Cash crunch may open fresh airline, customer refund spat
Some airlines are at risk of insolvency. WOLE SHADARE writes that recovering lost tickets from them would be complicated
Fight for survival
The fight to survive the Covid-19 crisis is pitting airlines across the globe against their grounded customers.
Airlines have been told to refund airfare to passengers whose flights have been canceled during the outbreak of Covid-19, the U.S. Transportation Department ordered on Friday.
This is receiving a growing number of complaints from people who say airlines have refused to pay refunds after flights were canceled.
This comes as many airlines have been offering future travel credits, rather than refunds, amid the coronavirus pandemic.
Airlines throughout the world have significantly slashed flight capacity while many countries have implemented travel restrictions. While several airlines are flying rescued flights to bring stranded citizens back home, the majority of Americans remain grounded, forced to cancel or postpone their travel plans.
The U.S. order threatens to add more financial strain to an industry that is facing severe challenges from a dramatic plunge in demand even as it prepares to start receiving $50 billion in loans and payroll assistance payments contained in a government bailout package.
Different scenario
The case is quite different in Nigeria as airlines said they do not have issues with refunds but pleaded that passengers give them time to make money to be able to do a refund post COVID-19.
There are three different categories of tickets that were bought either through the International Air Transport Association (IATA) otherwise known as IATA clearing house.
Not a few had alleged that tickets sold before COVID-19 ground airline business in the country amounted to N10b. Nothing suggests that Nigerian airlines sold that amount of tickets in three months.
IATA’s concern
What IATA is looking at is the entire tickets sold comprising those at international or IATA billing house, national airlines but originated because they have what we call BSP Nigeria, BSP West Africa, BSP World. There might be different people that bought tickets which probably has departure out of Nigeria or all destination to Nigeria and which happens to be.
To get a refund, the passenger is expected to go through the airlines, the agent that he bought the ticket from.
Dynamics
Speaking to Woleshadarenews, the Managing Director of Aero Contractors, Capt. Ado Sanusi said many do not understand the dynamics and how it operates
His words, “If you bought a ticket or an agent bought the ticket; that means the agent issued a ticket and because the agent has issued the ticket and has collected the money already from you, he may not have remitted the money to the airline”.
“Remittances to the airline is in two weeks, sometimes it is three weeks or a month. It depends on the Billing Settlement Plan that you have. That is very simple. You go to your agent that you bought the ticket from to ask for the refund. It is in the IATA billing system. So, money cannot be missing. It is either IATA has already transferred the money to the airline or the agent will transfer it to the passenger”.
“I am talking about local airline; it is a different ball game. We are already talking about Aero, other local airlines that use system do not have to go through BSP or IATA clearing house. That means what they need to do is that they have direct agreement with travel agents. Travel agents may have put bank guarantee or cash or something else. That one is very simple. It is one on one thing. If I have already paid the travel agent, I will go to the travel agent to refund my money. The travel agent will look at it, has he transferred the money to the airline? They will refund the money to the passengers. If the passenger feels like leaving the ticket the way it when we open up so that he can use it, so be it”.
No attached conditions
Asked if the ticket revalidation would come with extra charges and conditions, Sanusi said tickets issued before the lockdown will not attract extra costs, stressing that it cannot come with conditions because it was not the fault of the airline or the passenger that COVID-19 happened.
“In this circumstance, you come and make your request as far as the ticket you bought is the same. The airline will only make it flexible. You can re-route, you can do anything you want to do with it. Let me give you an example. If I bought a ticket from Lagos to Warri and want to re-route from here to Sokoto, it is for instance N5, 000 extra that is the only thing you will pay. But if you decide to go to Warri, even if you decide to travel today, you will not pay anything”.
The airline boss stated that reimbursing passengers should not be a problem should passengers come forward for refund, adding that he had seen a lot of write-ups on difficulty passengers would face getting their money back.
He reiterated that the world is looking at how they can quickly bounce back after COVID-19 pandemic, describing the disease as strange.
“The only time it has happened was during the Second World War and after the Second World War was when the International Air Transport Association (ICAO) was created. I think that is the only way forward”.
Sanusi urged airline operators to come back stronger to see how they can rescue the industry that is at the verge of collapse, further describing it as a global problem.
Global approach
He said he was not too enthusiastic about bailout being proposed by Airline Operators of Nigeria (AON), hinting that it would not work. He charged them to apply global approach, saying anything that is coming unilaterally from a country will not help.
“If we have not agreed that we can do this do that, it won’t work because aviation is global. We will get the bailout and we will end up paying it to government or the leasing company. It has to be a holistic approach. It has to be regional approach, continental approach and global approach so that by the time we roll out, it will be a new aviation industry’, he added.
Expert’s view
Director, Consumer Protection, Nigerian Civil Aviation Authority (NCAA), Adamu Abdullahi said the authority does not envisage that passengers would have issues getting their money if they decide not to travel again post COVID-19.
According to him, “If somebody is not travelling again, they will refund you. We are looking at palliatives quite alright. They have to be given some time to make the money instead of making refunds immediately. We are looking at option of giving them time to refund their money. It is not a law. The regulation says they should refund their money immediately. We have to get the economy back on track. It will take time for the economy to bounce back”.
Last line
The rules requiring refunds have been in place in NCAA’s regulations for quite a while. The key element for the airlines is to avoid running out of cash so refunding the canceled ticket for them is almost unbearable financially speaking
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