Need to know
- You're more likely to get a refund if the travel supplier has cancelled on you
- Travel agents can charge cancellation fees to cover their costs
- Travel agents and third-party booking sites have their own terms and conditions, but they're still subject to Australian Consumer Law
Plans are made to be broken, and unfortunately, your travel plans are no exception to this rule. You may have to cancel your trip because of illness, the airline might cancel the flight on you, or something outside of everyone's control, like a pandemic, can change everyone's plans.
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 whether 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?
Whether you can get your money back from a travel agent or booking site for changed or cancelled travel plans usually boils down to if it's you or the travel provider making the changes.
- You're more likely (but not always) eligible for a refund or credit if 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 or change your plans, it may be deemed a 'change of mind' and your options for a refund or credit may be reduced.
If you think your trip won't proceed, or you're worried about travelling due to illness or Smartraveller destination alerts, speak to your travel agent about your options.
The Australian Competition and Consumer Commission (ACCC) says 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 its mind
- you have a right to a refund under state or territory legislation or common law.
Travel refunds for travel bans and bushfires
Most of us have (hopefully) moved on from the trauma of travel bans, and the 2019–20 bushfires that prevented many people from getting to their holiday accommodation.
Should you find yourself in a similar situation again though, scan the terms and conditions of your contract for a 'force majeure' clause. This outlines what happens when the services can't be delivered due to an event outside everyone's control.
The ACCC's guidelines advise 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.
Travel agents conjure up images of people sitting in offices with pictures of the Greek islands on their walls. But these days you're more likely to interact with online travel agents via booking sites like Booking.com, Expedia and Airbnb.
Whoever you paid your money to is generally who you need to get your money back from
This guidance is equally applicable to online booking sites as it is to bricks-and-mortar agencies. Sites like Airbnb sometimes have extenuating circumstances for situations such as bushfires and travel bans but otherwise you'll need to refer to the booking site's terms and conditions (note that Airbnb's COVID-19 extenuating circumstances policy is no longer in place).
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. The terms and conditions of the supplier, such as the accommodation provider or airline, usually determine whether you're entitled to a credit or refund but whoever you paid your money to is generally who you need to get your money back from.
"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.
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 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
Flight Centre's cancellation policy during the COVID-19 travel bans 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. Flight Centre has since capped the $300 fee per person at $600 per booking.
While Flight Centre did stipulate the original 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.
After pressure from the ACCC, Flight Centre amended its cancellation fees. The ACCC said it would've enacted court action if Flight Centre didn't change its position.
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.
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'll issue a credit but won't return your money, then yes, the agent could retain the money as a credit voucher. However, if the travel provider returns the money to the travel agent, then they should pass the money onto you as soon as they can.
Credit voucher expirations
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
- if a travel ban applies, 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.
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.
If you think you're being charged an unreasonable cancellation fee or treated unfairly, complain to the business and direct them to the ACCC guidance. Advise that if you don't get a satisfactory remedy, you will escalate your complaint to the consumer affairs body in your state.
If your travel agent is a member of the Australian Travel Accreditation Scheme (ATAS), you can also complain to ATAS, who will investigate if the agent has breached the industry's code of conduct.
If your travel agent already paid money to the airline, accommodation or other travel service provider before going 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.
Some travel agents provide their own form of insolvency protection. If your agent had a ring-fenced client trust account, you may be able to claim money back from there.
TravelManagers travel agents have a Customer Fund that is designed to protect its customers from insolvency of an airline or other travel provider that TravelManagers uses. If you can't get a refund from your travel insurance or bank, you can claim from the fund.
The fund is a ring-fenced independent legal entity, which TravelManagers makes regular payments into – a kind of self-insurance pool for its customers.
It's unlikely your travel insurance will cover your losses if your travel agent goes bust, but always check with your insurer to make sure
If you can't get your money back from the travel agent, and the supplier 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 in 2020, 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?
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, 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.
Stock images: Getty, unless otherwise stated.