Booked an air ticket but had to cancel it? Effective today, the new Directorate General of Civil Aviation (DGCA) rules for refunds have come into force, reducing the inconvenience to passengers on many accounts and also canceling some of the charges that have otherwise been imposed by airlines in the past.For example, airlines can no longer charge you any extra fees to process refunds. A timeline is defined for processing refunds, you will not be forced to keep your refund amount in a credit shell for future use etc.“The issue of refund of tickets by airlines has become a major source of complaint among airline passengers. A large number of complaints are received regularly,” the DGCA said in its circular issued in late February, making it clear that the new rules will come into effect from March 26, 2026.DGCA also acknowledged that the number of complaints regarding refunds is increasing, which requires action. DGCA said, “This matter has been discussed in several meetings with the airlines, but there has been no improvement in the system adopted by the airlines for refund of tickets. It is now felt that the onus lies on the government to set some minimum benchmarks as far as the refund policy is concerned, so as to prevent growing dissatisfaction among passengers with respect to the refund procedures adopted by some airlines.”What types of complaints does DGCA want to resolve?
- Cases of delay in refund of unused tickets
- Complaints regarding the amount to be refunded by airlines against canceled tickets.
- Under the ongoing policy, airlines do not refund tickets but instead adjust the amount of tickets purchased by the passenger for future travel on the same airline, which in turn are valid for a limited period of time.
The circular clarifies that the change in refund rules outlines the ‘minimum requirements for refund of tickets’. This includes both domestic and international travel tickets booked with domestic and international airlines to and from India.
New Airline Refund Rules: Key Things to Know
- If a passenger has purchased an air ticket using a credit card as a payment method, it is mandatory for the airline to issue a refund within seven days of ticket cancellation.
- If pay for
flight ticket If done through cash transaction, the refund should be made immediately at the office of the airline from where the ticket was purchased. - If you have used a travel agent or travel portal to book your flight tickets, the responsibility for refund lies with the airlines, as the agents act as their representatives. In such a situation, the airlines have been asked to ensure that the refund is issued within 14 working days.
- Airlines are also no longer allowed to charge any additional amount for refund processing
- Not only this, airlines have also been asked to ensure that the refund includes all taxes and User Development Fee (UDF), Airport Development Fee (AFD), and Passenger Service Fee (PSF) in cases of no-shows, non-use of tickets and cancellations. It is worth noting that this condition also applies to tickets which have special fares, promotional offers or where the basic fare is non-refundable.
- The window for ‘look-in option’ has been kept 48 hours after the ticket is booked. During this time period the passenger can also cancel or modify the ticket without any extra charges except the ‘normal prevailing fare’ applicable for the new flight.
- However, if your flight is scheduled to depart in less than 7 days and less than 15 days for domestic and international bookings respectively, there is no option available when the ticket is booked directly through the airline website. This facility is not available after a period of 48 hours and in such cases the passenger will have to pay the charges decided by the airline for cancellation or amendment of the ticket.
- Another important point in the DGCA circular is the emphasis on alternative credit shell. This means that when you cancel your flight ticket, the airline will essentially ask you whether you would like to issue a refund or you would prefer to keep the amount in a credit shell for future use.
- Airlines have also been asked to clearly show the refund amount with detailed explanation. The amount and break-up may be indicated on the ticket or on a separate form for this purpose. The refund policy and amount are also required to be displayed on the airline’s website.
- For the information and transparency of passengers, airlines have been asked to prominently display the cancellation charges at the time of flight ticket booking.
- The DGCA guidelines are clear: Under no circumstances, the airline or its agents can impose a cancellation charge that is more than the basic fare and fuel surcharge. However, this does not include any charges levied by the travel agent, which are fully disclosed at the time of booking. The airline is responsible for this through its contract with the travel agents/portals.
- Foreign carriers flying to and from India are required to return tickets as per the rules of their country of origin.
- If your name is misspelled or incomplete, an airline cannot charge you extra for correction in the name of the same person. This applies when the ticket is booked directly through the airline website, if the error is reported by the passenger within 24 hours of booking.
