Force Majeure For Airlines Will Be Disastrous for Tourism Sector: IAMAI
The Internet and Mobile Association of India [IAMAI] on behalf of the Online Travel Aggregators (OTAs) and the other travel tech services have taken strong exception to the proposal for ‘Force Majeure’ for airline services. This follows the recent media report of certain quarters suggesting force majeure provisions for airlines sector in terms of its payments and dues to others, in order to protect the businesses in times of the ongoing crisis.
According to IAMAI, if airlines are allowed to not make refunds on grounds of force majeure, it will create significant downstream disruptions in the travel and tourism sector. Such a move may allow airlines to come out stronger but at the cost of destroying the downstream ecosystem affecting the livelihoods of millions.
The travel and tourism sector is going through one of its worse phase, with all present and future booking activities closed thereby stopping all incoming revenues; coupled with cancellations and demands for refunds which creates major cash flow challenges for everyone involved in the business. Customer refund is the top priority of most OTAs and airlines bookings are one of the most contentious one given the magnitude and complexities involved.
Citing the example of best practices followed by the Department of Transportation in the US mandating airlines to pay all customer refunds, IAMAI, and its members suggest full cancellation for international bound travelers; clearing of dues by airlines to downstream partners and the option of flexible travel vouchers valid for 6/12 months in lieu of refunds. According to IAMAI, this will help in expeditious settlement of refund requests while at the same time help ease cash flow challenges for the ecosystem. This will also allow the industry to bounce back post normalcy.
The association highlighted that there are over almost 2 lakh independent travel agents, tour operators, and online businesses and up to 7 lakh personnel working in the sector. This sector directly provides livelihood to over 9 lakh of personnel including self-employed entrepreneurs, on-roll employees, call center agents, retainers, insource and outsourced staff, women, and individuals working part-time from their homes as holiday expert. The entire ecosystem, often involving small entrepreneurs and self-employed can crumble if the airlines are allowed force majeure and avoid making payments that eventually percolate down to these agencies.