Refund & Cancellation Policies Evolving

Refund & Cancellation Policies Evolving

Last Updated on March 1, 2021 by tripcentral

If you were not booked to travel in mid-March or later, you may not realize how much the cancellation terms have changed.  If you are sitting with future travel credits looking for the Government to force airlines to refund, you will have a different perspective.  We address both here.

Old Days:  Non-Refundable, No Changes for Lowest Fares

It used to be that once you purchased the lowest fare, you could not get your money back if you cancelled, and making changes was nearly impossible or required buying a new ticket (often at a higher fare).  You could not change names.  Date changes or entirely different routes were often like throwing out all or most of the value of the ticket and buying a new one at today’s market rates.  The closer you were to travel dates, often the higher the price of the replacement ticket. 

You could buy insurance or some waiver products, but generally, people overwhelmingly declined these options saying, “I’m going, no matter what.”

Post COVID-19 – Flexibility

After the grounding of aircraft, it became apparent that this policy would no longer fly with consumers, and the airlines adopted a more flexible “travel credit” policy.  The unused tickets frustrated by the government travel advisory, the uncertainty around whether a flight would happen or not, or if cases spiked in a destination were all conditions to use the value of the old ticket towards a new booking in the future with no change penalty.

Facing historically low demand, the basic fare tickets were out the window, with most airlines offering one free voluntary change and use of the fare value towards the purchase of the new tickets.  In other words, the change and cancellation rules that the airlines were selling at higher levels pre-COVID are now applicable on their lowest fares.  Instead of losing everything, you get a credit towards another trip.

Refundable fares are still available at higher prices.

You can book travel on a refundable basis

It has always been an option, and most people don’t realize this.  Airlines have always offered refundable fares.  There were always higher fares that preserved the value of the ticket as a credit with a small change fee – those also sold at higher than lowest fares.

It is not a popular option because you pay much more for the ability to cancel and get your money back, or not pay at all (or a small deposit) and change your mind.  It’s an expensive way to travel, and often how many business travellers make arrangements.  That meeting might cancel or something else may change. That said, our vacation package suppliers have added more flexibility than ever before.

Why is refundable travel expensive?

Airlines and hotels hold open seats and rooms for those wanting refundable fares (often at the last minute), and if they are not purchased, they remain empty.  They could be cancelled at the very last minute, and the airline and hotel would have no time to try and fill that seat and room.

Imagine not knowing how many people will show up for a given flight.  People change flights at the last minute and expect an open seat to be theirs. 

Non-Refundable Fares = Low Prices, Full Aircraft, Full Hotels

Most of our customers buy non-refundable fares at discount prices.  Packaged deals are the most restrictive offering the very best value.  When almost every seat on a flight is sold, and when almost every room in a hotel is sold, travel suppliers can offer the lowest price.

By every seat full we mean the flight down, the flight back, and the rooms turning over the same day.  Hotels want the funds upfront as part of the non-refundable discount price, so most often the tour supplier will advance funds to the hotel.  The hotel portion of a package is now offshore in the hotel bank account.

Customers expect their flight to operate on time, as booked

Imagine if everyone could cancel or change or refund whenever they wanted?  “I’d like the option to cancel if I feel like it.”  Makes sense.  Trouble is, the airline faces last-minute cancellations for any number of reasons, and those seats are now empty.  Too many empty seats and it is not viable to fly the aircraft and crew, so they cancel and try and combine with another flight or cancel it outright.

Contradictory Needs

Booking, payment and cancellation policies need to satisfy many needs;

  1. Customer wants the lowest possible price.
  2. Customer would like to cancel or change at any time.
  3. Customer expects the flight to operate as booked.
  4. Airline provides this service to make a profit.

If the price is too high there will not be enough bookings, few direct flights, less choice.  Entire routes become unsustainable as there is a small market for high fares.  Business travellers get more frequency and choice when there are many low paying discount seats filling up many flights (frequency).

If everyone could change or cancel with no penalty, the number of people showing up for a flight would be unpredictable leaving many seats unsold at the last minute.  The more seats unsold, the more likely airlines will cancel and combine them.  Nothing angers people more than making a booking for a flight on a certain date and time, only to find that the airline has cancelled it, or changed the times or dates.  People feel “ripped off” when this happens.

