Need to know
- You may be entitled to a rebooking, refund or credit voucher for holidays cancelled because of the COVID-19 pandemic
- Travel agents can charge cancellation fees to cover their costs
- While travel agents and third-party booking sites have their own terms and conditions, all are still subject to Australian Consumer Law
People cancelling their holiday due to the COVID-19 pandemic were surprised to find out Flight Centre charged $300 cancellation fees, while STA Travel retained money from cancelled flights and accommodation as a credit.
Travel agents and third-party booking sites like Booking.com, Expedia and Airbnb all have their own terms and conditions that are the first port of call to determine if you're eligible for a refund or credit. But the fine print is still subject to Australian Consumer Law.
So what are your rights and how can you get your money back?
Can you get your money back from your travel agent?
With international travel bans in place due to COVID-19 and the government advising restricted local travel, it may become impossible for travel providers to deliver prebooked flights, tours, cruises and accommodation, let alone for you to travel.
- You are more likely, but not always, eligible for a refund or credit once a travel provider, such as an airline, cruise line or hotel, has cancelled the service you were due to receive.
- If you cancel the trip before the provider does, it may be deemed a 'change of mind' and your options for a refund or credit may be reduced.
So if you think your trip won't proceed because of travel bans, or you're worried about travelling amid COVID-19, speak to your travel agent about your options.
The Australian Competition and Consumer Commission (ACCC) has advised that it expects refunds to be provided where:
- the terms and conditions at the time of purchase specify you are entitled to a refund
- you bought a ticket that was promoted as refundable
- you were told you would receive a refund, even if the business later changed their mind
- you have a right to a refund under state or territory legislation or common law.
With the latter point, read the terms and conditions of your contract as it may contain a 'force majeure' clause outlining what happens when the services can't be delivered due to an event outside everyone's control.
The ACCC's guidelines advise the travel restrictions may also trigger a 'frustration of contract' under general law, which could entitle you to a refund or credit voucher for any payments you've made, less the travel agent's 'reasonable expenses' incurred before the cancellation.
Frustrated contracts law differs per state. South Australia, Victoria, and New South Wales have specific legislation, while in other states, common law may apply, so check with your state consumer affairs body about how it could affect your situation.
Getting your money back from third-party booking sites
Travel agents conjure up images of people sitting in offices with pictures of the Greek islands on their wall. But these days you're more likely to interact with online travel agents via booking sites like Booking.com, Expedia and Airbnb.
Our guidance is equally applicable to online booking sites as it is to bricks-and-mortar agencies. The first port of call is always the booking sites terms and conditions. Sites like Airbnb have policies for extenuating circumstances (although Airbnb have cut off this policy as it applies to COVID-19 for bookings after 14 March).
Whoever you paid your money to is generally who you need to get your money back from
If you booked via a third-party booking site, persist with the cancellation via that site, even if they try to refer you to the supplier (unless the supplier actually hands your money back). Whoever you paid your money to is generally who you need to get your money back from.
Can travel agents keep your deposit?
"We have paid a deposit for a two cities tour of Russia. Our travel agent said that if we do not pay the balance, they will cancel and we will forfeit our deposit of approximately $1300. We cannot possibly pay at this time because we may not be able to travel at all" – Kerry O'Leary, CHOICE member
This depends on the terms and conditions of the contract with the travel agent and whether a frustration of contract would apply.
If it does apply, deposits should also be refundable in cash or other means, such as a credit voucher.
In addition, the ACCC advises deposits should not be more than 10%, unless the travel agent can justify a higher amount due to potential loss or inconvenience.
A higher amount may be deemed a prepayment, and prepayments are refundable, less any reasonable cancellation fees.
Can travel agents charge cancellation fees?
"Flight Centre are charging a $300 per person cancellation fee, which could equate to $1200 per couple for cancelling land and air components. Flight Centre's explanation for the charge is the recouping of the costs of arranging the travel and that it is sanctioned by the ACCC" – Vic Reynolds, CHOICE member
Travel agents can charge a cancellation fee that reflects the reasonable costs of making the booking to start with and then cancelling it.
What constitutes a reasonable fee is a grey area. The fee should be specified in the travel agent's terms and conditions and should reflect expenses like office costs and the leg work involved in contacting suppliers to process refunds or credit vouchers.
Flight Centre's cancellation policy stipulated an international cancellation fee of $300 per person per booking, in addition to supplier fees. So, like Vic said, if a couple booked flights and accommodation through Flight Centre, that fee could quickly multiply.
