Travel refunds due to coronavirus: Why refunds are taking so long

When Julie McFarlane and her husband Gordon booked a holiday to Europe late last year they, like the rest of the world, had no idea what would happen to the travel industry by the following autumn.

The couple had booked multiple tours, hotels and flights for their travel to to Italy and Croatia.

Then came the COVID-19 outbreak and the cancellation of flights and tours. While some providers were quick to provide refunds and credits, others have taken longer.

Mrs McFarlane said they were only offered a credit voucher this month for their Rome hotel, booked through Expedia, having started the cancellation process in mid-March.

But the credit on offer is only for use at the same hotel within a 12-month period.

"It's OK getting credits, and I get it, but when you get to your 60s you plan your years on where you will travel and we're not likely to be able to go to Italy in the next year. The timeline doesn't work."

If Europe remains a no-go zone for Australians, the McFarlanes are likely to end up $3500 out of pocket due to unusable travel credits. The couple have been advised that finding out what will happen with their flights booked from Croatia to Italy will take until September.

The McFarlanes are understanding of the difficulties facing the travel industry, praising their travel agent ("She is copping it and we do feel for her") but also frustrated by the difficulties and delays in obtaining refunds.

They're not alone. Thousands of Australians have found themselves waiting months for refunds to be paid for cancelled trips due to COVID-19.

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Flight Centre, one of Australia largest travel agents, has been the most visible in the industry in bearing the brunt of customer anger. In response to widespread complaints and a potential court case from the Australian Consumer and Competition Commission, Flight Centre scrapped its $300 cancellation fee.

The travel industry has also been angered by media coverage it considers unfair, culminating in Australian Federation of Travel Agents chief executive Jayson Westbury saying A Current Affair host Tracy Grimshaw deserved a virtual "uppercut" for her program's coverage. Mr Westbury resigned after the comments, which did nothing to help perceptions of his industry.

Another industry body, the Council of Australian Tour Operators, has attempted to rectify some of the damage by releasing a video explaining why refunds are taking so long and why credits are being offered in some cases.

The video, hosted by council chair and owner of Bunnik Tours, Dennis Bunnik, urges affected customers to be patient and understanding.

Mr Bunnik said for most operators, refunding money was not a simple process, as most travel companies' systems are designed to only push money in one direction.

"Just as your car is far more efficient going forward, and has far more functionality than when it is going backwards, it's exactly the same with the travel industry," he said. "The system wasn't designed to work in reverse."

Mr Bunnik cited airline Emirates, which in April stated it was ramping up its capacity to process refunds from 35,000 a month to 150,000 a month. Even so, the airline did not expect to clear its backlog of more than 500,000 refund requests until August. One passenger contacted by Traveller applied for a refund on March 20 and only received it on June 6; 79 days later.

Mr Bunnik explained that in many cases most of the money paid by customers is no longer with the tour operator or booking agent - it has been passed on to the local business or accommodation provider at the destination. In order for a tour company to refund a customer's money, it must first obtain that money back from the local provider.

"When you look at a typical three-week European tour, there will be dozens of individual components that make up that tour, ranging from hotels to tour guides, transportation, meals, entry fees and special experiences such as cooking classes," said Mr Bunnik.

"Trying to unwind this to obtain a cash refund for each one of those individual components from overseas is pretty much impossible. And where it is possible, it adds a load of extra costs thereby putting even more pressure on jobs in the industry."

Mr Bunnik said this was the reason travel providers have been encouraging customers to accept a travel credit rather than a refund.

"When a credit is issued, it's generally for 100 per cent of what you paid, meaning that you can take a holiday at a future date. Any costs associated with rearranging your travel and re-doing that work is being absorbed by the travel industry. But, most importantly, what you're doing by postponing and not cancelling, is you're helping to protect jobs in the travel industry."

He told Traveller that Bunnik Tours was waiting on $4.5 million in refunds just from airlines and that until recently the company had only been receiving $30,000 to $40,000 back per week, though that amount had now significantly increased and airlines ramped up their processing.

Australia's consumer law is somewhat vague in the face of the unprecedented pandemic. The Australian Competition and Consumer Commission website states that refunds or other remedy such as a credit note or voucher will be offered in most circumstances.

However, the exact conditions of credit notes are not spelled out and in the case of COVID-19, where travel has been cancelled due to government restrictions, normal rules regarding the contract between customers and providers may not apply.

The video has now been viewed more than 30,000 times across YouTube and Facebook. Mr Bunnik said part of the reason for the video was to help the public understand the situation and hopefully reduce the anger being directed towards front-line staff, who were already facing the prospect of losing their jobs.

"There seemed to be a disconnect between the amount of work that was going on behind the scenes and the perception of what was happening in the public domain," he told Traveller.

"It's not in the interest of the travel industry to do the wrong thing by their customers."

Meanwhile, the McFarlanes don't know when or where their next trip might be.

"Right now we don't feel motivated to travel," Mrs McFarlane said. "We're not really sure what to do."

See also: The one big issue that will stop Australians travelling overseas

See also: Bali's out, Queensland's in: The new destinations on Australians' wish lists

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