Flyers may soon get higher refunds on last-minute cancellations:Govt explores ₹50 built-in insurance to enable up to 80% repayment

India may soon allow air passengers to recover a substantial portion of their fare even if they cancel a few hours before take-off, with officials indicating that the proposal could be rolled out within two to three months. Currently, travellers who cancel within three hours of departure are treated as no-shows and lose the entire ticket value. Airlines may offer full refunds in verified medical emergencies, but industry executives acknowledge that such waivers are discretionary. Airlines Explore Built-In Insurance for Refunds without Raising Ticket Prices According to a TOI report, the aviation secretary has been in talks with domestic carriers to craft a system in which a small, built-in insurance component is included in every ticket. Under discussion is a model where passengers would not pay extra; instead, airlines would negotiate with insurers so the premium is absorbed on the airline’s side. One major carrier has already initiated conversations with insurers. A senior airline official told the publication that they were exploring the feasibility of adding an insurance element to the lowest fare category to ensure passengers receive some refund, with specifics still being finalised. Plan Targets Traveller Concerns over Last-Minute Losses Officials familiar with the deliberations say the proposal aims to address a persistent concern among travellers: uncertainty around unforeseen contingencies and the risk of losing money on last-minute cancellations. Industry sources cited in the report noted frequent complaints from passengers who missed flights due to family tragedies or emergencies and were unable to recover any part of the fare. ₹50 Premium Could Enable Up To 80% Refund On Late Cancellations Preliminary estimates suggest that if about ₹50 is built into each ticket as an insurance premium, passengers might receive up to 80% of their fare when cancelling as late as four hours before departure. Airlines point out that online travel portals already encourage customers to buy optional cancellation insurance. Industry representatives say carriers are “working out the math” with insurers, who will ultimately assess the risk-to-reward ratio. If only a small number of travellers on a full flight make legitimate last-minute claims, the model could prove viable. Insurers currently analyse historical cancellation patterns to design similar products for online travel agencies. DGCA Plans Stricter Refund Rules To Protect Flyers Refund-related grievances have also drawn the attention of regulators. The Directorate General of Civil Aviation (DGCA) is revising its refund norms, acknowledging in its draft rules that delays, partial refunds, and conversions of refund amounts into limited-period credit have become major pain points for passengers. While the regulator maintains it does not intend to interfere in commercial decisions, it says the volume of complaints warrants minimum benchmarks to safeguard consumer interests. Final rules will be issued after stakeholder feedback is reviewed, the report added. ​