After pressure from the ACCC, Flight Centre stopped charging their cancellation fees for bookings made on or after 13 March, but they will still pass on supplier fees, such as charges from your airline. The ACCC said it would've enacted court action if Flight Centre didn't change its position.
While Flight Centre did stipulate the fee in their terms and conditions, the application of a fixed fee regardless of the circumstance, combined with the multiplication of the fee per customer and booking, may have meant the fee exceeded the reasonable costs of cancelling the trip in many circumstances. This is worth noting if your travel agent is applying a fee in a similar matter.
If you have travel insurance, your policy may cover your travel agent's cancellation fees, so check with your insurer.
Can travel agents keep your money as a credit voucher?
With the spate of cancellations due to the coronavirus, travel agents may offer rebooking or a credit voucher with the agent. The ACCC's advice for travel cancellations and changes is that businesses may offer remedies such as a credit note or voucher under the agent's terms and conditions.
But where a provider, for example the airline, has refunded money to the travel agent, it's expected those funds will be returned to you as soon as possible.
So if the travel provider advises the agent they won't return your money, then yes, the agent could retain the money as a credit voucher. If however the travel provider returns the money to the travel agent, then they should pass the money onto you as soon as they can.
The ACCC notes that the consumer guarantee provisions of the Australian Consumer Law probably won't apply to cancellations forced by government travel bans.
Credit voucher expirations
No end date has been set for the COVID-19 travel bans, but the same can't be said for travel vouchers. So you may rightly be concerned if you can use your credit vouchers before they expire. The regulators advise:
- the expiry date should allow a reasonable amount of time to use the credit after travel bans are lifted
- if the travel bans are extended, making the amount of time to use the voucher no longer reasonable, then the credit expiry date should also be extended
- if the original travel service is no longer available, you should be able to redeem the voucher on alternative services.
Can a travel agent change their terms and conditions to deny a refund?
You're bound by the contract you entered into when you booked your holiday, so if those terms and conditions gave you the right to a refund, the travel agent can't change it to deny you that refund.
If they change the terms of the contract without allowing you as the consumer to do the same, that may be considered an unfair contract term.
How long will it take to get a refund?
Everyone in Australia who has a holiday booked is considering cancelling or rescheduling, and the travel industry, from providers through to travel agents and insurers, have unprecedented workloads.
The Australian Federation of Travel Agents advise that in normal circumstances it can take up to 12 weeks to process refunds. However in the current situation, it can take even longer.
If you can afford it, take a credit voucher or rebook your holiday. It will be the easier course of action, and you're more likely to get approvals to your requests.
For a step-by-step guide, see how to cancel your holiday plans.
How do you enforce your rights?
If you think you're being charged an unreasonable cancellation fee or treated unfairly, complain to the business and direct them to the ACCC best practice guidance. Advise that if you don't get a satisfactory remedy, you will escalate your complaint to the consumer affairs body in your state.
What to do if your travel agent goes broke?
It's a challenging time for the travel industry and unfortunately we've already seen travel agents like STA Travel enter administration.
If your travel agent already paid money to the airline, accommodation or other travel service provider before it went broke, your service should still be valid. However if the travel agent did not transfer the money to the provider, your booking may be affected. Check with the provider to see if they will still honour your booking.
If they won't honour your booking, then refer to our advice on how to get your money back via a credit card chargeback.
If you're unable to process a credit card chargeback, you'll need to register with the travel agent's external administrator as an unsecured creditor. This places you in a queue to get your money back, behind secured creditors, such as staff and shareholders.
Be careful with cancelled bookings that were arranged by a travel agent that subsequently went broke. Following the collapse of online travel agent Fly365, CHOICE saw an example where a person requested a refund, only to lose their money when that refund was transferred back to Fly365.
Rebooking or asking if the airline can hold your credit voucher may be a better option in this case.
Will travel insurance cover you if your travel agent goes broke?
It's unlikely your travel insurance will cover your losses if your travel agent goes bust, but always check with your travel insurer rather than presume you won't be covered.
In our travel insurance comparison of 132 policies, we were unable to find any insurers that would cover insolvency of a travel agent and unfortunately we're not aware of any insurer that does. If you're aware of an insurer that does cover travel agent insolvency, let us know in CHOICE Community.
If a travel provider, such as an airline, hotel or cruise line goes broke, your insurance might cover it. Read our advice on travel insurance and insolvency for more information.