This might be too simple a view, but it probably reflects some industry trade. Accepted that full fare, flexible, refundable arrangements are not included in the following.
A customer buys a fully packaged non-refundable tour for $10,000.
The agent gets paid their a commission. There is $9,800 remaining.
The company secures and pays for non-refundable air fares, say $3,000.
The company secures and pays for non-refundable hotels, say $3,000.
There is $3,800 left in the account.
A few odd expenses, prepaid transfers and so on, remaining $3,700.
Multiple this scenario by hundreds to thousands per agency and COVID-19 happens.
The ‘food chain’ has paid non-refundable arrangements. Being non-refundable there would not necessarily have been quarantined funds. Not being familiar with accounting standards I’ll stay away from how the funds are treated internally to a business.
Say 1,000 travellers get dudded by the shutdown. $100 million went in, before explicit business overheads are paid there is $38 million potentially available for refunds. Scale this accordingly. Which of the 1,000 travellers gets refunded and how much? How much is available from a company put into administration?
Add a fully refundable ticket to the mix. The airline refunds to the agency who refunds to the passenger. All the commission is gone. Who pays the staff for processing and passing on the refund?
No intention of turning the example into a what-if why-if discussion, just putting reality on the tables into how the pressure escalates and how it may be impossible in a practical sense for consumers to get their rights. If there were a mandated insurance system to back travel companies for pandemics, acts of god, civil unrest, and so on, it could be done if the pool was large enough. otherwise?
I understand non-refundable purchases, I understand there are costs that accrue due to work undertaken. These are accepted (and should be excepted) and clients should be or need to be aware that some costs are not recoverable. These can be outlined and they should be able to be accounted for. If a business states that their “labour cost” was $2,000 of that $10,000 then a client would be aware. Most TAs are quite secretive of how much they obtain from a package, this is why so many I think are a bit unaware of why they don’t get the entire amount back.
But from my reading of several situations it would seem clients monies in some situations have been refunded to the TAs but then the remaining amount after those labour costs are removed are not being refunded to the clients.
Then to add insult, the insurance which has been wholly paid to cover such are being withheld because the insurers have clauses that allow them to back out of paying and not even refunding that cost of purchase.
The complicity of Govt and Agencies that oversee this all is as ever part of the Laissez-faire approach to most business behaviour these days.
How many businesses publish their business models from overheads to markups to rebates from their own suppliers and everything in between?
I think it is more basic than that. They only understand they paid $1,000 and expect $1,000 back since their tour or flight got cancelled through no fault of their own, and proceed from that position.
I too have noticed those cases, but in some of them it seemed the last shoe was yet to drop. It would not be surprising if the agents tried to manage their cash flow to keep trading, thus trying to ‘sell’ vouchers when possible and deferring whatever refunds they could. For how long the latter? Airlines routinely take 6 weeks in good times, so I’ll give the agents that time even though it seems over the top for the airlines as well as agents.
Is that like any other type of insurance? Insurance is a for-profit business excepting when governments provide it in special circumstances, not a service, and the policies are written that way. Force majeure events, events beyond anyones control, are always excluded from policies of all types.
As I previously posted, Allianz (US) actively contacted affected policyholders and refunded their travel policies within weeks for those whose travel had not started before the lockdowns and border closures began. Has Allianz (AU) done the same? If not perhaps the US versus Australian issued policies experience is part of what @bkuran observed when he started this topic? Not to enumerate all our other travel insurance companies who have apparently been ‘difficult’, to be kind to them.
Let me add to the mix this question: Why should travel agents charge for booking & then for processing a refund when the goods & servces are not delivered through no fault of the client (in this case due to COVID) when no other industry I can think of does or is allowed to?
They are agents by name. It’s through no fault of their own.
If we need examples, look to real estate. The client (seller in the example) pays for marketing and the auction sold or nor sold.
There is a difference between providing a service as an agent and delivering a product Eg plane flight, accommodation, tour etc.
I suspect a large portion of the funds able to be returned are not with the agents. For those following the recent discussion more closely I suspect
@grahroll and I are both right and wrong at the same time. In the absence of copies of the financial dealings of Travel Agents and each Clients booking status we don’t know reliably in each instance.
It is not possible to know for sure the rats that have left the sinking ship, those scrambling to the last line ashore, or those with integrity prepared to go down with the ship, but hoping we will all be saved and can go back to good business with us as grateful clients.
You are absolutely right IF the services or goods are delivered.
Even for a Real Estate Agent, if the contracted service is NOT delivered through no fault of the client, then the REA cannot charge their commission or charge for processing a refund.
Would it be so hard for a TA on refunding to include an amount of what was deducted for service fees, or even better at the procurement stage to outline what fees would be charged for services rendered even if the trip did not proceed? This is normally part of any service we arrange in most other areas of our lives. Go to a Dr, a Dentist, and so on fees are outlined before they begin the treatment, service, repair. A traveler would then know not to expect a full cost refund, they would have some idea of the expenses that would be deducted.
When quoting for repairs most express the hourly labour cost and expected total hours required. quote fee may also be charged even if repairs do not go ahead, but the client should be informed of these costs. The repairer may include a proviso that the expected labour and parts costs may vary if unseen difficulties arise. They often also state if extra repairs are required they will try to contact the owner before proceeding. When the final invoice is rendered it should include those final costs. Why then do we allow TAs to gloss over or even not disclose these costs? This seems to be absurd and also creates some expectation that everything will be refunded.
