Update on refunds due to Covid-19
**Update from Mark Trim, Director, 07 September 2020**
As we move into more favourable Spring weather we are also looking forward to getting past the darker times for the travel industry. Whilst we wait for more news on vaccines and border re-openings, our teams continue to process consistent refunds back to our clients. From 1 August to 4 September we processed $3,624,488 in refunds. This takes the total from 1 April to 4 September to just over $10 million in refunds. Per our last update on 20 Aug, we are expecting significant volumes to be processed back to customers this month, particularly as the Lufthansa Group catches up on their backlog.
A note on consolidators, the wholesale firms that agencies use to issue and reconcile e-ticketing transactions. You may have seen me refer to these companies in past updates. A significant portion of refunds are now being approved by airlines and once the refunds are finally approved they are reported to the consolidators via IATA BSPlink. From that time it is approximately 1-2 weeks for the consolidator to receive the funds, airline reservation staff often assume it is instant but these are batched via IATA reporting and do take a week or so to be received as they are usually international payments. Under typical trading circumstances we’d have received the money back into our Client Trust account in the next 1-2 weeks as the consolidators sort through their refunds and process to each individual agency they look after. However, the workload requiring manual intervention for consolidators has dramatically increased with such significant refund processing being undertaken for thousands of agencies and billions of dollars of refunds.
As these firms rely on overall flown revenue for income they have had to make significant cut backs to their workforce and align the hours of remaining staff with the job keeper subsidies. This has caused delays to the overall processing time until we receive the funds back on our statement. Along with AFTA, we are calling on the government for specific industry support to protect the 40,000+ jobs in travel agencies directly impacted by government border closures. In the meantime, the reality is that the complete lack of revenue is slowing down the amount of resources these firms have available to process refunds. It is currently taking 6 weeks for us to receive the funds from consolidators [an approx 4 week delay from when they receive it from the airline].
Effective 3 September we have reduced our opening hours to be 10am-2pm Monday-Friday, in anticipation to the upcoming cuts to Job Keeper 2.0. However, the refund process from our end is very simple compared to airlines and consolidators who have to pour over far larger amounts of data and reconcile those into smaller batches. Our team does not have a significant workload and are able to stay on top of all of their work in a timely fashion, despite reduced hours. We are replying to all emails within 1 business day and processing refunds within 1-2 business days of receipt which we believe all of our customers can attest to over this difficult period of time. Thank you to the countless number of clients who have sent their condolences and words of encouragement, it is much appreciated.
We are looking forward to when we can finalise all of these refunds and hibernate the business until new bookings can resume. However, as airlines spaced out their policies based on departure dates and date of cancellation it does mean quite a long tail to this process over the coming months. We, again, thank you for your patience and recognition for our role in this process and appreciate your understanding that we wish nothing more for this nightmare to end as quickly as possible.
**Update from Mark Trim, Director, 20 August 2020**
We are glad to report that we have now received our first batch of refunds from the Lufthansa Group [Lufthansa, SWISS and Austrian]. We have received over $550,000 this week from those airlines which we will be notifying and processing back to clients over the coming days. We are looking forward to significant volumes of Lufthansa Group refunds being received over the coming 6 weeks. We aren’t advised of which tickets are processed in which batches until they are received, but are glad to finally see these refunds starting to arrive back after lengthy delays. Please see the July update below for more background information and we will provide a further update on August refund statistics in the coming weeks.
**Update from Mark Trim, Director, 28 July 2020**
Thank you to all our clients for their ongoing patience whilst we steadily receive refunds back from the airlines and our ticketing consolidator. If you have not had a chance to watch the below video/read the statement please take some time to review these documents as important background info. The overall situation with refunds continues in the same manner in June. I am pleased to say that we have processed a further $3,026,584 in refunds since the June update was published.
In the last 6 weeks we continue to get steady refunds back from BA, Qatar Airways and Cathay Pacific who should be commended for their processing and streamlined solutions. We have, since the below update, had significant refunds received for Finnair bookings as well as some refunds coming back from Vietnam Airlines, Etihad, Emirates, SAS, Air New Zealand and Virgin Atlantic. Just in the last week we have received a handful of Qantas refunds, with many more to come.
Significantly, we are still waiting for more progress from the Lufthansa Group. However, we received the below email notice from Lufthansa on 27 July to update us and we are expecting to finally receive our first refunds from Lufthansa, SWISS and Austrian in the next week or two. Many of you who have had detailed replies from our team or watched my earlier video will note that Lufthansa, like many airlines, had disabled the self-service functionality for refund requests. We are pleased that this will be reinstated for future requests as it has been the major contributing factor to the unsatisfactory timelines on receiving refunds from the Lufthansa Group airlines.
“Austrian Airlines, Lufthansa and SWISS to reactivate self-service refunds via GDS and NDC
Dear Mr Trim,
In recent weeks and months, we have received more questions regarding refunds than any other topic. Unfortunately, in the current situation we were not able to meet our usual quality standards. Both you and your customers had to wait longer than usual for reimbursement and we know that submitting tickets for refund via BSPlink has led to a lot of extra work on your side. We truly apologize for this.
