A Delhi commercial court has directed Akasa Air to pay Rs 1.08 crore for cancelling 640 confirmed festive-season seats, calling it a clear breach of contract. The Court held that refunding the advance was not enough and the airline must compensate for the travel agent’s loss of profit.
A commercial court in Delhi has ordered Akasa Air to pay ₹1.08 crore to a travel agency after the airline cancelled a large group booking during the peak Christmas–New Year travel season. The Court held that the airline’s action amounted to breach of contract and caused clear financial loss to the travel agent.
The order was passed on February 23 by District Judge (Commercial) Lalit Kumar at the Saket Courts. The dispute arose after ABS Tours & Travels booked 640 airline seats in April 2023 for travel between Delhi and Goa during the high-demand festive period from December 23, 2023 to January 13, 2024.
The travel agency had paid Rs 4,82,640 as advance, which was 25% of the total ticket cost, through the airline’s booking portal. After receiving the payment, the airline generated Passenger Name Records (PNRs), confirming the bookings.
However, in May 2023—more than a month after confirming the seats—the airline cancelled all eight group bookings. The advance amount was refunded only in August 2023, nearly three months later.
While deciding the matter, the Court observed:
“The loss claimed is loss of opportunity arising from cancellation of a confirmed group inventory during peak season. In commercial transactions, especially in the travel industry, group bookings for festive periods are made precisely to capitalize on predictable seasonal demand,”
The travel agency argued that it had blocked the seats in advance to sell them during the festive rush, when ticket prices are usually high. It claimed that the sudden cancellation resulted in loss of profits. The agency sought compensation of Rs 1,08,80,000 for this loss.
In its defence, Akasa Air stated that bookings exceeding 70 seats required 50% advance payment and that the travel agent had not fulfilled this condition. However, the Court found that the airline could not produce any document or proof to show that such a requirement was communicated to the agent at the time of booking.
The Court held that once the airline accepted part payment and generated PNRs, a valid and binding contract came into existence under the Indian Contract Act, 1872. It further ruled that in the absence of any proven term allowing such cancellation, the airline’s unilateral action amounted to breach of contract.
The airline argued that since it had refunded the advance amount, the parties were restored to their original position. The Court rejected this argument and stated:
“Refund of principal does not extinguish the claim for consequential damages flowing from breach… The refund merely neutralized the advance; it did not compensate for the lost commercial advantage,”
Akasa Air also contended that the claim of Rs 1,08,80,000 was speculative. It pointed out that the travel agent had not actually sold the cancelled tickets and that airfare prices are dynamic and fluctuate frequently.
However, the Court examined screenshots placed on record by the travel agent showing ticket prices of approximately Rs 17,000 per seat during the festive season. It noted that the airline failed to produce any contemporaneous fare data, system records, or other material to contradict the figures presented.
The Court reiterated that loss of profit can be awarded if it is reasonably certain that such profit would have been earned in the normal course of business. It concluded:
“The defendant’s wrongful cancellation deprived the plaintiff of a real and foreseeable commercial opportunity to earn profit during the peak festive season,”
The airline further argued that the travel agent should have minimized its losses by accepting a revised proposal made in June 2023. Under this new offer, the number of seats per booking was reduced from 80 to 40 and new terms were introduced.
The Court did not accept this submission. It observed that the travel agent was not legally bound to accept a significantly altered offer in order to reduce its losses.
While the Court decreed the suit and awarded Rs 1,08,80,000 towards loss of profits, it refused to grant certain other reliefs. The claim for interest at 18% per annum was rejected due to absence of any contractual clause or supporting evidence. The Court also dismissed the claim for damages on account of mental agony, noting that the dispute was purely commercial in nature between business entities.
The travel agent was represented by advocates Abhinay Sharma, Atul Sharma, Deeksha Prakash and Sakshi Tripathi. Akasa Air was represented by advocates Gaurav Gupta, Shouryendu Ray, Yashendra Singhwal and Istela Jameel.
This judgment is significant for the travel and aviation industry as it clarifies that once a booking is confirmed and part payment is accepted, airlines cannot cancel group reservations without valid contractual grounds. It also reinforces the legal principle that refunding advance money does not automatically erase liability for loss of business opportunity arising from breach of contract.
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