Airfare refunds continue to elude Philippine agents

Low cost airlines Cebu Pacific and Air Asia aircraft at colorful sunset at Puerta Princesa Airport in Palawan island, Philippines. August 2018.

The Philippine Travel Agencies Association (PTAA) will have to wait it out before it can get the full refund of at least 141 million pesos (US$2.91 million) it is seeking from 27 airlines for cancelled flights due to the pandemic.

One of the big hurdles is that airlines are caught in a similar financial bind as travel agencies, if not worse. That leaves their hands tied even as PTAA president Ritchie Tuano made repeated appeals to IATA and the Philippine Civil Aeronautics Board for ticket refunds to help the liquidity of its 605 members, of which 80 per cent or 419 agencies have temporarily closed, with the rest only partially open.

Cebu Pacific, AirAsia among 27 airlines which owe Philippine travel agents refunds for cancelled flights

Paz Alberto, Philippine IATA Travel Agents Association president and Ark Travel Express general manager, asked agencies for patience, understanding and support for airlines, including Thai Airways which is banking on state-led financial aid to tide through the crisis and Etihad Airways which has announced it can only issue refunds within a year.

At the Network of Independent Travel Agencies general membership meeting last week, Alberto also said that the air passenger bill of rights (APBR), which was being invoked for air ticket refunds, was done at a time when Cebu Pacific had many cancelled flights and failed to address the fact that airlines don’t have money in this time of pandemic.

Alberto said one option is for agencies to instead offer clients travel vouchers which can be valid for up to two years and have lenient and generous add-ons including discounts and the option to refund.

Her stance reflects that of IATA director general and CEO Alexandre de Juniac who, in an April open letter to the travel agents community, said that “the best answer for both airlines and travel agents is for regulators to ease requirements for cash refunds and allow airlines to issue vouchers instead” to “remove the pressure that is currently on agents to issue cash refunds at a time when airlines are making decisions based on their own need to preserve cash”.

TTG Asia learned that Tuano, in communications with IATA and the CAB as early as April, invoked Section 11.2 of the APBR entitling passengers affected by flight cancellations due to force majeure to reimbursement for the full value of the fare and Section 16 specifying that “the reimbursement shall be made via check or cash, with no mention of the legality of a travel fund or a travel voucher”.

As irate passengers were also demanding refunds of travel agency service fees, Alberto clarified that refunds are not mandated by law because the service to passengers was a “consummated transaction”.

In the ongoing stalemate, seen by some quarters as airlines getting interest-free financing from smaller players, PTAA’s Tuano said in a statement: “Airlines have been one of the travel agencies’ long-time partner in the tourism industry. As the industry grew, they have thrived. Both sides need each other especially during this time of crisis.”

Among the 27 airlines that owe the travel agencies refunds are Philippine Airlines, Cebu Pacific, AirAsia, Emirates, Singapore Airlines, Turkish Airways, and Qatar Airways.

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