FATA steps in to refund controversy

KUALA LUMPUR, 13 April 2020 – The Federation of ASEAN Travel Associations (FATA) is concerned that many passengers and travel agents may not be getting refunds due to them from flight cancellations as a result of the Covid-19 pandemic.

This is in response to the open letter circulated by the International Air Transport Association (IATA) written to the travel agency community received 2 April 2020.

Serving as the umbrella body for national travel associations within ASEAN, FATA represents more than 7,700 registered travel agencies, serving a population of more than 622 million people in the region.

Tan Kok Liang, FATA President.

ASEAN member countries are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

FATA President Tan Kok Liang said, “Airlines must prioritise in proving refunds instead of issuing vouchers which may have little or no value should they be liquidated.

‘The travel agencies are mindful of the financial difficulties of the airline industry during these times. However, we also expect it would be equally respectful of the rights of the travel agencies.

More so, to our mutual clients who have put in trust their hard-earned money with the airlines through the travel agencies. As services are put to a halt due to the current circumstances, it is a matter of principle to return payments that have been collected from customers.”

“As depicted in the United States, the Department of Transport (DOT) have alerted all airlines (the US and foreign airlines) that passengers should be refunded promptly; for flight to, within or from the US when their scheduled flights are cancelled or significantly delayed and the passenger chooses not to accept the alternatives.

It has been long provided over the aftermath of major but localised disasters, and airlines should continue with a similar paradigm in handling this pandemic.”

“For instance, Section 11.2 of the Philippines’ Air Passenger Bill of Rights (APBR) provides that cancellation of flights due to force majeure shall entitle the passenger affected by the cancellation to the right to be reimbursed for the full value of the fare.

“Section 12, First Schedule, Item 5 of the Malaysian Aviation Consumer Protection Code (MACPC) 2016, is to protect the consumer interest in air travel, requires airlines to resolve complaints and remit refunds to consumers within 30 days of receipt of those complaints.”

“IATA itself, under Resolution 824r, refunds shall be made not later than the following remittance schedule after the refund application is received from the agent by the airlines.”

“Affected passengers will not be getting their money back if refunds upon travel agents are unfairly withheld. This could eventually initiate unnecessary lawsuits bringing forth further repercussions for the tourism industry.”

“One of the post-Covid-19 recovery measures is to encourage travel. IATA needs to address the challenges of customers unable to get back refunds which will stifle forward bookings, travel patterns and consumer confidence.”

“Money for tickets sold through travel agencies – a vital component of the distribution chain – which have not yet been flown, has been accrued by airlines through the IATA- BSP payment system.

Therefore, with this cash in hand, IATA has a duty to include traveller claims as a component of its members’ responsibilities with respect to existing Resolutions and ensure those are respected by airlines in terms of fulfilling contractual obligations with both passengers and travel agencies.

Without this action now, the collapse of the distribution channel is inevitable.”

“IATA recently estimated the industry liability in this area is at US$35 billion and stated that airlines’ most urgent need is to keep their remaining liquidity to pay salaries and face their fixed costs.

While we are sympathetic, we remain in our position that taking deposits for future services and the inability to provide a refund is poor financial management.

Customers’ deposits should be placed in a designated or trust account until services are rendered.”

“We urge IATA to compel the airlines to process a refund in compliance with the rule of law in the respective ASEAN countries, including IATA-set resolution, which has been stringently imposed by IATA on travel agents. Likewise, the same measure is to be imposed on the airlines.

Moving forward we are ready to engage in an open discussion at the respective countries Agency Program Joint Council (APJC) or through Passenger Agency Program Global Joint Council (PAPGJC) to resolve the issue on urgent basis.”

“Finally, FATA calls on government worldwide to provide financial resources and reliefs to the aviation and travel industry, which is crucial to facilitate industry recovery.”