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Local travel agents warn airlines about passenger ticket refunds 

14th May 2020

By: Rebecca Campbell

Creamer Media Senior Deputy Editor

     

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The Association of Southern African Travel Agents (Asata), while expressing understanding for South Africa’s beleaguered airlines, has cautioned that they must comply with the Consumer Protection Act (CPA). The airline, travel and tourism sectors have been severely hit by the country’s lockdown and flight ban, instituted to counter the Covid-19 pandemic.

Airlines are under severe financial stress. Consequently, to maintain their liquidity, airlines have been tending to issue vouchers in place of refunding tickets, or delaying the refunding of tickets.

“While we, as a representative of the travel agencies which have been significantly impacted by Covid-19 and the associated travel bans, are sympathetic to the issue, we believe that the delay or refusal to refund passengers is in contravention of the Consumer Protection Act,” warned Asata CEO Otto de Vries. Travel agents were the best channel for educating airline ticket holders about the airlines’ various voucher and refund policies. But the final decision – voucher or refund – should be left to the customer.

“In accordance with the Consumer Protection Act, airlines should extend full refunds for customers requesting them, the total amount paid by the customer, in lieu of a credit for future travel,” he affirmed. “We do not condone unsecured vouchers as an alternative to the consumer’s right to a refund, particularly in the case of South African Airways [SAA].”

SAA was currently under business rescue. So far, people who had booked tickets with the airline had been given three options, but a full refund was not one of them. “Bearing in mind that the CPA requires all consumer funds for future bookings to be ring-fenced and treated separately from the assets of the supplier, a refund should be legally possible even when the supplier is in financial distress,” he highlighted.

He urged that travel agents be involved in the establishment of voucher and refund policies, so that they could support their customers. This would require that airlines reactivate automated ticket change capability in their global distribution systems (GDS). These GDS would have to be updated to include airline policies on vouchers and refunds. This would streamline processes and allow travel agents to use the GDS to process all vouchers and refunds.

“Vouchers should be guaranteed to protect from a potential bankruptcy of an airline,” he stressed. “Even if, after 12 months from the original departure date, the customer chooses a refund in cash (also applicable for any residual value of a partly used voucher) and the airline is not able to provide this refund or has already become insolvent, the voucher must be protected by a guarantee fund.”

Regarding SAA, under the CPA it was required to ring-fence the monies it had received from ticket-buyers and not, for any reason, use them to fund operations. In general, the association’s opinion was that vouchers should only be a temporary expedient and the policy should come to an end on December 31 this year.

 

Edited by Creamer Media Reporter

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