Scheduled airlines such as Air Canada need 80%+ of the seats sold to make money, and leisure airlines need 95%+ sold to make a profit at low prices.

By selling low fares on a non-refundable and non-changeable basis, flights were full, and ultimately this results in lower fares.  Without non-refundable restrictions, fares would be much higher, and when fares are higher, less are sold which means less frequency and choice of destinations. 

The Compromise in 2020 Post COVID-19

With most airlines offering one free voluntary change for any reason and use of the entire ticket value towards a new trip, there is little financial risk of booking travel so long as you “ever” plan to travel.  For all the reasons mentioned above, airlines cannot offer the lowest fares AND refundability.

Packaged vacations are offering lower deposits, and longer to pay final payments.  Most final payments are now due 25 days in advance.

Cancellation waivers are offered by package operators giving more flexibility to cancel closer to departure and keep the value of the package as a future travel credit.  For instance, for a small premium, some offer the ability to cancel 7 days or even 48 hours in advance and retain the full value of the package for a new trip.

The Government offering Refunds as part of the airline bailout packages

Media stories are swirling after the Minister of Transport, Marc Garneau tied any federal bailout money to airlines such that those affected by the grounding would get cash refunds instead of credits.

There are a few things to consider;

  1. The federal government does not regulate travel packages including hotel components and funds passed to hotels in advance of travel.  It is not at all clear that they will force airlines to refund these packages in full or part.  In fact, in the area of airline advertising, travel packages are strictly excluded.
  2. Your airline may not take the bailout package.  While the Government is tying assistance to refunds, there is nothing obligating the airline to agree to the conditions of the bailout package or accepting federal bailout money.
  3. It is unlikely to cover voluntary cancellations prior to the travel advisory.  Some customers cancelled prior to the advisory.  It is uncertain if this will apply only for cancellations and grounding made on or after March 13, 2020, or if the Government will set a date prior.
  4. Voluntary cancellations for flights resuming after the groundings and during the travel advisory are also unknown.  During this time, consumers knowingly booked travel while there was a travel advisory in effect.  We have no idea if the requirement to refund (if at all) would extend to people who booked after the advisory was in place.
  5. New bookings are highly unlikely to be covered by the policy.

How would refunds be processed if airlines are ordered to do so?

There are literally millions of tickets affected.  Air Canada alone flew 51 million passengers in 2019.  The period in question likely represents about 1/6 of a year’s traffic, and 60% of it sold in Canada.  That would be around 5 million tickets for Canada’s largest airline. 

The accounting and processing will take months, in addition to all the above uncertainties of eligibility.  Airline reservation systems were designed to take reservations and process them, refunding maybe 5% of tickets at most.  These systems will behave like a cat being pet backwards against the mat of its fur.

In short, if the Government takes this action, and if the airlines agree to the bailouts, and if the tickets are eligible, each airline will need to develop a process to facilitate these refunds.  When we are apprised of this process, we will inform our customers.

It’s important to remember that tripcentral.ca or any other travel agency does not have your money.  When the travel service is charged to your credit card, the funds go into the airline or travel supplier’s bank account, and we then earn a small commission settled separately.

Who is the Villain in this story?

It’s easy to dump on the airlines – they took the money in advance and never provided the service.  It would be one thing if there was a rogue airline doing this, but frankly, this is how the entire international airline regime works worldwide.  It’s not like our Canadian based airlines are worse than others.  Our airlines compete every day with foreign airlines and this is a good thing for consumers.  All of them have evolved to take the money in advance and compete heavily on price.  No jurisdiction in the world is regulating airline financial statements (maybe they should).

Our airlines have not been given specific bailout money like other countries – namely the US, Europe and elsewhere.   Our airlines bled financially as the lockdowns began, flying empty planes out, returning Canadians home. 

It’s even easier to dump on us.  We sold you the tickets and we answer our phones and emails quickly compared to the airlines and suppliers.  Unfortunately, we’ve grown a layer of Teflon – and there’s really nothing we can control in the situation.

The federal government is an easy target.  They should have been regulating airline financial statements for years in preparation for this kind of event.  However, no other jurisdiction was doing so either, putting our Canadian based airlines at risk if they were subject to one set of rules, and foreign carriers another.  It’s been looked at before, and governments around the world decided “hands-off” this kind of regulation in order to keep fares competitive.  Maybe this will change in the future, or maybe there will be a passenger protection fund to cover these kinds of risks that private insurance doesn’t cover.

