India to Introduce Inbuilt Travel Insurance for Airline Tickets

In a significant development for air travellers in India, the government is considering the introduction of an inbuilt insurance feature in airline tickets. This initiative aims to allow passengers to receive refunds of up to 80% for cancellations made just before departure, a move that could reshape the current landscape of air travel in the country.

Currently, cancelling a flight within three hours of its scheduled departure is classified as a 'no-show', meaning that passengers lose the entire fare. The only exception is in cases of documented medical emergencies, where airlines may opt to issue a full refund at their discretion. However, this policy often leads to frustration and dissatisfaction among travellers who face unforeseen circumstances.

New Insurance Proposal

Sources familiar with the matter indicate that discussions are underway between the Secretary of the Ministry of Civil Aviation and major Indian airlines. The objective is to implement this insurance feature within the next two to three months, with no additional cost burden on passengers. It is expected that the premium for this insurance will be absorbed by the airlines through partnerships with insurance providers.

A senior official from one of the leading airlines stated, "We are exploring the feasibility of adding an insurance element to the lowest fare category to ensure that passengers can receive some refund. The specifics of this proposal are still being finalised." This approach aims to alleviate the anxiety many passengers feel about booking flights, particularly when unexpected events, such as family emergencies, arise.

Financial Implications

The anticipated cost for this insurance could be as low as ₹50 (approximately £0.50) per ticket. If the proposal is adopted, it could allow for refunds of up to 80% on tickets cancelled as late as four hours before a flight. Experts in the field suggest that the insurance companies will assess historical data on cancellations to determine risk factors and set premiums accordingly.

Airline officials have noted that online travel agencies currently encourage customers to opt for insurance when booking flights. They are optimistic that integrating this insurance feature could enhance customer satisfaction and reduce the volume of complaints related to ticket refunds.

Regulatory Changes in Motion

In parallel to this new insurance initiative, the Directorate General of Civil Aviation (DGCA) is also reviewing its existing refund policies. The DGCA has acknowledged that the refund process has become a notable source of grievances for passengers. A draft of new regulations is currently open for public comment, aiming to establish clearer guidelines for refunds and enhance the overall passenger experience.

The DGCA stated, "The issue of refunds has resulted in a significant number of complaints. It is crucial for us to intervene and establish minimum standards to protect the interests of travellers. This includes addressing delays in refunds and clarifying policies regarding unused tickets."

Conclusion

As India moves towards implementing this inbuilt travel insurance feature, it reflects a broader commitment to improving consumer rights in the aviation sector. The proposed changes could significantly reduce the financial risks associated with last-minute travel cancellations, potentially leading to a more confident and satisfied customer base. Industry stakeholders are optimistic that these reforms will create a more transparent and efficient travel environment for all passengers in the future.