Landslide on Day Four: Refund, Reschedule or Helicopter
Sunrise Tours & Travels, a small non-IATA agency in Lucknow, sold a seven-night Kedarnath–Badrinath group departure to 18 pilgrims at ₹24,500 per person, inclusive of 5% GST. On day four a landslide closes the road and the district administration stops all movement; two nights at Guptkashi and one day's coach hire remain unutilised. Per-person costings are: hotel ₹900 per night on twin share, meals ₹700 per day, coach share ₹600 per day, guide ₹250 per day, agency margin ₹2,200. The Guptkashi hotel agrees to refund 50% of the two unused nights because cancellation came within 24 hours; the coach operator refuses to refund ₹10,800 (₹600 × 18) citing committed hire; a helicopter operator offers seats at ₹8,500 extra per person for the next morning. Nine pilgrims are willing to pay, nine refuse. The agency's bank balance is ₹85,000 and the next group departure is in eleven days.
1. Compute the refund due per person and in total, showing how each unutilised item is treated, and state the agency's position on its own margin.
Read the worked answer
Unused, per person:
- Hotel, 2 nights × ₹900 = ₹1,800; hotel refunds 50% = ₹900 recoverable.
- Meals, 2 days × ₹700 = ₹1,400; not consumed, so ₹1,400 refundable.
- Coach, 1 day × ₹600 = ₹600; operator refuses, so ₹0 recoverable unless the agency chooses to absorb it.
- Guide, 1 day × ₹250 = ₹250 refundable (agency's own cost, fully within its control).
Refund per person = 900 + 1,400 + 250 = ₹2,550. For 18 pilgrims = ₹45,900.
Margin: the ₹2,200 margin was earned on running the first four nights and the selling work, so it is retained; but no margin may be retained on services not delivered, which is already excluded above.
GST: raise a credit note for the unutilised portion and adjust the 5% GST on ₹2,550 per person rather than refunding tax-inclusive amounts, so the books reconcile.
Cash check: ₹85,000 available against ₹45,900 payable leaves ₹39,100 - sufficient, and the next departure's collections must not be used for this refund. Pay by bank transfer within seven working days and send the computation in writing to all 18, not on a phone call.
2. Decide whether to allow the helicopter split and, if so, how you run the two sub-groups.
Read the worked answer
Decision: allow the split, but only on the pilgrims' money and only with written consent. Collect ₹8,500 × 9 = ₹76,500 from the nine willing pilgrims by UPI before booking; never fund it from the ₹85,000, which is committed to refunds. Book and confirm seats in writing the same evening.
Running the two groups:
- There is one tour manager. Send the tour manager with the road group - the nine who refuse the helicopter are the ones left waiting with uncertainty and are more likely to feel abandoned; the helicopter group is moving, is paying for a premium option and needs only a receiving representative at the helipad.
- Appoint one literate pilgrim in the helicopter group as the point of contact and give them the tour manager's number and the local agent's number.
- Take separate signed consents: the nine confirm the extra cost is voluntary; the nine confirm they accept the revised road itinerary and the delay. Keep copies on the agency's phone.
- Reunite both groups at Badrinath or Haridwar with a fixed time and hotel address, written down, not just spoken.
- If the district administration extends the movement ban, the helicopter option collapses: do not book until you have the order in writing.
3. State what you will document and what you will change in the agency's standard terms and processes after this incident.
Read the worked answer
Document now: the district administration's prohibitory order or a photograph of it; the hotel's written 50% refund confirmation; the coach operator's refusal in writing; the revised itinerary signed by all 18; the consent notes for the two groups; the refund computation and the credit note. Without these, a consumer forum can treat the cancellation as the agency's choice rather than force majeure.
Change in the terms of booking: a clear force majeure clause naming landslide, road closure and administration orders; a refund policy in writing at the time of sale stating what is refundable, what is committed and what is not; a line that unutilised services are refunded net of non-recoverable supplier advances. The clause must be shown and explained at booking, not buried in a footer.
Change in process: collect a 15% contingency in the package price for hill departures; keep a separate refund reserve rather than mixing group collections with working capital; get supplier cancellation terms in writing before selling; and buy tour-operator liability cover. Keep the ₹600 coach day absorbed as goodwill only if the margin allows - with ₹39,600 total margin on this group, absorbing ₹10,800 is defensible and buys the reputation the agency needs for the next eleven days' departure.