash expenditure by stopping operations altogether.

• Scandinavian carrier SAS has indefinitely shut down operations awaiting situation to improve [more details]
• Slovakian Airport is shut down for international flights [News]
• LOT Polish has suspended all its flights [News]
• Saudi Arabia suspends international flights for 2 weeks [Details]

3. Fleet Reductions

Where airlines are operating, almost every airline is cancelling flights. The non profitable routes, countries with severe travel restrictions and so on.

• Major US Carriers, Delta, United and American Airlines all have almost stopped their flights to Europe and Asia for a month or two (to be reviewed later depending on how situation improves). Some long term plans like proposed BLR-Seattle direct flight by American are left untouched as of now, that may change in future.
• Most airlines (excluding Emirates may be) are grounding their fleet of A380 super jumbos. These are expensive aircrafts to operate and not at all profitable unless every seat can be filled. Given the current situation, airlines are grounding older planes and uneconomical planes. 
• KLM is retiring their 747s an year earlier. [News]
• Cathay Pacific has cut most of their operations and running a small number of flights
• Air India and other Indian airlines cut flights to Europe, China & Middle East
• Lufthansa has announced as many as 43000 flights will be cancelled in April [Source]
• Air France KLM is cutting flights
• Ryan Air grounding most of its fleet

Contextual image- An American Airline aircraft in Nassau, Bahamas, clicked April 2019

4. Countries banning foreigners- travel restrictions, visa cancellations

Even when airlines are willing to operate, several countries don't want foreigners now. Qatar, Denmark, Sweden and many other countries have closed their borders to foreigners in a bid to prevent Corona virus spread. Even India has suspended already issued visas. Thus even if you are willing to travel you need to be doubly sure that destination country will accept you and airline you have your tickets on is operating the flight.

India bans all flights from Europe, UK, Turkey

Safest thing seems to be to return to your home country asap and wait for situation to improve.

5. Refund mayhem

Millions of passengers around the world are trying to cancel their flights and take their money back. However airlines need to survive too and can't afford to give full refund to everyone. While most airlines are allowing a free rescheduling subject to certain conditions, refunds are allowed only if your flight is cancelled or in some select cases where airline is generous to allow full refund. 

If you have an upcoming flight, do not clog call centre numbers unless you are traveling within next few days. Wait to see if your airline cancels the flight- in which case you will get full refund. If not, check for airline policy on refund, which could vary based on travel dates, booking dates, destination etc. If you qualify for a refund/rescheduling or credit then decide your option and proceed. If not, you may have to pay normal cancellation fees.

Corona virus is not really airline's fault, so they are sort of justified if they don't want to refund when flights are being operated but passengers are not willing to fly. But again, airlines need to retain goodwill of their customers, so it is a tough balance.

Here's how you can minimize travel loses due to Corona Virus.

6. Massive Airfare discount sales

Some airlines are running discount sales. Air Asia was selling domestic tickets for 12 MYR (INR 210). While the low fares could be tempting, you have to factor following aspects

• Financial health of the airline- will this airline survive another 12 months? Is it safe to book with them? This is because most airlines collect money from future sales and spend it for current operations
• When will Corona Virus crisis end? Is it safe to book a ticket 6 or 9 months from now? No one knows. If things don't improve can you take the loss? 
• Are the fares really cheap? A 10% off is not cheap enough. If you have to take big risk and book, savings should be very high- 50%+ over normal fares in my opinion. There is every chance that a even bigger discount is coming up. If you are not fully convinced, wait.

Here's how you can prepare well from now itself to travel once Corona Virus situation gets all clear.

7. Overall Impact on Hospitality Industry

The travel restrictions will have effect on entire hospitality industry. Hotels, theme parks, tourist attractions will be empty, jobs will be lost. When you decide to travel post Corona virus scare, you also have to check if the destination is ready to receive you.

Air BnB has announced full refund to all guests globally (Except China). Other brands have also relaxed their refund rules.

8. Desperate attempts by travel portals to portray a happy picture.

Several travel portals, online travel agents and are hard hit by almost no future bookings and existing bookings being cancelled. Some of these companies are found to mislead customers trying to say it is safe to travel and travel restrictions are not prudent.

