Need to know
- You may be entitled to a re-booking, refund or credit voucher for holidays cancelled because of coronavirus
- Travel agents can charge cancellation fees to cover their costs
People cancelling their holiday due to the COVID-19 coronavirus were surprised to find out Flight Centre charged $300 cancellation fees, while STA Travel retain your 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.
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 coronavirus, and the government advising restricted travel locally, it may become impossible for travel providers to deliver pre-booked flights, tours, cruises and accommodation, let alone for you to travel. 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, so check with your state consumer affairs body whether it could be applied to your situation.
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 then 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 a cancellation fee?
"Flight Centre are charging $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 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 stipulated in the travel agent's terms and conditions and it 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 a 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.
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 such as STA Travel offer rebooking or a credit voucher with the agent. The current ACCC advice for travel cancellations and changes is that you may be entitled to request a refund or other remedy such as a credit note or voucher under the agent's terms and conditions.
So yes, the current advice indicates the agent could retain the money as a credit voucher.
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 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 do you enforce your rights?
Be patient. 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.
If you can afford it, take a credit voucher or re-book your holiday. It will be the easier course of action, and you're more likely to get 'Yes' answers to your requests.
If you think you're being charged an unreasonable cancellation fee or just treated unfairly, complain to the business, and direct them to the ACCC guidance on the Australian Consumer Law. Advise that if you don't get a satisfactory remedy, you will escalate your complaint to the consumer affairs body in your state.
We're in this together
Throughout the coronavirus crisis, CHOICE will be here to help. We'll be working with you to stand up for consumer rights, calling out bad business practice via our investigative journalism, and providing regular expert advice and resources.
As a nonprofit organisation, we depend on your support. If you can, please consider making a donation so we can do even more in future.
What to do if your travel agent goes broke?
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 whether 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 to Fly365.
Re-booking or asking if the airline can hold your credit voucher may be a better option in this case.
Travel agents cannot require you to give up your right to chargeback. Consumer protection agencies are likely to treat this as an unfair contract term.
To be safe, don't accept any contract terms that require you to give up chargeback rights.
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 review 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.