- If you are canceling your flight ticket due to a medical emergency where you or your family member listed on the same PNR gets admitted/hospitalized during the travel period, the airlines are asked to provide a refund or credit shell. For other situations, refund will be issued by the airline after obtaining opinion on the passenger’s fitness certificate to travel from the airline’s aerospace medicine expert or DGCA’s empaneled aerospace medicine expert.
Apart from this, recently the government has asked airlines not to charge extra for allotment of seats up to 60 percent in domestic flights. Similarly, passengers with the same PNR will have to sit together. Currently, 20% of flight seats can be booked free of charge.According to a PTI report, airlines are in the practice of charging Rs 200 to Rs 2,100 for choosing seats.
How will passengers benefit from the new refund rules?
Aviation experts believe the new rules address a large number of complaints from passengers. However, they stress the need for effective implementation and also call for further steps to be taken to reduce the gap between travel agents, portals and airlines.Ashish Chhawchharia, partner and aviation industry leader, Grant Thornton India, believes the revised DGCA refund framework modifies passenger rights and airline obligations, making the latter more accountable. “The most immediate benefit will be reduction in refund timelines, with mandatory refunds within seven working days for credit card transactions when purchasing directly from the airline and within 14 working days for purchasing through agents/OTAs,” he told TOI.“Furthermore, by mandating the need to refund taxes, UDF and PSF in all cases, the DGCA proposes to streamline and curb various extortionate practices often invoked by airlines or agents,” says the aviation expert.
Greater clarity on the extent of cancellation charges and timelines for refunds will increase passenger confidence in the booking process and address one of the main passenger grievances.He further said, “It would have been beneficial if DGCA could also offer remedies to the ever-increasing tariffs charged by airlines for excess baggage and seat selection.”Dr Preet Sandhu, founder and MD, AVPL International, told TOI that the guidelines mark a significant change for travellers. “For many travelers, long refund delays have been a source of real frustration, so this clarity and commitment to the timelines will certainly bring relief,” he says.“The 48-hour free cancellation window for domestic flights booked at least 7 days in advance also provides people the confidence to review their plans without feeling financially locked out. These are practical steps that will definitely make air travel less stressful.”For Sandhu, a particularly meaningful reform is the requirement that airlines obtain explicit passenger consent before issuing credit shells. In the past, many travelers automatically started using vouchers instead of receiving cash refunds. He believes, “Reinstating that option is important. It aligns India more closely with global aviation practices and could reduce complaints by an estimated 30 to 50 percent based on past complaint trends.”
What do the new rules mean for airlines?
Dr Preet Sandhu says the operational implications for airlines cannot be ignored. “During large-scale disruptions such as adverse weather, refunding at this speed may lead to liquidity shortfalls, especially when bookings are made through agents, but the onus is on the airline. With cancellation charges not being allowed to be added to the base fare as well as fuel surcharges and processing fees, traditional revenue buffers will be reduced,” he told TOI.
“We have already seen the regulator taking enforcement seriously, including the Rs 22 crore penalty imposed on IndiGo, which underlines the intent behind these reforms,” he said.Ashish Chhawchharia of Grant Thornton India says compliance may not be a major challenge for airlines in adopting their IT systems, however, these measures are expected to have an adverse impact on their cash flow cycles and working capital requirements. “This will be particularly relevant in case of substantial refunding requirements due to large-scale disruptions such as weather events, geopolitical events such as we are currently seeing or public health crises,” he says.Ashish Chhawchharia says, “Overall, these reforms address a large number of passenger complaints, including delayed refunds, hidden charges and lack of choice. Nevertheless, further measures can strengthen consumer protection, including automatic refunds on cancellations and strict enforcement mechanisms to ensure compliance.”Dr Preet Sandhu says areas such as agent mark-up may still require further oversight, but the overall framework is moving in the right direction. As he concluded: These guidelines address the long-standing concerns that we all faced regarding delays, forced vouchers and opaque fee structures. The intention is creative. The next phase will rely on consistent enforcement and technology-driven systems that can efficiently manage large-scale disruptions without compromising passenger rights or operational stability.
