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Flight refunds in the travel industry are overly complicated. Ridiculously so. Whilst in most retail industries its a matter of return the good, receive a refund. It’s not uncommon for refunds in travel to take 3 months or more. How?
First we must go back in time to paper airline tickets.
Paper airline tickets were regulated by the International Air Transport Association (IATA) and every ticket had its own unique identifying ticket number.
A standard paper ticket had 4 coupons or ‘tickets’ valid for each flight. A one-way flight uses 1 coupon, a return journey uses 2 coupons and so on. The remaining coupons were voided if unused.
For an airline to be paid for an airline ticket issued, they had to remove the coupon for that flight at check-in, submit it with the relevant paperwork and send it to IATA every month. IATA would wait for the matching paperwork from the travel agent to say the ticket was issued, along with the funds for the ticket (less their commission).
The process was not always completed until the traveller had completed their journey in case they cancelled their ticket and requested a refund. Many tickets were valid for 12 months, so it could be up to a year before the payment was finalised and the ticket closed off and completed according to accounts.
Even though IATA have switched to e-tickets, essentially the same principals and procedures are often still in place.
When it comes to refunds, first the travel agent would send a request to the airline requesting a refund. That request would go to the ticketing department to check the fare rules allowed a refund, and if so what the cancellation fees were.
The refund request would then go to the ticketing manager to be approved, before being sent to the accounts department to check they had received the money in the first place, and so could then issue a refund.
The refund cheque would be issued and passed back to the ticketing manager to sign-off and it would then be sent out to the travel agent. The travel agent would then cash the cheque, issue a new cheque from their agency, less their cancellation charges and then give this to the client.
Often parties involved would be in different countries, speaking different languages and if one person in the chain would be away, busy or sick, it would slow the whole process down.
Multiply the amount of refunds by the potential number of cancellations, such as during COVID-19 lockdown which ran into the millions then you can imagine why your refund is taking so long.
The standard minimum amount of time this would all take is 3 months, but 6-9 months is possible.
Even if you book direct with an airline, it could still take 4-6 weeks (or in some cases 9-12 weeks) for a refund request to be completed and paid out.
An important point is some online travel agents have a blanket ‘no refunds under any circumstances, even if the airline offers a refund’ policy. In some countries this could be illegal, but they will certainly try. Which is why;
BEFORE YOU BOOK ANY TRAVEL PRODUCT, ALWAYS READ THE TERMS AND CONDITIONS!
Now, many airlines are more generous with their refund and date change policies as governments close down borders with little notice, however even if the airline offers free date changes or refunds, a travel agency (online or physical store) may still charge fees (not all but some) so never presume and always keep a copy of the fare rules, relevant to the ticket you purchase.
Here is IATA’s CEO’s statement on airline refunds during the COVID-19 Crisis. These are IATA’s standard conditions of carriage which outline your rights as a traveller. If you’re trying to obtain a refund, you might find some handy region specific information and links here. It gets tricky because there are slightly different rules in different regions.
If you find yourself in a situation where the airline has offered a refund but the travel agent is refusing to pass it on, you could:
- If possible, visit the travel agency in person (it’s easy for them to hang up a phone call, more difficult face-face)
- Request your refund request in writing (by registered mail) and keep diary records of every communication you have
- Request in writing from the airline they are offering a refund
- Contact your local travel agent association – most countries have one e.g. AATA (USA) and AFTA (AU) for advice
- Speak to your bank about a credit card charge-back
- Contact a lawyer and threaten legal action
- Organise a payment plan with the travel agency if cashflow is an issue
- Be relentless, don’t give up!
I’ve seen travel agents with minimal cashflow struggle with refunds because the money has already been spent on rent, bills, office supplies and so on. Whilst you may have paid $1000 for a flight ticket. The travel agency probably received maybe $50 commission from that ticket, maybe less. So for them, receiving $1000 back from an airline is like a cash bonus. It’s tempting to keep it to cover bills which is why some travel agents try and push the ‘no refunds under any circumstances’.
However, be relentless, they hope you will get tired and forget about your refund. Keep asking until you’ve tried all possible angles.
Expedia, Trip.com, and Kiwi.com are all massive online global travel agencies that can still offer cheap flights with customer service teams able to assist if things don’t go according to plan. I’ve used Trip.com several times (they own sky scanner) and I’ve even received a refund I didn’t know I was entitled to when I was downgraded on a train in China.
The easiest way to avoid a nasty refund situation is obviously knowing your rights before booking.
So, make sure you READ THE TERMS AND CONDITIONS and not just tick the box so you know your rights before handing over your credit card details. If something isn’t right, or you don’t like the terms being offered, you can always buy that same flight ticket from another source.
For reference, here’s our terms of service.
This is why on FlightSale, we give you the choice when searching for flights to choose to book direct with an airline, or choose from a variety of online travel agents for the best possible price. In many instances, the difference is only $20-$50 between booking with an online travel agency and the airline direct, or a larger global online travel agency.
Have questions? Feel free to ask us.
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Thanks for reading,
The Flight Sale Team.