Global Airline Trade Group Deals Massive Blow to Travel Agencies by Opposing Refunds

This isn’t the news travel agencies were hoping for. The International Air Transport Association has just dealt a fresh blow saying it is now backing member airlines’ moves to issue vouchers, not refunds, to cash-strapped travel agencies.

“The message I have to deliver is not one that will provide comfort,” admitted Alexandre de Juniac, director general and CEO of the association, in an open letter sent on Friday.

The association also wants the countries in which it operates its billing and settlement plan — the mechanism by which it channels vouchers and refunds back to travel agencies — to sign up to its proposal.

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So far, three countries have said they will recognize this stance, with De Juniac stating: “Canada, Colombia and the Netherlands have recognized the necessity of this approach and we hope others will do the same.”

Country level

Previously, the association has distanced itself from those airlines opting for vouchers, and earlier this week told Skift: “We recognize the difficulties this has created for travel agents and IATA has reminded airlines that in some jurisdictions agents are required to provide refunds to passengers, but ultimately this is a business decision for each individual airline and is outside of IATA’s scope.”

But in Friday’s letter, it says: “We believe the best answer for both airlines and travel agents is for regulators to ease requirements for cash refunds and allow airlines to issue vouchers instead.

“These vouchers can be managed through the Billing and Settlement Plan using processes and procedures that already exist today. This would remove the pressure that is currently on agents to issue cash refunds at a time when airlines are making decisions based on their own need to preserve cash.

“We are willing to engage in open and collaborative discussions with the travel agency community represented in the Passenger Agency Programme Global Joint Council to formulate a structure for these vouchers that will bring value for airlines, travel agents and consumers.”

The move could now prompt more agencies to follow the lead of one Norwegian company’s proposal to take the airlines to court to force them to repay refunds.

At the same time, the association has said it will tolerate more flexibility for those agencies that owe money to airlines, allowing settlements to be made later and without penalties.

It is also allowing agents to continue selling, using secure methods, even when they are late with remittances. “We also recognize that in today’s environment, when it may be difficult to impossible to get audited financial statements, or arrange a financial guarantee, we are offering to extend deadlines for these statements by up to a month,” it added.

UK agency consortia told Skift more needs to be done.

The Advantage Travel Partnership said vouchers are not an acceptable form of refund, because agencies are in the most part contractually obliged to return monies to corporates.

There is also an “overlap between airline refunds under the association’s resolution 265 and the ability for agents/operators to refund in line with their obligations under the package travel regulations”, according to CEO Julia Lo Bue-Said.

It is continuing to negotiate more favourable cancelation policies with individual airlines.

The Business Travel Association warned that corporate customers needed the option of refunds to help ensure they will be able to travel again when the crisis passes.

Dark Days

The association says one-third of the global fleet is parked, and estimates  revenue from passenger ticket sales will fall 44% this year compared to 2019.

“While I know that this is not the answer that you want to hear, it’s important that you understand that IATA is working hard to find a solution to this problem that will enable us to endure and move forward.

“People want to travel, for the horizons it broadens and the connections it enables and maintains. These are dark days for our industry, but we are resilient, and we will get through them, together,” De Juniac concluded.

UPDATE: This story was updated to include comments from the Advantage Travel Partnership and the Business Travel Association.