Double whammy for India’s travel aggregators – bookings have stopped but refunds come out of their own pockets

• Online travel aggregators in India work in a system where they have a virtual wallet with preloaded money for bookings. So airlines have refunded money into these ‘wallets’.
• Currently, EaseMyTrip claims to be the only company who has been refunding money to the customers bank accounts.
• The travel and tourism industry has been the worst hit due to coronavirus. Even the most avid travellers have declared 2020 a no travel year.

The Ministry of Civil Aviation in India announced on April 16 that airlines will have to give a full refund for cancelled tickets, due to the coronavirus lockdown. While passengers across the country heaved a sigh of relief, travel aggregators knew this was a double whammy for them.

Why? Online travel aggregators in India work in a system where they have a virtual wallet with airlines where they have preloaded money for bookings. So when airlines refund the tickets it comes into this wallet, which can’t be used for refunds or transfer of money into accounts. But for travel aggregators to issue refunds it will have to come out of their pockets, and its airline credit is not transferred.

“So our wallet balance with airlines will be blocked till the time we start getting fresh bookings and we have to use our cash flow to refund to customers, whenever fresh bookings will start we would be able to utilize that agency wallet to book tickets for our customers,” Nishant Pitti, Co-founder and CEO, EaseMyTrip told Business Insider.

Currently, EaseMyTrip claims to be the only company who has been refunding money to the customers’ bank account even if airlines are providing amounts in EMT’s virtual wallet only.

“We have been receiving money on our virtual wallet from airlines which is of no use for the time being. But still we are paying money to customers' bank accounts from our own expense,” said Pitti.

Before Covid19, the company used to process 30,000 air tickets on a daily basis.

2020 – a dark year for the travel and tourism industry

And it’s not the story of EaseMyTrip alone.

As 2020 began, Indian travel aggregators were in a conundrum like never before. As the news about the deadly coronavirus spread from China’s Wuhan, people began cancelling their tickets. Travel aggregators began to dread the imminent future – bookings would slow down. But then worse things were in store, flights across the world were suspended and bookings stopped completely.

The travel and tourism industry has been the worst hit due to coronavirus. Even the most avid travellers have declared 2020 a no travel year.

“The year 2020 could be a complete washout for the travel and tourism industry in India too if we don’t take immediate steps – not just to contain the impact of virus on lives but also its devastating impact on businesses that support millions of livelihoods,” MakeMyTrip founder Deep Kalra wrote in an article.

The travel and tourism sector in India is expected to lose ₹5 lakh crore and see job cuts for over 4 crore people, according to Confederation of Indian Industry (CII).

The industry body also estimates that “branded hotel groups are set to lose as much as ₹1.1 lakh crore, online travel agencies ₹4,312 crore, tour operators (inbound and domestic) ₹25,000 crore, adventure tour operators ₹nearly 19,000 crore and cruise tourism ₹419 crore.”

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