SAN FRANCISCO — ASTA is in active communication with the Department of Transportation to advocate for travel advisors on the issue of airline refunds, and it seeks to ensure that travel agencies are not responsible for refunds of tickets regardless of whether they possess the funds.
The DOT has proposed regulations that would make it a responsibility of agencies to provide consumer refunds if airline changes or cancels a flight and the alternatives offered are unacceptable to the consumer.
During a press conference at this year’s Global Convention, ASTA president and CEO Zane Kerby said what was once “a very large problem” is now “much smaller than we originally anticipated.”
Eben Peck, ASTA’s executive vice president of advocacy, said that it initially seemed as if the rulemaking would require agents to be potentially responsible for refunds for every transaction. Now, though, it appears agents would only be “on the hook” if they are the merchant of record in a transaction, which appears to be rare.
ASTA is in the process of determining exactly how rare that is, but it said in the “vast majority” of cases agents are not the merchant of record. In most cases, it said, consumer funds go to the airlines through ARC.
ASTA’s position on the rulemaking
Kerby and Peck earlier this week appeared at a meeting of the DOT Aviation Consumer Protection Advisory Committee to discuss ASTA’s position. According to comments provided by ASTA, Kerby told the committee that ASTA was supportive of several of the provisions within the latest rulemaking but took issue with the requirement that agencies, referred to in the rulemaking as “ticket agents,” provide refunds whether or not they possess the funds.”
“Even if agencies wanted to hold client funds — and thus be in a position to promptly issue refunds– in the vast majority of cases it is impossible to do so under rules issued by ARC, the settlement system through which virtually all travel agency transactions flow,” Kerby told the committee.
Further, Kerby said, travel agencies do not in practice withhold consumer refunds. The DOT has not taken any enforcement action against agents regarding refunds since at least 2003, which is as far back as the DOT’s website of enforcement orders goes.
“The prospect of being ‘on the hook’ for refunds regardless of whether the agency has access to the funds in question could disrupt the airline distribution system in unknowable and unpleasant ways,” Kerby told the committee.
It could drive some agencies to stop selling air tickets, robbing consumers of their advice and opportunities for comparison shopping, he added.
Next steps
The public comment period on the rulemaking is open until Nov. 21. ASTA will be filing comments.
“But for now we urge the department in the strongest possible terms to eliminate from the proposal any obligation of a ticket agent to issue a consumer refund where the agency does not control the funds in question,” Kerby said.
During the press conference, Peck said ASTA will continue to work with members to determine what exactly to propose in its comments.
After the public comment period closes, the DOT will consider the comments and issue its final ruling. That rule will be effective 90 days after it is published.