However, remember the following

• Unless airlines give full refund, these travel companies will not process refund if you wish to cancel
• OTAs often charge additional cancellation fee in addition to airline cancellation fee
• At times it is better to deal directly with airlines. You don't want to be thrown around by both airline and OTA asking you to check with other party.

9. Empty planes, airports and streets

Inputs from flying public confirm the grim situation aviation industry is facing. Several flights and airports are almost empty. However there is a rush on select routes where passengers struggle to return to their home country before situation gets worse. But this high demand is temporary.

Airline's need to balance safety (risk of Corona virus spreading), survival (operate some flights, keep making money) and critical needs (like students wanting to return home, emergency personnel travel etc)

10. Airline's desperate survival attempts

Airlines are resorting to desperate measures to stay afloat.

• Many passenger planes are being used to ferry cargo [Scoot * Cathay]
• Employees are either being fired or given unpaid leave
• IT investments on hold
• New aircraft deliveries to be deferred
• Requesting govt support
• Extreme cost cutting measures.

Challenging times ahead and situation is getting worse each day as of now. Need to see when it reaches its peak and starts improving.

Have I missed anything crucial? Got any comments? Do share.

GoAir & Spicejet: Delhi to Leh/Srinagar 4000 INR return

Flying to Leh is usually an expensive affair. Due to limited options, air fares are usually very high, around 5000-8000 INR just one way and return trip costing 13-17k INR for last minute bookings. Even for a well planned trip, one needs to budget INR 10000 to fly to Leh. Because of this high fares many prefer to drive/take bus or other cheaper modes.

At present GoAir is selling Delhi-Leh tickets for about INR 4000 return. (INR 3700+ convenience fee) This information was a tip of Courtesy Amar Singh Solanki, who runs Lily holidays & Travel planner services.

If you book on either Spicejet/GoAir website you will have to spend a bit more, but then you will save more if you have to cancel. You don't have to incur Makemytrip cancellation charge in addition to airline charges. Decide which works better for you

Mumbai to Leh return is about 8000 INR, which is like Mumbai-Delhi sector for INR 2000 one way.

Similar fares are available to Srinagar as well.

If you are optimistic about the Corona virus pandemic getting sorted before July/August, you can take a risk and book these tempting low fares.

AirAsia's Corona Virus Refund process explained

March 18 Update: Govt of India has banned flights from Malaysia, Philippines and Afghanistan. This is bound to affect Air Asia heavily. If you have a flight in and out of India till 31st March, your flight is mostly cancelled and this will make you eligible for full refund.

---------- Original Post ------------------

Air Asia is a major low cost carrier in South East Asia flying to dozens of countries in the region. AirAsia sells tickets years in advance and because of their tempting low fares, many customers would have booked their trips months in advance. Now that world is struggling to come out of Corona Virus (COVID-19) crisis, most passengers do not want to travel, to minimize risk and to aid in speedy recovery from the crisis. However airlines need to stay afloat and can't afford to give generous refunds to every passenger. Airlines around the world are scrambling to define their Corona Virus refund strategy- while a few allow full refund (for select dates and destinations) others are only offering rescheduling (again subject to conditions). Because Air Asia is one airline I track closely, I am compelled to explain their refund policy for this scenario in detail.

If you have an upcoming flight on Air Asia and wondering if you can cancel it for free, this post is for you.

Air Asia has announced their Corona Virus cancellation policy here
https://support.airasia.com/s/article/Covid-19-Refund-Request-Guide?language=en_GB

Below is a quick interpretation for you.

• India domestic flights (I5) do not qualify for any kind of refund. Free rescheduling is offered if your travel date is before 31 March.
• Don't expect full refund, except in select cases like Air Asia cancelling the flight. Almost all other cases only qualify for "Move flight", or Credit Account.
• Passengers with tickets to select countries and select travel dates are eligible to move flight or take refund in credit account. For others, sorry!
• Air Asia Move flight is an option where you can select a new travel date within 15-30 days of current travel date. (Similar to what other airlines refer to as "Rescheduling", but no need to pay fare difference)
• Air Asia Credit account is where your money will be refunded in full, but not in cash. Amount will be credited to your Air Asia big account and YOU HAVE TO USE THIS WITHIN 90 DAYS, else this will lapse. One advantage is you can use the same money to fly anywhere else, not necessarily your original destination, but disadvantage is you've to decide and spend it within 90 days, irrespective of fares, irrespective of how worse Corona Virus scenario gets.
• You don't qualify for any refund/rescheduling if the country you're headed to hasn't taken any drastic measures like revoking visa, declaring emergency etc. That is, if your destination is Australia, Vietnam, Indonesia, Cambodia, Laos and various other countries on Air Asia network which haven't banned entry or sounded an alarm, then you have to either proceed with your trip or cancel without any refund.

