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“This saga could go on for years”: Potential complications with future...

“This saga could go on for years”: Potential complications with future travel credits

Thursday, July 9, 2020

This story originally ran in the July 9, 2020 issue of Travelweek magazine. To get Travelweek delivered to your agency for free, subscribe here.


 

TORONTO — When global travel all but grinds to a halt, and cancellations ramp up to unprecedented levels, the sheer volume of future travel credits (FTCs) creates tricky challenges, on a grand scale, out of previously one-off situations.

And while for the travel industry FTCs are still preferable to refunds, for a long list of reasons, complications with the credits are still bound to arise.

Here’s one example. When a client’s trip is cancelled, who owns the future travel credit? The client, presumably.

But what about this: a client books a trip with an agent at ABC Agency, and the trip is cancelled because of COVID-19. The client gets a future travel credit. The agent then decides to leave ABC Agency and move over to XYZ Agency, and the client goes with her. Would ABC Agency still have a claim to the FTC?

We put this question to several host agencies, chains and consortiums. Their answers show the difficulty of resolving situations like these when so many factors, including the precariousness of the industry itself, and supplier policies, are at play.

CASE-BY-CASE BASIS

Host agency TravelOnly is looking at every situation individually, depending on the circumstances. “We recognize that deposits on file, amenities, gift certificates, future travel vouchers, etc. are all owned and managed by many different stakeholders and we try to work with everyone involved to provide the best possible service and resolution,” says VP Sales & Marketing, Ian Elliott.

Gary Gaudry, President, Maritime Travel, says: “Our view is the customer owns the credit and the customer can choose to use that credit with whomever they wish. For the ITC operators, the previous agency already has been paid the commission, so there should be no commission concern on the customer using the credit at another agency.”

Christine James, VP, TL Network Canada, agrees. “The FTC belongs to the client so he/she would be free to redeem the credit with the original advisor even if she moved to another agency.”

Potential problems can arise, however, from supplier to supplier.

“SOME SUPPLIERS ARE VERY CLEAR ON IT … SOME ARE NOT”

While everyone has been doing their best to keep lines of communication open in these unprecedented times, there’s still plenty of room for confusion.

“The clients who purchased a trip, only to find out it was cancelled, and then to find out no money was coming back to them – only an FTC – should have some choices. One of those choices is where they can take that FTC to rebook their vacation,” says Flemming Friisdahl, founder of The Travel Agent Next Door.

“Some suppliers are very clear on it – that the consumer owns the FTC. Some of them are not very clear and say the consumer owns it, however they must book it with the same agency or get a letter from the agency owner to move the FTC.”

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Complicating matters is that COVID-19 has dealt the travel industry an unfathomable blow, and no one knows when the turnaround will come. Some retailers may not make it.

“The reality is that some of the agencies the consumer is supposed to redeem the FTC/voucher with will not be in business in two to three months, unfortunately,” says Friisdahl. “So then what happens? Are the customers supposed to hunt down the owner that closed their doors to ask them to sign a letter?”

He adds: “It is very unclear and what is confusing matters even more is that some of the cruise lines who say ‘The customer owns the FTC’, in the next breath are saying the credit lives in their online system and can ONLY be redeemed by the agency who booked the file.”

“THE CUSTOMER GETS PUNISHED A SECOND TIME”

Friisdahl says the client “should be able to book it with ANY travel agent they wish. It is unfair that at the end, the customer gets punished a second time when they are told they have no choice in who they MUST buy their travel from!”

TPI CEO Zeina Gedeon says communication with clients is key during times like these. TPI is hosting training for its advisors to help with tracking and strategy for clients with FTC, and recently did training where advisors could set up automated reminders to their clients holding FTCs to engage with them.

Says Gedeon: “Most of our supplier partners have worked diligently in helping the travel agent community retain the initial booking as it stipulates the FTC needs to be booked with the agency on record. The FTC belongs to the client at the end of the day however; with constant and consistent communication with their clients; travel advisors will be able to retain their clients and book them in the future using their FTCs.”

At TPI, the clients remain the sole property of the advisors “as it is their independent business and we can’t take that away from them.”

Niche Travel Group owner Faith Sproule, in Dartmouth, NS, says she support the idea that the agency owns the booking, but says she has already made allowances to move bookings to other agencies.

“THIS SAGA COULD GO ON FOR YEARS”

Sproule says she has allowed three Transat files, worth between $2,600 for a solo traveller and up to $3,900 for a couple, to be moved to other agencies so far. “Right now some suppliers have left the control with the agency. I am sure if the client wrote a letter they would have to move it, but I don’t think they will give up that file without a fight if the commission is still pending. It is such a tough situation, the agent and agency lose any way you cut it,” says Sproule.

“Either they have to do the work a second time for the commission owed on the first file or they lose it all together. The most fair option would be for the new agency to buy the credit from the old agencies at 50% of the commission owing on file.”

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Sproule adds: “In a perfect world, all clients want to rebook with the original agency, but we have to make allowance for clients to book with other agencies and I only hope other agencies do the same for us … We are looking at FTCs that never expire and this saga could go on for years.”

Doug Crozier, principal, Heifetz, Crozier, Law, says that from a legal point of view, the FTC is owned by the client, and if the client’s agent signs on with another agency, “the credit would stick to the client, whether s/he follows the counsellor to XYZ, or stays with ABC, or goes somewhere else entirely.”

Crozier adds: “The only exception I can see would arise when the counsellor put together a group tour, it was sold through ABC as the TICO-licensed agency, COVID intervened, and a supplier whose services were to be part of the group tour offers a group credit to ABC, as opposed to individual credits to each of the disappointed clients.”

In that scenario, says Crozier, the benefit doesn’t accrue to the individual client so it can’t travel with him/her. “That said, ABC would still have to deal with the client who paid money to ABC and didn’t get the purchased travel services and is not sharing in the benefit of any use to which ABC puts the group credit.”

“THE VALUE OF AN AGENT HAS NEVER BEEN MORE EVIDENT”

Heather Baker, Director of Acquisitions & Social Media for Independent by Flight Centre says IFC has encouraged all of its Independents to keep a careful record of FTCs, to minimize any potential headaches down the road.

“With some suppliers removing expiration dates entirely it could potentially be a couple of years before a client looks to redeem that credit.”

Management of FTCs “will be of the utmost importance in the coming months,” says Baker.

“We have never seen suppliers having to issue this many, this quickly.”

Baker notes that a number of IFC agents are already redeeming supplier credits for rescheduled trips. “The value of having a travel expert on your side has never been more evident.”

Tags: FTC

Kathryn Folliott

Editor at Travelweek
Kathryn is Editor at Travelweek and has worked for the company since 1995. She has travelled to more than 50 countries and counts Hong Kong, Jerusalem, the Swiss Alps and the Galapagos Islands among her favourite destinations.
Kathryn Folliott
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