Why are travel businesses offering credit vouchers instead of cash refunds?

savermseman

Fed_Up said:

Why are TUI being allowed to get away with not refunding customers for cancelled holidays?  There is clear guidance on the rights of the customer, but these are being totally ignored by TUI!  We've all paid good money and are legally entitled to a refund, we want our money.  There needs to be Government intervention to ensure people get their money paid back in the specified 14 days.  Unfortunately ABTA are asking for refunds to be allowed to be paid over the next four months to 'help travel companies' - what about helping people who need their money back as they've lost their job and have no money coming in!

Took the words right out of my mouth

kuepper

https://www.independent.co.uk/travel/news-and-advice/coronavirus-cancelled-holiday-refund-delay-industry-kane-pirie-a9452151.html

fifeken

eDicky said:

IATA speaks:
"Airlines cannot afford to refund cancelled tickets"
https://reut.rs/3e5cly0

I know this came from IATA, who will be biased in favour of the airlines, but it doesn't take much to realise that if everybody is paid a cash refund a lot of airlines will go bust pretty quick.  We will all then spend more on flights for decades as there is less competition and the surviving rich legacy airlines take advantage.

Most flights discussed on here are discretionary spending, so no one should be hurting too much and can afford to wait or take a voucher, but would rather demand their rights with no though of the big picture or long term effects.

Butts

fifeken said:

eDicky said:

IATA speaks:
"Airlines cannot afford to refund cancelled tickets"
https://reut.rs/3e5cly0

I know this came from IATA, who will be biased in favour of the airlines, but it doesn't take much to realise that if everybody is paid a cash refund a lot of airlines will go bust pretty quick.  We will all then spend more on flights for decades as there is less competition and the surviving rich legacy airlines take advantage.

Most flights discussed on here are discretionary spending, so no one should be hurting too much and can afford to wait or take a voucher, but would rather demand their rights with no though of the big picture or long term effects.

Why not give people the choice of a refund or a voucher , if everyone is as altruistic as you seem to think there won't be a problem.
Is it true IAG BA's holding Company are sitting on a 9 Billion Euro Bank Balance ?

Nebulous2

fifeken said:

eDicky said:

IATA speaks:
"Airlines cannot afford to refund cancelled tickets"
https://reut.rs/3e5cly0

I know this came from IATA, who will be biased in favour of the airlines, but it doesn't take much to realise that if everybody is paid a cash refund a lot of airlines will go bust pretty quick.  We will all then spend more on flights for decades as there is less competition and the surviving rich legacy airlines take advantage.

Most flights discussed on here are discretionary spending, so no one should be hurting too much and can afford to wait or take a voucher, but would rather demand their rights with no though of the big picture or long term effects.

Airlines are being bailed out across the world, with a lot of them still being fully or partially state owned which makes it easier.

The competition point is a valid one and is being used in Australia for instance. They have Qantas and Virgin Australia. Virgin seems in real trouble, and there is a feeling there is a need for two full-service airlines there to promote competition so there are loud voices to support Virgin.

Despite the big rise in air travel, many of these airlines were struggling anyway, in the same way as is happening in every industry. The price-cutters were doing well, the top-end was doing well and the middle was being gutted. Vouchers don’t make the debt go away. They only shift it 1-2 years down the road. Do you think a struggling travel industry can make enough in 1-2 years to repay billions that they can’t / won’t repay now? What will happen is the whole industry will be full of zombie companies trying to survive for 18 months until the bulk of the debt becomes due, while doing 20-30% of their business for free, as people cash in vouchers. 

Then there is is public perception. The past ten years has seen a massive resentment of the bail out money the banks received. Yet very few of the public were directly affected by that. Most deposits were protected and people got their money back. There seems to have been some learning from that. In return for the support the banks have been offered this time they are expected to stop dividends and offer relief to hard pressed customers.  

Can you imagine the public resentment at having to effectively become a junk bond-holder in a company or industry they believe has cheated them.  

Then there are the public. They are wakening up to how scary the world has become. Many people are on short working, worried about their jobs or have already lost them. Private individuals were indebted as never before. Cars, holidays, houses etc were all on tick. It’s common for holidays to be paid on credit and repaid over the next year or even years. So yes discretionary, but not necessarily affordable, especially now. 

The travel industry is scrabbling desperately to survive. Many of them won’t. Whether they go now or go in two years when the enforced loans to the public become due. Appearing to turn on the public that they need is going to be a huge PR disaster however. 

V1m_Fuego

The 2 reasons I will not accept a voucher;
1/ if the company goes under, a voucher is worthless
2/ any future trip with a voucher isn't covered by travel insurance covid19 cover, despite the original trip being covered.
The last point is significant. If I get a refund, I will rebook knowing what my insurance cover is, not forced to take something down the line that may not be covered, and subsequently lost.

I think the travel insurance industry has a part to play, providing covid19 cover on voucher rebookings

bradders1983

Any future trip paid in cash wont be covered either, on any policy. Anywhere. By all means if you know of one, kindly let us know where.

Nebulous2

Here's an analysis of the EU airlines ability to repay cancelled flights.
https://simpleflying.com/eu-airline-ticket-refunds/

Butts

So the cry of poverty is somewhat exaggerated - worst offender from that list seems to be Air France/KLM who as I understand it are only offering vouchers despite having the money to refund everyone.
Good to see the EU are still at this point insisting customers are entitled to a cash refund if they want it.

fifeken

Butts said:

fifeken said:

eDicky said:

IATA speaks:
"Airlines cannot afford to refund cancelled tickets"
https://reut.rs/3e5cly0

I know this came from IATA, who will be biased in favour of the airlines, but it doesn't take much to realise that if everybody is paid a cash refund a lot of airlines will go bust pretty quick.  We will all then spend more on flights for decades as there is less competition and the surviving rich legacy airlines take advantage.

Most flights discussed on here are discretionary spending, so no one should be hurting too much and can afford to wait or take a voucher, but would rather demand their rights with no though of the big picture or long term effects.

Why not give people the choice of a refund or a voucher , if everyone is as altruistic as you seem to think there won't be a problem.
Is it true IAG BA's holding Company are sitting on a 9 Billion Euro Bank Balance ?

I don't think Joe Public will be altruistic (where did I say that?).  As can be seen on here, most people think their £39 easyJet flight to Bristol for the weekend should be refunded immediately.  My thought is that this could be short term thinking as it could put airlines under to everyone's long term detriment, and I would hope people bear this in mind when they're screaming you've ruined my holiday and I demand my money back.

I don't know about IAG now but the article from Nebulous2 says only 3.5 billion Euro for last year, but against that do you know how much they have in the way of claims for refunds?  As a big player I expect they will be in a better position than many but will struggle to process and pay claims in the timescales being asked for, even if they have the money in the bank.

https://simpleflying.com/eu-airline-ticket-refunds/