Consumer Watch: Travel agents kick back against flight refunds

Customers who have bought flight tickets and cannot use them because of the pandemic are not happy about getting a voucher as a refund. Picture: Henk Kruger/African News Agency (ANA)

Customers who have bought flight tickets and cannot use them because of the pandemic are not happy about getting a voucher as a refund. Picture: Henk Kruger/African News Agency (ANA)

Published Jun 8, 2020


Travel agents are at the receiving end of customer fury about airline vouchers but the Association of South African Travel Agents believes the anger is misplaced. It says the suppliers have locked agents out of payment systems and are refusing to refund.

Asata, whose members control 95% of the travel sector, has blamed airlines for flouting the Consumer Protection Act (CPA) by denying customers their rights to refunds for flights cancelled due to the Covid-19 lockdown.

The association says the airline sector has behaved abusively for years - the Covid crisis has merely highlighted it. It has tried to engage with airlines about their refusal to issue refunds but the discussions proved fruitless.

Punching bags

With half of all global travel booked through an agency, many customers look to travel agents for their refunds, not the airlines, Asata says. But while it’s sympathetic to the airlines’ financial stress, delaying refunds or issuing vouchers to stay afloat violates customer rights.

“While we, as a representative of the travel agencies which have been significantly impacted by Covid-19 and the associated travel bans, are sympathetic to the issue the delay or refusal to refund passengers is in contravention of the Consumer Protection Act,” says Asata chief executive Otto de Vries, adding the final decision on whether to accept a voucher must be left to the consumer.

Asata takes a dim view of airlines, particularly SAA, pressuring customers into accepting vouchers. None of the options SAA has given customers include cash refunds, and its vouchers are valid until March 2022 which could prove worthless.

“Bearing in mind that the CPA requires all consumer funds for future bookings to be ring-fenced and treated separately from the assets of the supplier, a refund should be legally possible even when the supplier is in financial distress,” he says.

De Vries says airlines need to reinstate automated ticket change capabilities through the Global Distribution Systems to allow travel agencies to process refunds and vouchers. All changes, updates, cancellations and refunds must be processed through this.

Locked out

But the airlines have switched off the function, locking agents out of the system, to prevent refunds. This forces agents to submit refund requests manually, which delays or stops repayments.

“For agents, who have put together packages, they might get a refund from one supplier, nothing from another, only a voucher from another - it all adds layers of complexity to the refund process. The tricky part is that customers don’t care - they really just want their money back.”

If a supplier does not like a change, or agents make too many changes, they penalise the agent by levying change fees and cancellation penalties.

Asata has put in an “inordinate amount” of training around the lockdown, including legal recourse, how to engage with suppliers, risk management, the voucher debacle, managing customer expectations and, more recently, how to reopen, but the industry needs something to sell. They need control over bookings and need to get their members back to work.

“I don’t have a problem with vouchers but you have to consider the consumer’s rights. In many cases the agents are between a rock and a hard place and they can’t get the money back. The intermediary is in a very difficult situation.

"If we are made aware of our members doing this we would mediate, based on law and the rules of being an Asata member If the member chooses not to comply, we advise consumers to go to the Consumer Goods and Services Ombudsman. Our role is mediation and I would rather find a way to be conciliatory. This is why it’s so important to book through an accredited agent - they are good and experienced at helping resolve customer issues.”

De Vries acknowledges that some travel agents have held onto refunds or not passed it to the suppliers, in order to manage their cash flow for their business. “It’s fraud.”

Signs of recovery

Lockdown has crippled travel globally: many airlines have announced job cuts and flouted consumer protection laws that entitle customers to a full cash refund.

The EU, which is hoping to salvage some of its summer tourist season by gradually opening borders and lifting restrictions, has called on companies to uphold consumer rights to refunds and proposed “sweeteners” to make vouchers more attractive. The vouchers should be protected against insolvency, and be valid for at least a year and refundable if not redeemed.

The European Commission said: “As soon as the health situation allows, people should be able to catch up with friends and family, in their own EU country or across borders, with all the safety and precautionary measures needed in place.”

European Commissioner for Home Affairs Ylva Johansson told Euronews that member states had a duty to ensure refunds remained an option. “This is a fundamental right for consumers and we will stick to that.”

Mark Watts, the co-ordinator of UK Transport in Europe who helped write a regulation that requires airlines to refund within a week, told the news network that airlines’ cash flow crisis shouldn't become the consumers’ problem.

"The airlines have a cash flow crisis, but it’s probably nothing compared to the cash flow crisis being faced by many households, who may have hundreds of euros locked up in flight tickets that they cannot use this summer.

“They (consumers) need that money back, and there’s a financial but also a moral obligation on the part of the airlines to pay this money back.”

Iata estimates that airline revenue will be down by about R55 billion this year, which is almost 60% below last year's levels. More than 252100 jobs are at risk.

* Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected], tweet her @georginacrouth and follow her on Facebook.

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