Blame the virus?  I guess, but it doesn’t care, and it won’t refund either.

If you are waiting with travel credits:  No one thought this was going to last this long or be this big.  And as a result, the Government is working through this with the airlines.  We ask you to be patient and we will communicate as soon as we have something tangible.

Meanwhile, travel has never been so flexible to book, change, cancel

At this time, Canadians are required to self-isolate for 14 days on return from another country.  Calgary has a pilot project in effect offering the choice of a two-day waiting period for a negative test and a follow-up test four days later.  Premier Ford of Ontario is looking for something similar.  This will evolve as our testing and contact tracing capabilities expand.

Vaccines are coming – hopefully in Q1 for health care workers and vulnerable groups, and Q2 for those of us who want it or need it to travel.  This is uncertain.

It doesn’t mean you can’t book travel – you just need to be aware of the deposit, final payment dates, non-refundable dates, cancellation waivers and insurance options.  Things are far more complicated than they used to be.  It takes us twice as long to book someone as a result.

Savvy folks are even booking cruises now for Q3 and Q4 2021, and 2022 knowing that the CDC Guidelines have been published and will be in effect.  Prices will be great, and there’s nothing to lose if you book a refundable deposit fare.

And there’s always the ability for us to book your airfare and hotel separately (not as a package) at the last minute to reduce the risk of cancellation.  No matter what, we will be here for you when you’re ready.   

50 Comments

  1. We should be able to get all cash back do to covid 19 not a travel voucher that expires. Especially when we paid cash / credit card.

    • We hear you. That’s what the Government discussions are all about.

  2. And if we do end up getting refunds, there better not be any stipulations. If someone paid 4k for a vacation, we expect 4k back in a refund. There should be no money held back for whatever the travel companies decide. This is a global pandemic we are all suffering through, there should be no excuses if refunds are made mandatory!

    • We empathize and do not disagree. If we could press a magic button to do refunds we would. This is why the Government support to the airlines is so critical. All we can do is keep our customers apprised.

  3. Is the travel voucher going to be extended past 24 months?

    • Some have been extended with no deadline. Others are allowing flexibility for name changes – best to check with us for your specific voucher. In the beginning when everyone thought we’d lock down for a few weeks and everything would be normal, the initial re-booking periods were tight, then set to a year, then two years…

  4. Service paid for & service not delivered = full refund!!!
    Other countries have offered full refund based on the above ascertain, including full refund for non-refundable tickets. Shame on the Cdn. airlines!!!

    • True about other countries. Those countries provided Government support to their airlines. This is what we are all waiting on.

  5. Why is there an expiry date on the travel vouchers. Will they be valid if the 2 years from our original travel date go by and we are still not able to travel. They should have no expiry and be transferable to another person.

    • Please check individually as these expiry deadlines have evolved over time. Some have allowed for no expiry and a process to change some or all the names when rebooking. It depends on the supplier.

  6. Should be with interest as we did not receive a service we paid for. You used our money to keep afloat so it’s like a loan, you kept your services going while the rest of us could use that money. Times are hard all over.

    • Once again, WE do not have your money. It is in the hands of airlines and if a package vacation was booked, a hotel outside of Canada may have some of it. We empathize with the situation and you’re right, times are hard all over. There is no single villain in this story – this is why we are keeping everyone apprised of how Government financial support to our airlines may or may not affect refunds.

  7. Are the issued vouchers still only good for 2 years? We were cancelled for a trip in March and now have almost a year of our voucher wasted.

    • Some have been extended with no deadline. Others are allowing flexibility for name changes – best to check with us for your specific voucher. In the beginning when everyone thought we’d lock down for a few weeks and everything would be normal, the initial re-booking periods were tight, then set to a year, then two years…

  8. I sympathize with everyone involved….the travel agents who get blamed, the airlines who get blamed, the government and the people that purchased the tickets. I have been waiting, however, to receive the long-overdue notice that the vouchers can be transferable…TC has been telling me that the lawyers are doing the paperwork but with the peak period coming up for booking, sure would be nice to see something that allows myself or my sister to transfer the vouchers to those who could use them. Being told that it’s in the works for the past 4 or 5 months now…..

