This story originally ran in the May 28, 2020 issue of Travelweek magazine. To get Travelweek delivered to your agency for free, subscribe here.
TORONTO — Many travel agents didn’t have time to worry about a second wave of refund requests in the wake of the COVID-19 pandemic — because they were too busy still dealing with the first wave.
When the refunds vs. vouchers debate reignited in the consumer media recently, agents were bracing for new rounds of questions from clients seeking refunds or pursuing credit card chargebacks, resulting in commission recalls, in case of cancellations, or serious financial repercussions in the case of chargebacks. Not only that, in many of these cases agents are trapped in the middle of difficult disputes they have no control over.
Asked by a reporter recently if the federal government, as the regulator of Canada’s airlines, planned to use its power and authority to “insist that people who were not given refunds, get those refunds”, Prime Minister Justin Trudeau indicated that the government is working with all concerned parties “to find a solution.”
Then again last week, Trudeau was asked if the federal government sees airline tickets “as a luxury product that don’t deserve refunds”.
Trudeau responded that while he knows Canadians want money back in their pockets, they also want to have an airline industry in this country when this is all over, and added that the federal government is looking for “a fair way through this”.
“We’ll have more to say on the issue in the coming weeks,” said Trudeau.
Thousands of Canadians have signed petitions asking the federal government to require airlines and other carriers under federal jurisdiction to allow customers whose trips have been cancelled due to the COVID-19 pandemic to obtain a refund.
This despite the Canadian Transportation Agency’s statement in late March that under these extraordinary circumstances, vouchers are an acceptable alternative to refunds.
The group Airline Passenger Rights (APR), headed up by Gabor Lukacs, argued that the CTA’s statement wasn’t binding and had filed a motion with Canada’s Federal Court of Appeal, in the hopes that the CTA would have to remove the statement.
But the Federal Court of Appeal has dismissed the motion in an interim ruling, and for now the CTA’s statement on vouchers can stand.
In a bit of a Catch-22 situation, the court noted that it’s precisely because the CTA’s statement isn’t binding, that it can’t be asked to take it down.
The ruling also noted that “while APR appears to be pursuing this matter as a public interest litigant, it has not yet sought or been granted public interest standing.”
The CTA’s statement on vouchers has been an important tool for agents as they deal with refund-seeking clients.
The entire travel industry has been hit hard by the coronavirus crisis and airlines are working to conserve whatever cash they have to ride out the bans on non-essential travel.
As agents point out, there are no easy answers, despite the favourable ruling. There’s no sense handing out refunds if the airlines aren’t still in business to honour them. But the same can be said for vouchers and FTCs.
Meanwhile many consumers are in dire financial straits as well amid the coronavirus pandemic, and are just looking to get their money back.
Paulette Soloman, spokesperson for The Travel Store in Charlottetown, PEI, says: “Many are hurting financially, and we care about these clients. We do not want to see them suffer economic consequences from this pandemic. Money in peoples’ pockets makes a difference in their travel intentions.”
Not everyone can, or is interested in, rebooking, Soloman points out. “For example, an aging grandparent who might not be able to go to a destination wedding in two years’ time, or someone who has lost their job or financial security due to this crisis and is unable to commit to rebooking at some future point.”
She says the federal government “must step up and ensure that the interests of travellers are protected but also that our industry suppliers are given the tools and supports they need to survive. At the very least governments should insist on transferability of travel credits. I think this could go a long way to putting to rest many concerns.”
Air Canada has made changes in its policies in recent days. On May 22, as part of its summer 2020 schedule launch, Air Canada announced that in addition to its regular goodwill policies, starting today, June 1, it is offer passengers the choice of a travel voucher with no expiry date that is fully transferable, or to convert bookings into Aeroplan Miles and get an additional 65% bonus miles. Both options are retroactive to March 1.
Soloman says some clients “are understandably angry and worried about what has happened to their money. I worry a lot about how this exposes my staff to a great deal of stress because they have had to maneuver a difficult situation over which they have no control.”
The refunds vs. vouchers debate has caused upset not just in Canada but in the U.S. and Europe as well.
In April, just weeks after travel around the world effectively came to a halt, the European Commission announced that any European airline that failed to honour refund requests, even in the wake of COVID-19, was breaking EU law.
The EC said that airlines wouldn’t be on the hook for out-of-pocket passenger expenses as is the case normally with cancelled flights, but said they must refund tickets.
The Department of Transportation (DOT) in the U.S. is also telling airlines to provide refunds.
Meanwhile most carriers, like Canada’s airlines, are offering vouchers and future travel credits instead of refunds. Passengers are up in arms and agents are caught in the middle.
Air Canada points out that Air Canada passengers with refundable tickets continue to have the option of refunds. Since Jan. 1, 2020, Air Canada has refunded nearly $1 billion to its customers.
Low cost carrier Ryanair has been offering refunds, travel vouchers or the option to rebook. At the beginning of May, Ryanair’s CEO Michael O’Leary said the airline was working through a queue of 25 million refund requests.
Linda Kasza with Robert Q Travel in Aylmer, ON says she had to deal with several refund requests. “Sometimes it helped to explain that if airlines had to offer refunds they may go bankrupt before money was returned to the consumer and then people would have nothing. A future travel credit is far better than nothing.”
Kasza says she lets clients know that she’s in the same boat – her own vacation, and another agent’s at her travel agency, was affected the same way, with future travel credits. “Most people understand. It just seems that the ones that don’t are the loudest.”
Refunds mean recalled commissions and “this is not a good thing for us small agencies,” says Kasza, adding she could see many agencies going bankrupt under those conditions. “I think Canada has done the right thing with future travel credits, and two years is generous.”
If things go on for some time, it would be nice for those credits to be extended perhaps another year, adds Kasza. “Once there is a vaccine I can see a huge rush of people wanting to go somewhere, anywhere.”