What will happen to my prepaid meals, seat selection, baggage charges?

Unless your ticket qualifies for refund, all pre-paid add-on services are gone with the wind. Air Asia will not refund the amount paid for meal/baggage/seat selection etc if you don't fly. If I decide to cancel my flight and communicate it to airline a few days ahead of travel, in my opinion these pre-paid services should be fully refunded, as the service is not availed and there's no real loss to Air Asia. But airlines are reluctant to give back the money they have pocketed so will hide behind tricky refund policy and insist these are non refundable. I scanned Air Asia's policy thoroughly but couldn't find any assurance that add-on service fees will be refunded. Have asked them a question on twitter- will update if they reply. 

This is the very reason I never buy add-on services upfront with the ticket. Their prices are stable and do not increase exponentially as travel date comes closer- so there's no reason to select all of them up front. As travel date comes closer, selectively buy add-ons that you absolutely need. Lot of times cost of baggage will be more than cost of flight ticket. So you lose more on add-on service fees than on flight ticket fare.

What will happen if you have multiple PNRs?
If you have one ticket from India to KUL/DMK and a separate PNR for somewhere else from there, then things get more complicated. One PNR may qualify for refund/move-flight while other may not. Each PNR needs to be dealt individually.

How to avail refund/rescheduling?
Air Asia is trying to save cost by reducing call centre staff and automate things as much as possible. You can't just speak to someone and get things sorted. You've to deal with their chat bots and eforms and comply with all instructions 100% if you want your money back. I have written earlier about Air Asia's deliberately complicated refund policy- instead of giving a "Cancel" or "Modify" button next to a booking, they make the refund process so complicated, most people would give up in frustration.

For refund/credit account.

• Open AirAsia.com 
• Click on Chat with AVA icon in bottom right corner of the screen
• Be patient while the chat window loads- may take several minutes to few hours.
• Select COVID-19
• Follow on screen instructions

Note: Using Chat app is not easy. After it loads (sometimes taking hours) Ask AVA chat app works only if your scenario matches 100% with the policy AirAsia has defined and you follow all instructions perfectly. If you have any queries, if your scenario is bit different from standard or if you want an option not offered there, then you will have more frustration.

Calling Air Asia customer care will NOT help for refund- they will mostly redirect you to the chat app. Rescheduling is best done with call centre, but be prepared for long waits.

So what to do if you don't qualify for a refund/rescheduling?

Option 1: Wait and watch: If your travel date is few months from now, wait and watch. If scenario improves you can travel as planned. If scenario worsens, Air Asia may update the policy or if flights are cancelled (or even if they undergo major rescheduling), you will be eligible to get full refund.

Unless your travel dates are immediate, it is best to wait and watch and take a decision closer to travel dates. As of now most policies are valid for travel dates till end of April only. But this may get extended early April depending on how corona virus crisis worsens.

Option 2: Take loss, cancel. You will be eligible to get airport tax component refunded, which could be few hundred to few thousand rupees only.

Option 3: Take risk and travel: Not a wise option, but it is an option if you are willing to take that much risk despite all the concerns. You may face quarantine on both onward or return journey, might end up infecting others-so at this moment travel is not advised.

Ethiopian cancels proposed Chennai flight

Ethiopian has silently withdrawn Chennai-Addis Ababa flight.

Ethiopian airlines had announced this service to begin from April 2020 and had set a return fare of almost 60000 INR for a MAA-ADD return ticket in economy class. I had written about this earlier as this fare was too high.

Ethiopian had originally planned a dreamliner for this route. Later it was downgraded to 737.

