For those who issue airline tickets, either through a GDS, direct with the carrier, or through a consolidator or other third party, it’s a common experience to feel widespread confusion and uncertainty, especially relating to ticket refund policies and terms and conditions.
To help navigate this complex issue, several travel industry leaders held a discussion during ASTA Global Live this week, to help advisors learn how they can protect themselves from the impact from chargebacks and debit memos.
1. Identify the actual dispute
The first step for advisors dealing with airline debit memos and chargebacks is knowing what disputes fall under their purview.
“Historically, what we’ve seen in the airline industry is fraud being the primary driver of disputes. Before COVID-19, the vast majority of disputes in the airline space were fraud related or customers saying they didn’t participate in the transaction. Since COVID-19, that has all changed significantly,” said Callie McKill, senior director in the Global Buyer and Seller Standards organization at Visa.
“What we’re seeing now is a large number of service and refund related disputes, and the way those disputes have to be addressed has also shifted.”
The COVID-19 pandemic deeply impacted the airline industry, and forced many airlines across the globe to reevaluate and change their policies with regard to refunds and flight cancellations.
“One of the biggest changes to the airlines was when business decreased basically overnight, many airlines went in and changed their policies, and that caused many [problems] for agencies and anybody issuing airline tickets,” said Brian Chapin, senior director for Air and Travel Solutions at Ensemble.
To help ease some of the pressure from advisors, the Airlines Reporting Corporation (ARC), changed its debit memo and chargeback policies back in April. The organization decided to not hold travel agencies liable for any memos involving a flight canceled “by an airline or government entity as a result of COVID-19”, nor will it take action on memos that are “related to a passenger compensation dispute resulting from COVID-19.”
“Managing chargebacks between agents and airlines is challenging in the best of times, and this is just going to make it even more so,” said Jennifer Watkins, director of Credit Card Services and Fraud Prevention for ARC. “Plus, it’s a different kind of dispute, managing a customer service issue as opposed to a fraud type dispute.”
“If the airline cancelled the flight, [they must] accept the chargeback and move on, the agent should not be seeing debit memos for that sort of thing.”
2. Clearly disclose your terms and conditions
According to the panel, the best way to protect yourself and your agency from being financially liable for a chargeback or debit memo, is to be clear and upfront with your clients about your terms and conditions.
“[Advisors] should update their terms and conditions, to make sure that the cardholder signs off on them. There are many different fares out there, with many different rules, so [advisors] should be transparent with their customers,” said John Burbidge, CFO for Sky Bird Travel & Tours.
Travel advisors and agencies should display their terms and condition clearly and prominently to make it as easy as possible for their clients to understand. Not only will this inform and reassure the clients about their options if the situation changes, but it will also help advisors.
“The key element here is properly disclosing the terms of sale on your website or over-the-phone with your customers very clearly before the airline ticket is ever purchased,” said McKill. “Speak to the topic directly and clearly label the policies, avoid using more general phrases like terms and conditions.”
“I just want to stress the importance of putting that information right up front and very clearly, as opposed to hiding it in a footer, or in small font, or in another document. It really should be clear and easy to access so clients won’t have any confusion.”
She also said agencies should provide secondary confirmation that customers have read and understood the policies, adding that companies that take this extra step are providing “gold standard service”.
“The most important thing is if a customer chooses to cancel a nonrefundable transaction, and you properly disclosed, then you should be fully protected from that type of dispute. A nuance though is if the flight itself is cancelled, the customer does have the ability to request a refund. If they cancelled, you properly disclosing completely protects you, but if the flight is cancelled, they are due a refund if they are not agreeing with another form of compensation.”
3. Encourage FTCs
Another way to mitigate the impact of chargebacks and debit memos is to inspire clients to take advantage of the numerous travel credits offered by the airlines now.
Airlines are issuing EMD’s or future airline credits, [and] that is a great option, especially for those clients who thought they were going to be traveling and were willing to let their money ride and take advantage of the additional 10% or 25% available to them,” said Chapin. “But what we’re seeing now is many of them saying they want their money back, or they don’t know what’s going on yet.”
The lingering sense of uncertainty is causing many perspective travelers to cancel their plans and seek a refund, but if they’re still willing and eager to travel, advisors should encourage them to accept an airline credit for future travel.
“What we try to do now is encourage our [advisors] to convince their clients to opt for future travel credits that are being offered by the airlines,” said Burbidge. “Some of the airlines are offering EMD’s for an additional credit of 10%-20%, which are good for future travel over the next 12 months, so we encourage our clients to let them know.”