Travel Agents Warn That Tougher Airline Refund Rules Threaten Passenger Flexibility And Agency Stability

Several airlines have introduced stricter refund policies that require travel agents to either refund or reissue cancelled fares prior to the original date of departure or face a no-show penalty.

Agents say the change disadvantages passengers, particularly those needing last-minute changes, and creates financial risk for agencies that are unaware of the rule change or who fail to advise clients.

“The general rule used to be that airlines required that refund requests be submitted while the ticket is still valid, which is often up to one year (12 months) from the date of original issuance for unused tickets, or one year from the date of the first flight for partially used tickets. Tickets that were expired were generally not eligible for a refund,” said Rachael Penaluna, MD of Sure Maritime Travel.

“However, the consensus now is that refund rules are at the discretion of each airline.”

Administrative burden

This new tight time-frame for refunds or reissuing of tickets places administrative strain on agents, who have to discern which airlines have changed their policy, and on refund administration, ensure this process is completed for any last-minute cancellations or changes to avoid having to charge clients no-show penalties.

“It is a total minefield out there because agents get used to a general set of rules that gets applies across most carriers, but then an airline will come and throw a curveball by adding this clause into their fare rules,” said David van den Heever-Liebenberg, Travel Director and Co-Founder of Mr and Mr Jones Boutique Travel Management.

“If the agent does not notice this change to policy and inform the client of the no-show penalty and how it gets applied when a ticket is not reissued or refunded before its original booked date, then the agent could be liable, especially if they value their client highly enough,” he warned.

Penaluna also pointed out that a typical refund could take a few days or weeks to come through to the client or agent, and that, while refunds could be submitted as urgent, the newer short timeframes for refunds compromised clients.

“Obviously one refunds tickets as quickly as possible because they don’t want to risk it, but the policies need to offer a reasonable period of time to complete the refund. It was previously a year post original departure date and even seven days is more manageable. But one hour prior to departure is unreasonable and illogical,” said Penaluna.

“Sometimes a client may cancel at 22h00 the night before departure, and then an agent has to phone the refund department, after hours, and expedite the process even further.”

Van den Heever-Liebenberg speculated that airlines were implementing these types of policies because they wanted to protect their revenue, by forcing commitment and reducing open-ticket liability, to increase their guaranteed cash-flow and eliminate fare abuse.

However, Penaluna explained that the one-year leniency offered on most airline refund policies could not be taken advantage of, as all changes to the original fare, including a change to date, class or route, as well as changes to taxes on a reissued ticket would inevitably be charged to the passenger.

“It’s unfriendly but financially very smart and I will be very surprised if the other airlines don't follow suit,” admitted Van den Heever-Liebenberg.

He said that it would become agents’ responsibility to inform their clients of the risk of extra penalties, to avoid liability and maintain their relationship.

“The way to combat this, is to check every fare rule every time an agent quotes and books for a client. Rather take the extra time to source the details and put the wording into the quotes and educate clients about the rules to avoid being liable for the potential penalties,” he said.

“It's a ton of extra work, but once agents get into the flow of doing it repeatedly, it will become second nature.”