To apply for a visa, a flight reservation, travel insurance and hotel reservation is a necessity:
Should I buy a flight ticket before I apply for my visa?
In the link above, I understand I do not have to buy the ticket but do the reservation alone. Which airlines have a feature where, due to denial of visa, they will refund the ticket?
This should be written in the fare conditions in the section "CANCELLATIONS". You can see them for instance if you search for flights on http://matrix.itasoftware.com/, but I've seen various booking websites which also allow to check fare conditions. This could look as follows:
CANCELLATIONS
ANY TIME
CHARGE EUR 190.00 FOR CANCEL/NO-SHOW/REFUND.
WAIVED FOR DEATH OF PASSENGER OR FAMILY MEMBER.
NOTE - TEXT BELOW NOT VALIDATED FOR AUTOPRICING.
WAIVERS MUST BE EVIDENCED BY DEATH CERTIFICATE
REFUND PERMITTED BEFORE DEPARTURE IN CASE OF
REJECTION OF VISA. EMBASSY STATEMENT REQUIRED.
(which is from the cheapest round-trip fare Delhi-Munich on Lufthansa.)
Following a short random sampling, it seems some airlines offer this, some don't, though all fares I saw from India to Germany were at least refundable except for a penalty. (I did not check extensively, though.)
Alternatively, you can ask a travel agent to book the flights for you.
No airline will refund your ticket because you didn't get a visa.
Also, there is typically no possibility to 'reserve' without buying a ticket, at least not longer than one or three days; not enough to wait out a visa application.
However, you can buy refundable tickets from most airlines; those are refundable without reason, you can simple ask for a refund at any time.
They are typically significantly more expensive than normal (non-refundable) tickets, and often there is a processing fee deducted when they get refunded. Some airlines might not refund you, but instead put the money in a hold where you (and only you) can use it within 12 months; somit is not lost, but still bound to be spent with that airline.
The usual approach is to buy a refundable ticket, and once your visa is approved, buy a normal (cheaper) ticket and return the refundable ticket. Still, you need to put the full price on the table for the refundable ticket, and be out of that money for months.
