Why N100bn ticket refunds may cripple travel agencies in Nigeria

* Bank collaterals at risk as IATA insists on remittances

* It’s worst crisis ever in air travel sector -Stakeholders
Web Editor | ConsumerConnect
Besides other key sectors of the Nigerian economy currently bleeding from the damaging implications of the outbreak of Coronavirus disease, the aviation industry is also having it a bit heavy going.

The Guardian reports that despite the airlines’ inability to refund due to cash crunch, yet there are about 1,000 leading travel agencies that are caught in-between refunding consumers’ ticket fees and settling the airlines.

It was learnt that the ravel agencies in the country might be thrown into huge debts, as consumers continue to press for the refund of unused tickets.

However, such requests are reportedly being declined by several transnational airlines.

While the airlines would not refund due to cash crunch, about 1,000 top-rated travel agencies in Nigeria are torn between paying consumers’ refund and settling airlines’ mandatory remittances, both estimated to reach a total of N100 billion.

Nonetheless, as of Tuesday, April 14, only three airlines – British Airways, Emirates and Lufthansa – had promised to issue refunds to “interested customers” in accordance with the 50-day regulation.

Incidentally, the foreign airlines, through the International Air Transport Association (IATA), have mandated all travel agencies to pay up all tickets issued to date, whether used or unused, or risk being cut off from the business because of default, report stated.

It was learnt that the international air travel business is one in which the travel agencies issue, sell tickets and collect fees on behalf of the airlines and their representative, IATA, in a Bill Settlement Plan (BSP).

Under the BSP arrangement, all enlisted agents must remit the payment for all issued tickets (which airlines had given on credit) every 15 days to the airlines through IATA.

The consequence is that “defaulters will be struck out of the selling platform and their bank collateral forfeited,” stated the report.

In view of this payment schedule, therefore, the current restriction of all flights, both local and international coupled with the ongoing lockdown over COVID-19 pandemic, have plunged the travel agencies into difficulties.

Some of the agencies informed The Guardian that they were owed by bulk-buying organisations and companies that have temporarily stopped operations due to Cotonavirus lockdown.

Other agencies are said to be being troubled by consumers who insist on their ticket refunds.

The Chief Executive Officer (CEO) of Finchglow Travels, Bernard Bankole, said the nature of the business put many travel agencies in the middle of the global crisis and made them bear the brunt.

Bankole said the losses for travel agencies would be about N180billion should the crisis last till July 2020.

As of April, the CEO said, unused ticket refunds and payments to airlines had already cost travel agencies in Nigeria over N100 billion.

Bankole said: “We (travel agencies) are stuck in the middle.

“As it stands, we have to keep encouraging our members to pay the airlines on schedule.

“We have a lot of clients that have not paid us.
“Yet, we have to protect the integrity of the BSP, just like IATA also wants.”

He further stated: “But while we are keeping to our end of the bargain, the airlines are not.

“They don’t have money to pay, and they are not even ready to push money into Nigeria to settle our customers, who cannot fly because the airspace is shut.

“The challenge now is for IATA to protect the travel agencies from these airlines because not all of them will survive this crisis.

“Yet, IATA is not doing much of that, putting us in heavy losses,” Bankole said.

Mrs. Susan Akporaiye, President of the National Association of Nigerian Travel Agencies (NANTA), also confirmed the dilemma of many top-tier travel agencies, saying the main loyalty is to the consumers.

Akporaiye said talks were ongoing with airlines and IATA to strike a balance between cumulative ticket refunds and remittances to the airlines, to ensure that the travel agencies do not suffer unduly.

She explained that the crisis had left many airlines without cash for settlement of refunds as required by some of the loyal customers.

“But we have our customers to protect. As of now, Emirates, British Airways and Lufthansa, have issued us emails towards refunds and how they want to do it for customers that want a refund.

“But it has to go through a process lasting about 50 days.

“Other customers that do not want a refund, which is what airlines are encouraging, can still use the tickets within a two-year validity period.”

Alexandre de Juniac, Director-General and Chief Executive Officer (CEO) of IATA, said no words to adequately describe the devastating impact of COVID-19 on the airline industry as a whole.

The IATA Chief Executive described it as the worst crisis ever in the air travel sector.

de Juniac said IATA was considering a comprehensive approach to rejig the aviation industry when governments and public health authorities allow.

Kindly Share This Story