Flight Centre has reversed its controversial policy of charging $300 per passenger for involuntary flight cancellations due to the COVID-19 pandemic. The travel agency will also refund customers that have already been charged the cancellation fee after the ACCC threatened legal action.
As Australian Frequent Flyer reported four weeks ago, many Flight Centre customers were surprised to learn they would have to pay $300 to get a refund for international bookings where the airline or supplier had cancelled.
This Flight Centre administration fee was being charged on top of any supplier fees, and even in cases where the airline itself was providing a full refund. For domestic bookings, the fee is $50 per passenger. Customers would not be charged an extra cancellation fee if they opted for a flight centre credit voucher instead of a refund.
Last week, Flight Centre revised its policy by capping its cancellation fee at $600 for bookings of two or more passengers.
Yesterday, Flight Centre went a step further by completely eliminating cancellation fees for customers whose travel was cancelled by the airline or travel provider. In addition, customers that already paid this fee on or after 13 March 2020 will get it refunded. This notice now appears on the Flight Centre website:
On 2 May 2020 we announced an amendment to our Change and Cancellation Policy for our customers.
To support Australians during this very difficult time, Flight Centre and our parent company FCTG has made the decision to completely waive our usual Cancellation Fees for bookings where the travel provider (usually an airline, cruise line or tour operator) has cancelled its service – and you are unable to travel as a result.
The waiver, which is in addition to the other waivers and amendments that we have announced previously, follows ongoing discussions with customers and regulators, including the ACCC, and will apply retrospectively to bookings cancelled as a result of COVID-19 on or after 13 March 2020 for which a Flight Centre Cancellation Fee was charged. Please note this waiver applies to our fees – we cannot waive fees or conditions that airlines and other third party suppliers impose.
This new policy also applies to other businesses that are part of the Flight Centre Travel Group, including Aunt Betty, Travel Associates, Student Universe, Universal Traveller and Byojet Travel.
Flight Centre cancellation fees will still be charged if your flight or travel booking has not been cancelled by the provider, and you choose to initiate the cancellation yourself.
To encourage customers to choose a Flight Centre credit instead of getting a refund, the travel agency is now offering additional vouchers and a complimentary “Captain’s Package” to customers when they use their voucher. Customers will receive $50 of extra value on vouchers issued for $2,000 or more, or up to $200 of additional value for credit vouchers of at least $8,000. The vouchers will be valid until at least 31 December 2021.
Why the change of heart?
Flight Centre has copped a lot of criticism for charging cancellation fees to passengers that did not choose to cancel their trips. But it only made this change after the ACCC threatened legal action. If Flight Centre had not agreed to refund cancellation fees, the ACCC would have taken them to court.
The ACCC says it has received over 6,000 complaints from consumers dissatisfied with the refund policies of travel companies. Thousands more have contacted state-based consumer authorities.
“We are continuing to discuss issues in relation to refunds and cancellations with the travel sector, and encourage travel providers to treat consumers fairly in these exceptional circumstances,” ACCC chairman Rod Sims said.
“While we know some consumers are very concerned about getting a refund or credit for their cancelled travel plans, we do ask people to be mindful of the significant impact that this pandemic has had on the travel industry.”
When we contacted Flight Centre four weeks ago, a spokesperson told us that the company was “comfortable its position is inline with Australian Consumer Law”. It seems the ACCC didn’t agree.
Travel agents’ association criticises mainstream media
It comes just days after the Australian Federation of Travel Agents (AFTA) blasted the mainstream media over what it called “errors of fact” in the reporting of this and other consumer issues relating to travel agents in recent weeks. AFTA made the case that travel agents deserve to be paid for their time and have been “unfairly blamed” throughout the COVID-19 crisis.
“Travel agents, like everyone else, deserve to be paid for work that they do especially in situations like this which are not of their making and which are considerably more convoluted and time consuming than normal. Paying a small, reasonable fee for this work given the reality of the COVID-19 pandemic is appropriate recognition of the time travel agents are investing in helping consumers understand what your options are and how best to access them,” AFTA said in a statement.
It is true that, when an airline cancels and refunds a booking, the travel agent usually loses their commission from the airline. In some cases, this means they have received no revenue at all for the booking – but still have to spend time processing a refund on the customer’s behalf.
“Any fees you are charged, or any other loss you may have experienced, should be pursued under your travel insurance,” AFTA said.
Some Australian Frequent Flyer members have pointed out that Flight Centre’s $300 per person fee was neither small, nor reasonable. And passing on your costs to the customer, who is not at fault and has not done anything wrong, is a great way to trash your reputation and lose loyal customers – which is exactly what Flight Centre and other travel businesses will need on the other side of this crisis.
AFTA also pointed out that the lengthy delays in processing refunds are largely due to supplier delays.
Join the discussion on the Australian Frequent Flyer forum: Flight Centre refunds for cancelled flights