    • Someone will be contacting you today. There was a delay getting the required paperwork assembled in a template form for these transfers, but we have those templates completed now. You should not have been waiting this long, perhaps something was lost in the shuffle here.

  9. This blogpost is an insult to the intelligence of your customers.
    WE DID NOT CANCEL. THE AIRLINE DID.
    1) We Purchased a service.
    2) Service was not provided.
    3) They kept the money.
    Gyms have refunded me, Events have refunded me, ANYTHING else I’ve booked has refunded me.
    Legally and morally, a refund is what should be done.

    • We agree with your points #1,2,3. We hope the Government assists the airlines as has been done in other countries. In no way are we insulting the intelligence of our customers. Contrary – we are trying to keep everyone abreast of what is changing. Our prior blog, why can I not get a refund suggested our customers write to the Minister of Transport. Many did. This helps facilitate change. This is a global problem and will require Government intervention including possibly new regulatory requirements to prevent the use of advanced funds. But Canada cannot do this alone unless they can somehow regulate the sale and finances of foreign airlines who fly into Canada and sell tickets in Canada.

  10. So many people who have yet to receive a refund have either lost their employment due to COVID19 or seen their income drastically reduced. Even with a full refund, many won’t be able to afford another vacation, rather, opting instead to use that refund money to put food on the table or pay rent/mortgage which they’re in arrears with.

    • We appreciate this. Our employees are facing the same issues. This is why Government intervention is important.

  11. Whoever wrote the above article did a stellar job.
    Clear, informative, informal yet professional, the article was a pleasure to read. (and yes, I too, am hoping/waiting for a refund.)

    • You made our day! Thank you for your kind words and positivity. Keep watching for updates on refunds.

    • My wife and I have been going back and forth with Air Transat for months. A future travel credit with no expiry date isn’t sufficient. We paid money and trip was cancelled. We requested a refund several times. That should be sufficient. As a customer service operation once a customer requests a refund for shouldn’t be a battle. Airlines are asking for bailouts, but the customer is asking for their money back. Isn’t that kind of hypocritical. They won’t give a refund but want a hand out to aid them. What about individuals like myself who could have used that money refunded when they lost their job. Holding money hostage isn’t a very good customer experience. Future travel credits aren’t guaranteed. No one knows what the future holds. Saying “I understand your frustration, or I sympathize with you” holds no value. Not until I have something of yours and refuse to return it.

  12. I agree with Kinga Hay’s comment. The article was well written. These are unprecedented times, something we never expected to happen. I have a trip that was cancelled and not planning to book another till it’s safe to travel and there’s no Quarantine rules. For now, I’ll wait to see what happens between our Government and the travel industry. Thank you for the article, it was informative.

  13. I wish I could express my thoughts as clearly Kinga Hay has. The article is the best I have ever read on this subject. I hope Tripcentral will keep us informed on further developments

    • Thank you for your feedback, much appreciated. We will continue to keep you updated.

  14. Any word on whether the voucher expiration for United airlines has been changed to indefinite? Or are they still on 2 years, I have q group of 4 people who have tickets for a trip to Japan who still have their borders closed to tourists, I tried to contact the agent I booked with via email and got no response. The trip was booked for April then we wanted to rebook for October but the borders there remain closed the returning flight was operated by all nippon airways I believe but still stated it was a United flight. we are now hoping to reschedule for October of 2021. Thanks for any reply we are just hoping to get some information about what the heck is going on.

    • They are to be used within 24 months from the date of ticket issuance. Travel must begin by December 19, 2021. Unfortunately, your agent is no longer with us, but you can contact any of our travel experts by calling 1-800-665-4981.

      • Thank you very much for the reply I am sorry to hear that my agent is no longer with you, however I am very grateful for the swift response and for clearing up the issue I was having.

  15. While we do understand what has been told to us about how our money was distributed here and there and Trip Central does not have any of it, who has the vouchers. We were only emailed about them and that they were good for 2 years and not received vouchers or any other information since then.

    • One of our Customer Support team members will be in touch with you shortly.

  16. The way things are going right now, I don’t feel I can use my vouchers within 2 years. Vouchers should have no time limits. Not due to our fault, trip was canceled.

    • Some have been extended. Things keep changing. We have your email address and will check for you.

