Corporate Travel Advisors Put Global Airline Group in Crosshairs Over Refunds

Corporate travel agencies are demanding airlines, and the International Air Transport Association (IATA), speed up the return of refunds — amid claims that the airline organization is violating its own resolutions.

In the UK, the Business Travel Association, which claims its agent membership accounts for over 90 percent of UK spending on managed business travel, has called on airlines to stick to IATA’s regulations by offering refunds to corporate travelers.

It said while most UK airlines are now offering refunds, many overseas carriers are refusing to do so, even where flights have been cancelled as a result of government advice or action.

Get the Latest on Coronavirus and the Travel Industry on Skift’s Liveblog

“This is in contravention of IATA ruling 824r. These airlines are instead offering vouchers which prevent the BTA’s member travel management companies from refunding their corporate traveller customers, and the companies for whom they work, from recovering the money that they have paid,” it said in a statement.

“These vouchers are often valid for up to one year and will be lost if not used within that timeframe. The BTA is calling on all airlines to offer cash refunds rather than vouchers, and to do so via the quickest means possible. This will enable TMCs (travel management companies) to reimburse their clients and ensure that corporate travelers and their companies are not unfairly penalized at a time when all businesses are facing up to the challenges of COVID-19.”

“We understand these are challenging times for the airline industry,” added Clive Wratten, the association’s CEO, “but those difficulties are also being faced by other parts of the business travel supply chain and, indeed, across the wider business community.”

refund challenges

Meanwhile, the Advantage Travel Partnership, which claims its leisure and business agency members collectively produce $5.35 billion (£4.5 billion) of travel sales each year, has criticized IATA’s Billing and Settlement Process.

The biliing and settlement services the settlement of financial transactions between travel agents and some 370 airlines, spanning 180 countries (excluding the U.S.).

IATA claims an on-time settlement rate of 99.999 percent. Currently, agencies using the settlement process are subject to fortnightly remittances, but Advantage is calling for an extended period.

“Our members have expressed they understand the rationale for not extending settlement periods, as the volume of bookings will be low,” said Julia Lo Bue-Said, the partnership’s CEO. “However, the topic of processing refunds is a more pressing topic for them. While we understand the challenge for airlines with BSP not being designed to process the level of refunds it is now being asked to do, our members need to understand how and when the airlines will be issuing refunds.

“We are holding regular calls with IATA along with our aviation expert Joanna Kolatsis to highlight a number of points that have been raised through our TMC emergency member steering group relating to the billing process. At this time we are advising TMCs in this current situation that they ensure they are raising any operational issues on the IATA portal so trends can be monitored closely.”

‘Outside our scope’

In a statement to Skift, IATA said it “has reminded airlines that in some jurisdictions agents are required under law to provide refunds to passengers.”

“While we cannot address specific situations, we recognize that these are extraordinary circumstances facing this industry and have taken steps to provide our travel agent partners with additional flexibility in terms of remittances, financial assessments and in exceptional situations, alternatives to bank guarantees,” IATA said.

On the issue of airline refunds, it added: “We fully understand the concerns of agents, and our whole sector, all stakeholders included, is facing a common and unprecedented crisis. We have already encouraged our airline members to facilitate any claim for reimbursement but given the current liquidity situation this is a business decision for each individual airline and is outside of IATA’s scope.”

Register Now for Skift’s Online Summit on Business Travel on March 31

In February’s BSPlink Newsletter, IATA hints at incorporating additional frequencies weekly, eight times per month and daily. However, when asked for clarification, IATA told Skift it was not able to comment at this time. Meanwhile, IATA’s technology partner Accelya is set to carry out scheduled maintenance work from “March 28 14:00 CET to March 29 03:00 CEST.”

French revolution

In France, IATA has also riled online travel agencies, including MisterFly and Bourse des Vols. In French media, Fabrice Dariot, president of Bourse des Vols, has said: “IATA has just decided to no longer reimburse immediately canceled flights, as has always been the practice. The consequences are harmful for travel agencies: cash tightness, deterioration of customer relations… risk failure of companies. This decision goes completely against government incentives.”

Meanwhile, in a 1,500-word open letter to IATA, Nicolas Brumelot, co-founder and president of MisterFly, warns that for many agents the issue has become a matter of “life and death.”

Referring to IATA’s refund resolutions, he writes: “These resolutions, grouped together in the Travel Agent Manual, list all the rules that we must comply with. It is useful to clarify, for those who do not know, that these rules are unilaterally voted by the only members of IATA, namely the airlines. IATA enjoys the prerogatives of a monopoly.”

Adriana Minchella, president of French agency group Cediv, has also called out the “illegality” of airlines refusing to issue refunds. In an another open letter, on the same French media website, she addresses IATA CEO Alexandre de Juniac: “I allow myself to question you … on the illegal position adopted by the European companies member of the association, which do not respect the provisions of European Regulation 261/2004 regarding reimbursement of canceled flights, including in the event of extraordinary circumstances (in particular Article 9).”