Voucher VS Refund Debate: It’s Complicated

Anna Kroupina, Open Jaw

Richard Vanderlubbe

As the COVID-19 health crisis wreaks havoc on the global travel industry, Canada's largest carriers and operators are fighting for survival and issuing vouchers for cancelled services instead of granting refunds.

Airlines in particular have come under fire for this decision as advisors are left to placate consumers expecting their money back.

Open Jaw spoke with a number of advisors to get your take on a complex issue which affects the future of our aviation sector. 

For the most part, while empathizing with the fact that their clients are out of pocket, travel professionals say vouchers are a tough but necessary evil.

“These are not normal circumstances", says Richard Vanderlubbe, founder and owner of Tripcentral.ca, and extraordinary times call for extraordinary measures. 

Vanderlubbe is well versed on the subject, having served on the TICO board and chaired ACTA, both regionally and nationally.


This means that passengers are essentially providing
interest-free loans. It's a flawed system that has been in place
for years and the coronavirus pandemic is exposing the cracks.



The Canadian Transportation Agency (CTA) and IATA stand firm that the nation's airlines are not obliged to refund passengers for flights suspended by the unprecedented border, air transport and travel closures caused by the pandemic.

Coupled with this is the fact that the industry runs on a monetary system where services are paid in advance of delivery.

"I agree with consumers and advocates saying, 'You took the money, you didn't provide service, you give the money back' on a moral level and I agree that any advance money should be held in trust until the service is performed. But that's not possible with how the system works right now," says Vanderlubbe.

"If we as travel intermediaries receive customer money directly, we have to hold that money in trust until we pass it to the supplier. As soon as the money gets passed, there are no regulations as to how the supplier can use that money. The trust accounting rules don't apply. They can spend the money whenever and however they want."

This means that passengers are essentially providing interest-free loans. It's a flawed system that has been in place for years and the coronavirus pandemic is exposing the cracks.

The upshot is that even if the airlines had the liquidity to issue refunds, doing so would likely bankrupt them. 

Vanderlubbe says that governments are well aware of this and reluctant to step in. Any system reform would be a long-term process involving extensive stakeholder consultations with the goal of a global solution.

"It's easy to blame the airlines, but the reality is that every airline and cruise line is competing in a global market under these rules. Whatever is done, we have to make sure that Canadian airlines are not put at a competitive disadvantage. Airlines would also need to get their balance sheets in shape and not rely on this consumer money, and that might take years. In the long term, it would foster a healthier airlines business," says Vanderlubbe.

"I feel for consumers, I feel for airlines, I feel for everybody impacted by this. We're in a mess. When there have been failures before, everyone was warned about it, but nothing was done. What's being proposed [by the CTA] is the best solution."

Some advisors that Open Jaw spoke with echoed that sentiment.

Bonnie Little, a franchise owner with Expedia CruiseShipCenters in Brantford, ON, shared this: "I understand that some consumers are not happy with the situation, and I do empathize with that. Having said that, I feel that it is in the economy's best interest. If the airlines were to offer cash refunds, we would see our airline industry -- and it's not a big one in Canada -- collapse. As much as it's not great for the consumer, we have to think about the bigger picture."


Christina Sarracini, co-founder of Omega Tours and Sarracini Travel in Vaughan, ON, said it's difficult to point fingers in this unprecedented situation.  

"I understand the airlines' decision is based on a whole different spectrum than mine. My vision is narrower. It's me and my client, and my empathy is focused on what's best for them. Can I say what's right and wrong? It's difficult, because we are not operating under normal circumstances, so what is right and wrong?" Sarracini said.

Coreen Doucett, a Toronto-area Travel Agent Next Door-affiliated advisor, believes the airlines handing out a 24-month voucher and, in many cases, eliminating change fees is very generous.

"It's not the airlines' fault that they've had to cancel flights. The airlines are doing the right thing," she tells OJ. "This is new ground for everybody."

L-R: Bonnie Little, a franchise owner with Expedia CruiseShipCenters; Christina Sarracini, co-founder
of Omega Tours and Sarracini Travel; and Coreen Doucett, an advisor with The Travel Agent Next Door.

As for clients, their reactions are varied.

"I have a lot of cases where people are saying they will definitely travel within the two-year time period they have to use the voucher. Then I have a client saying she'll take the penalty because she's working on her Master's, looking at a new job, and definitely won't be travelling for two to three years," says Sarracini.

Little says that from the get-go, she decided to take a glass-half-full strategy.

"We took the approach that we were going to sell it to our customers as a positive, helping them see that they have a whole 24 months to use their credit to travel," she says. "We have a very passionate clientele and our culture is very passionate about travel."

Vanderlubbe, too, says that most customers are understanding of the situation.  

"We're trying our very best to get things organized and rebooked in a way that's civilized," he says.

And for agents, the middle men and women dealing with sometimes upset customers, Vanderlubbe had this to say: "It's very difficult because we try to satisfy everybody but we're not operating in normal times, so don't beat yourself up and keep a level head. It's like when you're driving the car, make sure you're staring into the horizon, not the dotted line in front of you."

Anna Kroupina

Anna Kroupina Journalist

Anna is OJ's newest member and she joins the team as a writer/reporter. She co-writes the daily news and covers events. Although she's new to the industry, pursuing a career path in travel/tourism has been a goal since her first family road trip to the Florida Keys sparked a desire to discover the world and this exhilarating, fast-paced industry.