Now it looks like the direct flight option is withdrawn. No official response on this-

• Possibly because of Coronavirus scare Ethiopian is putting new routes on hold? If situation improves may be Ethiopian will reintroduce.
• Possibly not many people booked flights on Ethiopian- mostly because of very high fares (60k we can go to Europe, US, Australia etc)
• Possibly some other reason

Bengaluru-ADD flight is continuing as usual. Will keep an eye on this.

AirAsia's cheapest ticket ever!-Malaysia Domestic tickets for 12 MYR (INR 200)

This could be Air Asia'a cheapest ticket ever. Asia'a leading low cost airline is running deep discounted sales offering some real tempting fares.

You can now fly between Kuala Lumpur and Penang/Kota Bahru/Langkawi/ Johor Bahru etc for just 12 MYR one way, 24 MYR return. That is just INR 420 or USD 5.7 return. Haven't seen a flight this cheap in recent times- Even Ryan Air/Easyjet 8-10 Euro/GBP tickets in Europe usually cost around INR 1000 at their lowest best.

Penang is some 400 kms from Kuala Lumpur and takes 5+ hours by road. Bus ticket to Penang from KUL costs about 38 MYR one way. So Air Asia flight at 12 MYR is a real loot. Available for so many dates from now till 2021. Flight takes about an hour- similar to Chennai-Bengaluru.

I guess this probably the cheapest ticket ever on Air Asia. Have you spotted an even cheaper ticket? (even on any other airlines) Let me know!

Read Ami Bhat's post on George Town, Malaysia (near Penang).

24 MYR return ticket is available for Langkawi and Kota Bahru also, for select dates. Try if you can get lucky.

Johor Bahru (near Singapore)

Do you think it will get even cheaper than this if Corona Virus issue persists?

Chennai-Bengaluru (similar 400 kms away) costs about INR 1000 during cheapest sales, 5 times the KUL-Penang fare. Your airport to city transfer cost will probably be more than airfare. Of course baggage and meals extra, if you need them.

AirAsia has a dozen flights between Penang and Kuala Lumpur. A few seats are often sold for dirt cheap price. Grab one if you can.

9 tips to minimize travel related loss due to Corona Virus scare

If you have an upcoming travel but now want to cancel because of Corona Virus scare, what are the ways to minimize your loss? How to get maximum refunds?

If you had booked a more flexible tickets you will probably get a cheaper cancellation options, but those who have booked cheapest tickets that come with maximum restrictions will have to face a higher risk. I don't have any magic pill to get you 100% refund but following tips will help you salvage the situation and minimize losses.

Tip 01: Do not rush to cancel flight tickets- Wait till travel date comes closer.
Cancellation fee of airlines will be same irrespective of how early you cancel. There is no point in cancelling months in advance. Wait till travel date comes closer. Cancel 2-3 days prior to departure date.

Wait for any of the following scenarios:
1. If airline itself cancels the flight you will get full refund.
2. Airline may announce a policy offering full refund or free rescheduling which you may avail.
3. In case situation improves before your travel date, you might still be able to travel as per plan.

Tip 02: Book only "free cancellation" hotels or Pay at property hotels so that you have high flexibility in case you've to cancel your plans. Else you will lose money unnecessarily. Booking.com has huge collection of such Free to cancel and pay at property hotels.

Tip 03: Day tours, activities can be booked after reaching destination.
Do not fall for marketing trap saying "things are getting sold out"- it will be cheaper, convenient and risk free to book day tours, activities at the destination, than booking online in advance.

Tip 04: Watch out how your airline responds to the situation.
Some airlines like Indigo are offering only "Free rescheduling" and not full refund. Some airlines may give full refund while other airlines may stick to their regular cancellation policy. This decision need to be made from top management- no point fighting with customer care executives or airline's twitter handle.

Tip 05: Remember to file for refund of airport taxes and fees
Even if your ticket is non refundable, airlines are required to refund airport taxes and fees. Different airlines have different process for this- be sure to apply and get it back- you will get back few hundred to few thousand rupees depending on domestic/international, which airport etc

Tip 06: Rescheduling is usually better than cancelling
You can postpone your trip by 6-9 months and hope things get better by then. If airline is expecting you to pay fare difference, wait for a sale or identify dates in future for which fares are same or cheaper than what you have already paid.