We have now increased our capacity in the relevant service and audit departments to enable faster processing of refund requests and to allow for individual checks.
On 27 July 2020 we will therefore reactivate the refund functionalities in all reservation systems. You will then be able to use the automated self-service element of your GDS for the refund of Austrian Airlines, Lufthansa and SWISS tickets and EMDs.
What happens to refund requests which have already been submitted?
Outstanding refunds already submitted via BSPlink will be processed as quickly as possible. Nevertheless, it will still take four to six weeks to process all refunds submitted for flights until the end of June. The more recent refund requests should be processed by the end of the (European) summer.
Please rest assured: Every customer who is entitled to a refund will receive one.
We know that these difficult times are marked by frustration, disappointment and many uncertainties. We would like to genuinely thank you for your patience and understanding which you have shown us so far.
Your Lufthansa eXperts team”
We very much welcome this news from the Lufthansa Group. Please note that once the airline approves the refund it is typically a couple of weeks for our ticketing consolidator to batch and process the funds back to us with our weekly ticketing statement. However, they are making great progress and this process is speeding up over time. Some recent statistics they have shared with us are as follows (bear in mind they look after ticketing for hundreds of travel agencies in Australia)…
“As of 27 July, total statistics during last 60 days:
67,764 Incoming Received
75,560 Refunds processed
Total statistics during the last week
6,051 Incoming received
9,118 Refunds processed
Total $ Refunds distributed back to agents last week $15.6m”
Typically speaking, as one of their larger travel agency customers, we are processing over $800,000 per week now and we cannot wait to get through all of these refunds as the quicker this stage is over with the better as far. We, like you, wish this to be as painless as possible and look forward to planning future travels as soon as we are able to.
If you are still waiting for a refund, thank you again for your continued patience during this extraordinary time and we look forward to finalising these as soon as they are received.
Mark Trim, Director
11 June Statement from Mark Trim, Director:
With winter now upon us I’m sure we are all enjoying a bit of additional freedom as some restrictions ease in our everyday lives. Whilst this provides some respite from the depths of the Covid-19 crisis, it is still very much the darkest of days for the travel and tourism industry. Whilst we expect and prepare to be the last sector to recover, we remain relatively positive about the long term outlook and hold onto the hope that, eventually, ‘every storm runs out of rain’.
After navigating the first stage of this crisis situation, which seemed extremely reactionary in an ever-changing landscape, we have now settled into the 2nd stage of the Covid-19 dilemma for the travel industry. We are glad that supplier policies are now clearer, more reasonable, and finally somewhat predictable. We very much look forward to when we can safely fly around the world again and once more discover the uplifting experience that travel delivers.
In the meantime, stage 2 appears to be playing the waiting game. Waiting for policies from respective suppliers to be extended, waiting until borders begin to reopen, waiting to return to our usual workplaces, waiting for normality to resume and, most importantly, waiting for airlines to process refunds.
Unfortunately that refund process continues to be derailed by airlines who have disabled any ability that travel agents had to process these refunds ourselves in a reasonable time-frame. With almost all airlines mandating refund submissions via IATA BSPlink, we are left in the dark with no updates and no ability to chase or influence the timeline of refunds due to this antiquated method. This article from late March highlights a number of airlines that have disabled the refund functionality, however, the list of airlines mentioned has only grown and now features almost every major carrier, including Qantas.
The resulting IATA BSPlink refund process which is being enforced is one that is extremely laborious and requires manual intervention for every ticket, removing any possibility of automation and control. More can be read about the IATA BSP process here. Airlines state that this is being done to prevent errors [and subsequent agency fines], however, we can’t help but see this as a delay tactic. Along with slowly extending policies to cover later departures this will ensure that they are paying back refunds at a time when they can be receiving new cashflow for future bookings once borders, both domestic and long haul, beginning to reopen.
Many carriers have finalised government bailout packages which we hope will provide much needed financial surety so that we can receive funds back and get those processed to our clients. For more information specific to Lufthansa Group (Lufthansa/SWISS/Austrian) please see this recent article from Forbes, as we know many of you are waiting on a refund from these carriers and they have recently received a EUR9bn package from their 3 respective governments. Rest assured that these aren’t specific issues relating to our agency, nor a reflection on our service or appreciation of your business. Rather, this is a global issue of unimaginable proportions and one which we are stuck in the middle of whilst we wait for airlines who have billions of dollars of transaction to process.
We are very thankful to our government for the support they are providing for our industry, as well as the hard work being done by AFTA to represent the various stakeholders on a larger scale. AFTA’s Covid-19 update and FAQs are very useful should you have an affected booking. We would also like to thank the other organisations around the nation which are adapting to the crisis. Including landlords, the banks and especially credit card issuers who are protecting merchants from charge-back requests when trips were affected by Covid-19 cancellations. Whilst we know it is frustrating to wait for the airlines to process these refunds, know that we absolutely wish this would be over with as quickly as possible.
I have taken this opportunity to provide further detail in the video above and would ask that if you have an outstanding booking or refund with us to please take a moment to view the video. Thank you for your understanding, patience and consideration.