Airline Refunds Get Faster, Cheaper As DGCA Cracks Down On Charges

The new rules, which will take effect on 26 March 2026, will grant air passengers quicker refunds and tighten protections provided by the Directorate General of Civil Aviation (DGCA).

The updated framework addresses the rising number of complaints regarding refund delays, hidden deductions, and coerced credit shells. The regulator will provide clear timelines, maximum charges, and greater transparency.

What Are The New Refund Timelines?

Under the new rules, airlines are not allowed to levy any additional processing fee for refunds.

Passengers must receive the full eligible amount, including taxes and charges such as the user development fee (UDF), airport development fee (ADF), and passenger service fee (PSF), even for non-refundable tickets where the booking is not utilised.

The DGCA has mandated strict timelines for refund processing, depending on the mode of payment. They are as follows:

• Refunds must be issued within seven days for credit card bookings

• Cash bookings at airline offices must be refunded immediately.

• Airlines must issue refunds for tickets booked through travel agents or online portals within 14 working days.

Notably, the DGCA has made it very clear that airlines have the obligation to refund, despite the possibility of tickets being booked by intermediaries.

What About Credit Shells And Transparency?

Airlines are now prohibited from mandating that passengers accept refunds solely as credit. However, offering credit as an option is still permitted.

Additionally, airlines must now provide complete visibility of refund amounts, including a detailed breakdown. Refund policies should also be well-posted on the airline websites to enhance transparency.

Is There A Free Cancellation Window?

The new regulations have a 48-hour free cancellation period. This will enable passengers to make cancellations or amendments to the booking without extra fees other than fare alterations.

However, this option is subject to conditions:

• Not applicable if the flight departs within 7 days (domestic)

• Not applicable if the flight departs within 15 days (international)

The DGCA has capped cancellation fees. Airlines are not allowed to charge higher than the basic ticket price plus fuel surcharge. This action is expected to avoid high deductions and treat the passengers more fairly. Beyond this window, airline-specific cancellation charges will apply.

What Other Passenger-Friendly Changes Have Been Introduced?

The new framework also has some other provisions:

• Refund-related complaints, such as delays and disputes, are being directly addressed.

• Passengers cancelling due to medical emergencies can claim refunds or credit shells.

• Airlines cannot charge for minor name corrections if reported within 24 hours of booking.

• The rules apply to both domestic and international flights (with foreign carriers following home-country norms)

Separately, the government has advised airlines to ensure that up to 60% of seats on domestic flights are available without seat selection fees, up from around 20% currently.

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What Does This Mean For Passengers?

For those who travel, these fresh regulations signal a substantial improvement in consumer protections, with the promise of faster refunds, reduced costs, and clearer guidelines. The new structure aims to eliminate confusion surrounding cancellations and refunds, while also curbing practices like mandatory credit vouchers and unwarranted fees. Ultimately, it shifts more accountability onto airlines, resulting in a more traveller-centric experience.

Sources:

Economic Times

Business Standard