Tip 07: Travel insurance
Travel insurance doesn't cover your loss if you decide to cancel yourself. But it may come handy if you travel to a destination and return flight is cancelled or if you fall ill etc. Check the fine print carefully, if you feel a travel insurance policy will provide some compensation in case of risks/uncertainties, go for it.

Tip 08: Track what's happening on twitter
Follow airline's handle, check what other passengers are complaining about and how they are being serviced. This gives you an idea what to expect when you want to cancel.

Tip 09: Watch out for any rescheduling
If airlines reschedule your flights more than 2-2.5 hours, you can use that as an excuse to claim full refund. This probability is very high if your travel date is few months from now and also involves a connecting flight. As airlines try to cut loss making routes, your flight may get some kind of rescheduling if not cancellation, which you can use for your advantage.

To be fair to airlines, corona virus is not their fault. They are not required to take entire loss and give full refund to passengers as long as they are operating the flight. Most of them are already running in loss flying half empty. But at the same time, they need to retain the trust and loyalty of their customers because acting too strict will make passengers book with some other airline once situation improves. So it will be interesting to see how airlines manage this phase.

Aware of any more tips?

AirAsia Sale- Vizag to Australia just 5500 INR one way

AirAsia sale has some killer deals from Vishakapattanam (Vizag) to Australia and other countries.

• One way to Avalon (Melbourne) for INR 5500, return for 13k
• Vizag to Sydney, onward journey for just INR 6500, return for about 15k
• Vizag to Kuala Lumpur for 3000 INR one way, 6400 return

Available for several dates during October-November 2020 and early 2021.

As usual bags and meals extra.

I don't think it will get any cheaper. If Australia is on your mind, go ahead, grab these offers.

Thanks to Samir Ahmad for the tip off.

Gulbarga (Kalaburagi) gets second flight-Air India

I had written last year November about Kalaburagi (Gulbarga) airport in North Karnataka getting operational, with Star Air flying 4 times a week.

Now there's another good news.
(Update: I am told this flight has been operational since December 27th, I guess I didn't notice earlier)

Air India-Alliance Air is starting daily flights between Bengaluru and Kalaburagi from March 9th. Tickets have been priced at about 3000 INR one way, slightly more than Star Air. (INR 2300 onwards).

While Star Air flight is in the afternoon, Alliance Air flight is in the morning.

Also while Star Air doesn't sell one stop flights to other destinations on its network, Air India does, so people of Gulbarga can book a ticket to anywhere on Air India and star alliance network from Gulbarga (this feature not enabled yet on Air India website, hopefully soon)

Flying to Gulbarga (Kalaburagi) will give easy access to various tourst attractions in North Karnataka

AirAsia Big Sale: Kochi-Honolulu 35k INR (480 USD) return!

Air Asia is running a big sale. I tried various dates and destinations to check if there're any good deals. Didn't find anything impressive, except this one.

Return ticket from Kochi to Honolulu, USA are available for just 35000 INR (<500 USD), which is a good deal. Flying to mainland USA usually costs 50k minimum and from there Honolulu will be another 25-30k. If you are keen to fly to Honolulu directly, then this is a good deal.

Honolulu is an island destination- Pearl Harbor incident happened here. Unless you're extending your visit to USA Mainland or have some specific reason to visit Honolulu, other beach destinations such as Mauritius, Maldives, Seychelles etc might be more economic to visit (and Visa on Arrival too)

Points to note:

• Travel dates: October 04/05 to October 28, 2020, try for other dates and see if you get lucky.
• Two stop flight via Kuala Lumpur and Osaka. Japan transit visa may be needed
• Food, Baggage extra. In fact, food on Osaka-Honolulu sector is 3-4x more expensive than Kuala Lumpur-Osaka flight  [Details]. These are ultra long haul journeys so managing without food will be near impossible
• 20 Kg checked bag is 8500 INR extra (return)
• From Honolulu if you wish to fly to Mainland USA, another 25000-30000 INR extra.
• Might be available from other Indian cities, but for a few thousand rupees more.
• Be sure to sign in to get lowest fares on Air Asia website.
• USA Visa costs 14k INR approx, if you don't have one already.

Are you excited?