If I have insurance for say my car that the insurer later realises they cannot cover in most cases any policy amounts that have been paid are refunded. If I had commenced my Journey then I expect that there will be some situations that arise that may not have coverage eg force majeure but no travel commenced and the policy effectively void, why isn’t the cost, less perhaps stamp duty and similar fees, refunded within a short time frame?
It is possibly no different to one say getting financial advice on where best to invest ones super…and then deciding not to pursue the advice given. No products are sold or goods are delivered. Should one not pay for the financial advice as one doesn’t take up the recommendations?
One has to remember that the consumer instigates and engages the travel agent to perform work in their behalf. The work is to book travel for upcoming holiday/business trip. It is not the travel agent who instigated this work and the consumer should be partly responsible for costs incurred by the travel agent to book on their behalf.
If not paying for the service was accepted, then any service which one cancels one either could expect not to pay an incurred costs or receive a full refund. This would be unacceptable to almost all industry as the financial burden of work commissioned by a person would be fully borne by the business engaged to perform the service.
Like any service costs, one should however be able to request a breakdown of costs incurred by the travel agent for the services rendered (it could be 5 hours at $35/hr, booking or other related travel fees etc). One should then pay for these costs as they could be considered reasonable.
It depends. If the house is auctioned, and the auction didn’t result in the sale of the property (which is no fault of the owner), the owner still has to pay for the auction.
One also shouldn’t confuse browsing for a service provider (such as trying to find the travel agent which delivers the best customer outcome) to engaging a service provider (such as travel agent to book on ones behalf).
This is different, as in this case you are engaging the advisor to provide advise, not to purchase something for you.
If the auction runs and the home doesn’t sell that is different to what I am suggesting.
What if you contract for an auction, and the auction is cancelled indefinitely before any action is taken by the RE, because gatherings are banned? Then the service is not delivered, and you could expect a full refund.
Most travel agents also provide advice…what flights are available, their costs, suitable accommodation, what visas are required, suitable tours/side trips etc…if one then agrees, the components are booked and then confirmed.
If an agent didn’t provide advice, why use an agent (I suppose only if one can’t book oneself - e.g. doesn’t have internet access).
Financial adviser can also be the same…provide advice on investment strategies and also offer the service of making the investment ‘purchase’ on behalf of the client.
But is is still two months away. Who knows what the situation will be then. Maybe the students (or their parents) should be patient and make claims around the time that the travel was planned.
For those of you that have been affected by cancelled travel over the COVID period please feel free to reach out. I have dedicated the last 6 months fighting to ensure that consumers are treated fairly and get back what is rightfully theirs. I have done plenty of media on the issues and will continue to do so until justice is served.
The reality is that we have very little protection available to consumers at the moment and we need urgent changes made to the ACL.
If you have been treated unfairly by:
Airlines
Travel Agents
Tour companies
Cruise companies
or any other travel companies please share your story.
Hey thanks Adam, and welcome to the community. That’s very kind of you.
As you may notice, I have moved your post over to this existing thread which is to do with people who have cancelled travel due to the COVID epidemicl
For the sake of transparency, it might help forum members if you explained how you have come to be an advocate for consumer who have been affected by travel cancellations during COVID, and what you would do with their information if they contacted you.
Thanks for doing that for me. I wasn’t aware that a thread was already dedicated to this.
A little bit about myself:
Like many, my wife and I had booked a holiday through a travel agent. They owed us money that they were not willing to give back and I figured that hundreds of thousands of Australians would have similar issues. I then decided to start a Facebook group to help as many people as I possibly could that were in similar situations. My groups now have over 15000 members and I thought I would reach out to the Choice Community to see if I could assist.
In relation to customers information, it is kept 100% confidential as it always has been with me. If anyone wishes to have a chat, I am more than happy to assist in any way I can. I have been doing this for about 12 hours a day for a number of months. We thought that the issues may have been resolved by now, but numerous issues still exist and need to be rectified.
You are most welcome There are a bunch of really nice people here who assist whenever possible:
Oh the right hand side of the lue bar at the top of the page you will see a magnifying glass. If you click on that you will be able to enter words to search for, such as “COVID travel”. That will bring up a range of topics related to those key words.
Feel free to chip in and provide advice or assitance to other forum members. They will appreciate it.
Thanks for that. It makes it much your offer of assistance much clearer.
I had booked a cruise that was all inclusive, i.e. airfares, hotels each end and transport. It started in Alaska and finished in Japan and because we are not comfortable with economy seats for that distance we asked could we pay the difference and fly business class. They agreed but on the condition that we paid those fares in full upfront in addition to a deposit on the remainder, which we did. In February we received an email cancelling the complete trip, from the cruise company. Shortly after we were told they would refund our deposit less $750 per person. This took several months for the refund to appear and as indicated less the $1500. We were told to claim on our travel insurance. Having looked at a travel insurance claim in the past and knowing it was a hassle I had put off doing it and then out of the blue I got a phone call from the travel agent to say they were going to give us the $1500 back. Well it took a while but that money too was paid into my account recently. Even though I asked the travel agent numerous times I never got an answer regarding who was getting the $1500 I believe it was the travel agent because that is what they would have received as a commission.
I think it is highly like due to the pressure being put on the industry and subsequent backdown on refunds that this happened in my case. As well I was dealing with a highly reputable travel agent, cruiseline and my business class tickets were with Cathay Pacific.
I do not know whether my travel agent would have covered this as I never got round to putting in a claim.
There are a bunch of really nice people here who assist whenever possible: