DGCA’s New Refund Rules Offer Passengers a Second Chance — But Airlines May Feel the Impact
India’s aviation regulator, the Directorate General of Civil Aviation (DGCA), has introduced revised air ticket refund rules allowing passengers to cancel or modify flight bookings within 48 hours of purchase without paying cancellation charges, a move that significantly improves passenger flexibility. The policy change comes after rising complaints over delayed refunds and booking-related issues, particularly during the airline disruptions seen in late 2025.
Under the amended Civil Aviation Requirements (CAR) framework, airlines must provide a mandatory 48-hour “look-in option”, enabling passengers to review their bookings and make changes without penalty. During this period, passengers can either cancel or modify their tickets without additional charges, although any difference in fare for revised bookings will still be applicable.
The revised rules are aimed at improving passenger rights and ensuring transparency in airline refund practices in one of the world’s fastest-growing aviation markets. The changes also bring India closer to international standards where limited free cancellation windows are common.
The new framework is expected to improve passenger confidence while also requiring airlines to adjust their operational and revenue management strategies.
48-Hour Free Cancellation Comes With Important Eligibility Conditions
While the 48-hour free cancellation window provides significant flexibility, the facility will apply only under defined conditions. Passengers booking tickets close to departure dates will not be eligible for the free cancellation option.
The DGCA clarified that the free cancellation and modification facility will not apply if:
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Domestic flight departure is within 7 days from booking
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International flight departure is within 15 days from booking
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Certain fare rules restrict flexibility
After the 48-hour period ends, airlines will apply standard cancellation or amendment charges according to fare rules.
The eligibility criteria aim to balance passenger convenience with airline operational requirements, as last-minute cancellations can disrupt flight planning and pricing strategies.
For passengers booking tickets well in advance, the new rules provide an additional safety cushion against booking errors or sudden changes in travel plans.
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Airlines Now Responsible for Refund Processing Within 14 Days
One of the most important aspects of the revised rules is the clear accountability placed on airlines for refund processing. Even when tickets are booked through travel agents or online platforms, airlines will remain responsible for ensuring that refunds are processed on time.
Under the revised CAR guidelines:
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Airlines must complete refunds within 14 working days
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Travel agents act only as intermediaries
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Airlines remain legally responsible for refunds
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Refund delays will attract regulatory scrutiny
This clarification is expected to reduce disputes between passengers and travel agents, which have been a major source of complaints in recent years.
The regulator aims to ensure that passengers do not face uncertainty about which entity is responsible for their refunds.
Free Name Correction Rule Reduces Booking Errors for Passengers
In another important passenger-friendly step, the DGCA has directed airlines not to charge extra fees for correcting passenger name errors if the mistake is reported within 24 hours of booking and the ticket is purchased directly from the airline’s website.
Name correction charges have often been a source of frustration for passengers, with some airlines charging substantial fees even for minor spelling errors.
Under the revised rule:
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Name correction must be reported within 24 hours
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Ticket must be booked through airline website
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Only genuine corrections allowed
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No additional charges permitted
This provision is expected to reduce unnecessary costs for passengers while improving overall booking accuracy.
Medical Emergency Refund Rules Offer Greater Passenger Protection
The DGCA has also clarified refund policies in cases of medical emergencies, offering greater protection to passengers facing unexpected health issues.
If a passenger or a family member travelling on the same PNR is hospitalised during the travel period, airlines may provide either:
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Full refund
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Credit shell for future travel
In other medical situations, airlines will process refunds after medical evaluation conducted by airline doctors or DGCA-approved aerospace medicine specialists.
These provisions are intended to ensure that passengers facing genuine emergencies are not financially penalised.
Surge in Passenger Complaints Triggered Regulatory Changes
The revised refund norms were introduced after a noticeable increase in passenger complaints, particularly related to refund delays during airline disruptions.
The issue gained prominence during the December 2025 operational disruptions involving IndiGo, after which the civil aviation ministry directed airlines to clear pending refunds quickly.
DGCA data shows the scale of the problem:
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29,212 passenger complaints in December 2025
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7.5 percent related to refunds
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1.43 crore passengers travelled in December
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16.69 crore passengers travelled in 2025
The data highlights the need for strong consumer protection measures in India’s rapidly expanding aviation industry.
Here’s What Happened Today and Why Traders Reacted
The DGCA policy change drew attention from both aviation companies and investors because refund rules directly impact airline revenues and cost structures.
Key Developments
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48-hour free cancellation introduced
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Refund timeline fixed at 14 days
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Free name correction allowed
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Medical emergency refunds clarified
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Passenger complaints addressed
Why Traders Reacted
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Possible increase in refund-related costs
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Higher cancellation rates expected
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Changes in airline pricing strategies
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Policy-driven sector impact
Investors reacted cautiously because flexible cancellation rules could increase operational costs for airlines, particularly low-cost carriers.
What This Means for Airline Stocks and Investors
The revised DGCA refund rules could have a mixed impact on airline companies and aviation sector investors.
Short-term impact on markets
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Airline stocks may see policy-driven volatility
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Increased operational costs possible
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Higher refund processing expenses
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Pricing adjustments likely
Long-term impact on investors
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Improved passenger confidence
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Stronger demand for air travel
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Better regulatory transparency
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Sustainable aviation growth
While the new DGCA rules may slightly increase operational costs for airlines, the long-term impact could be positive as improved passenger confidence supports growth in India’s aviation sector.