Comments

gloria thompson - April 24, 2020 @ 12:54
IT seems to me that seniors should get a full refund, esp if they have health issues.
Then there is the FIT problem. Booking various land programs and doing air in-between that is non ref is a big problem. No way that is ever going to be rebooked in 2 years. Croozer comments above are startling.

Carey Duncan - April 24, 2020 @ 11:47
While I sympathize with clients and travel providers (airlines, cruiselines, tour operators etc) this is a complicated matter and goes far deeper than just a client out money. We could potentially be talking about the collapse of an industry as a whole. I would argue to say that the client's aren't out anything EXCEPT the experience of the trip they initially purchased. That money was spent already. I think there could potentially be some room for individual case by case, special circumstances to refund but can you imagine the confusion and the greed and how unfair that would seem to others. Be kind - everyone is doing their best in a situation that is unfathomable. In the majority of cases, a credit for 24 months (which is a reasonable time frame) is a win for the provider and for the traveler.

Kerry Pitt - April 21, 2020 @ 14:29
Just wait until we have to deal with the re-booking of future travel credits' and all of the air ticket prices have doubled because the airlines now have to provide seats with some sort of social distancing!

Kelly Shea - April 21, 2020 @ 11:28
Why should clients have to take a travel credit from Air Canada when they booked YYZEDI then AC cancels the EDI flight and "reprotects" them into LHR, and if they dont want LHR have to take a credit??? If the client wanted LHR they would have booked LHR...and this is being allowed???? OR how about when clients are due a refund from Sunwing on a UNRELATED COVID19 cancellation but are now being denied their entitled refund and only offered a travel credit from Sunwing?? How they can use the crutch of COVID19 not to refund a flight they had cancelled on March 11 days before they cancelled any of their flights regarding COVID19 is simply unmorall! Not too mention my client is 80yrs old as it really shouldnt matter but who knows if she will be able to use a credit. Sunwing cancelled their last 3 departures of the season to Grand Cayman and it now happens to coincide with COVID19 so they are allowed to cancel their original offer from March 11?

Grant - April 21, 2020 @ 10:16
My jaw dropped when I read that some of these agents support the moral corruptness of the Tour Operators and Airlines literally stealing clients money. Shame on you! It's Right To REFUND! These are our clients, some of which have lost their jobs and have no income. Clients deserve a refund. The CTA has overstepped its mandate with their statement on vouchers. Its not their job to determine if vouchers are acceptable. It is their job to uphold the airline tariff system which tells everyone they deserve a refund! I find it hard to believe that TICO has even entered into this - they are only there to protect the consumer. So the airlines stealing money from the consumer is "consumer protection"? So much collusion going on behind our backs. If your in it to win it, then REFUND!

A Full Time Travel Agent - April 20, 2020 @ 17:30
as add on to the TICO mandate, I am tired about hearing about protecting the consumer at the expense of the travel agent funding it all.
The problem is that too large a percentage of the travelling public deal with cut-rate agencies and websites that cannot deliver as they are crooks and/or pax waive insurance but are screaming the loudest when they get screwed.....(poor me!)
How about all those who buy BASIC fares and want refunds because their plans change!
BUT nobody gets off today with me as some airlines are backing away from policies they insist agents follow! Just today, a Canadian airline with fixed penalties waived them for a client holding a YYZTLV tkt whereas when we requested it, the airline denied it.
Did any airline or media (enemy of the travel industry) or government advise those having issues with travel rescuses to contact an agent?

R Steart - April 20, 2020 @ 17:04
The Ontario regulator TICO has for its vision statement in part..."To be a progressive regulator advancing consumer protection" yet the TICO board for the most part consists of individuals who have major holdings in the travel industry. Conflict of interest perhaps? It is like having Rogers or Bell on the board of the CRTC. Something is definitely wrong here and it is not complicated.

stella Karpouchkina - April 20, 2020 @ 13:51
FYI, the client must pay for add coll ( fare difference and taxes) with 2 years credit voucher.
Air Canada must to waived all extra cost for future travel , not only the penalty. From cabin to cabin within 2 years- that can be a solution.
Also, i agree, if AC cancelled the flight, by IROP the airline must to give a full refund.
The pandemic time affected all of us, not only AC
Stella

tamara macintosh - April 20, 2020 @ 13:37
Well said, you are reaching the travel industry only, it would benefit for this information to reach the general public. A family that chose to take a trip at easter break for 20K may not be able to do this trip due to the economy in their future, due to job loss etc. We also don't know if we will be here tomorrow, let alone 2 yrs from now, what happens then ? YES its a MESS, good luck with making legislation to benefit the consumer.

Joan Burnett - April 20, 2020 @ 13:19
Air Canada is only giving certificates that must be used by April 2021
Not 2 years....and that will not work

croozer - April 20, 2020 @ 13:19
CTA and IATA say refunds aren't possible.
US customers get a refund.
EU customers get a refund.
And that's on any airline that flies to the US or the EU - not just domestic carriers.
So US or EU citizens that have purchased an Air Canada ticket for example , get a refund, Canadians don't.
It's not complicated.
Canadians just have weak consumer protection legislation.

Mary E Speck - April 20, 2020 @ 12:52
The public needs to be made aware of this! Thank you for the information.

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