  17. We would like to thank you for the updates and we are looking forward to travel again the only thing stopping us is the quarantine cannot afford to take an extra 2 weeks off after trip so we hope they come up with another option like test us when we get off the plane, just a thought.

    • Testing on arrival is in a pilot project in Calgary. Toronto is lobbying for it as well. We will definitely be communicating if anything changes. Thanks for reading.

  18. We will not be booking further trips through Trip Central. We purchased full insurance coverage and paid in full up front. We then found out with weeks to go, that an emergency surgery was required. We were then told because it happened close to our trip date, we would only get 50% back, and have a travel credit. Big Whoop, a travel credit during Covid. All that money lost after paying for cancellation and insurance coverage.

    • This is unfortunate in that Manulife is taking the position that there is “no insurable loss” when a credit that can be used in the future is provided by the supplier. It would have happened no matter where you booked. We completely understand and agree with your frustration. Manulife is the leading provider of travel insurance in Canada, and they have done this along with a number of other companies in concert. That said, the insurance covers other risks that didn’t occur for you, and the value of your entire policy can be attributed to a newly booked trip. So the value in the coverage is not lost. We realize that using the policy and getting the other 50% in cash was the preferred option. Readers of this post and comment may conclude that it is not worth purchasing insurance, but again, there are many other risks and situations covered by insurance that are covered. When the Government eventually lifts the travel advisory, this situation will be covered. That can happen at any time, especially as vaccines are rolled out in the coming months. Since you can only buy insurance at the time of booking, it is a “catch 22”. If you don’t buy insurance now on a booking and the advisory is lifted, you have no coverage. Overall, we completely agree that cash is better than credit, but unfortunately, it is beyond our control. We also accept that this leaves a bad taste in your mouth and because you booked with us, it’s natural that it associates with us. It is equally happening to other travel agencies, suppliers and insurance companies. All we can do is try and explain that none of this is within our control, even though we may be naturally blamed as a result.

  19. its been 7 months and not one person in our group haven’t received a voucher ,credit nothing sent email haven’t heard anything left
    my number phone hasn’t rang so here i am , now what?????
    the store closed cant go there

    • This should not be the case. We have escalated your email address to a manager to follow up.

  20. Is Air Transat still committed to refunding the vacation packages that they cancelled from Western Canada going south as they announced that they would on July 30, 2020 ? Thank you for your reply.

    • Yes. It’s an exception due to the fact that they have no plans to operate a program from Western Canada in the foreseeable future. They are slowly working through those based on the original departure date priority. We are not being kept apprised of the refunds as they are being done by Transat. They did publish a schedule with the announcement when they would begin the process.

  21. Thank you for the info, very well presented 😊We have a credit from Air Transat so we were ready to rebook only to find out they no longer fly in and out of Atlantic Canada, we can not fly with another airline (at our own expense) into another province and then fly from there to our chosen destination as we would then have to quarantine there for two weeks. What will happen in this case? Does Air Transat have any future plans to begin flying in and out of Atlantic Canada around Easter? We are stuck, no refund but can’t go anywhere.

    • We think this predicament is untenable. Very likely the discussions with the Government, if they are actually happening, would hopefully first impact a situation like yours. At least in the short term, unless there is a connection offered with Air Transat through Montreal or Toronto this winter, or a rapid increase in demand due to increasing vaccinations where more flights are put on, it will be difficult to use the voucher this winter. It is not expiring any longer. We’ve seen airlines put on some destinations, frequencies and durations and have to scale back. In terms of a connection through Toronto or Montreal, if you’re going abroad, the 14 days applies anyway – at least right now. We cannot foresee a situation where the quarantine is higher for a domestic return from Toronto than from outside the country. We will absolutely keep everyone posted with widespread changes in policy as soon as we know anything. We can only hope that something breaks on this front for you before the winter is out.

  22. so can you tell me, if I book a trip that’s less then my credit, do I lose the difference or do I have another credit for future trips?

    • Great question Carol! You will not lose the difference – you can use it for another trip and our system will track it.

  23. Westjet has told us to contact Trip Central to get a refund for a Westjet vacation package booked through Trip Central that was set to depart Apr 17, 2020. Could you please tell me who to contact for more information.

  24. Sunwing announced it is not flying out of Halifax for 2021. How long is Sunwing travel voucher good for?

    • Hi Wendy, thanks for reaching out. Sunwing vouchers are valid for 24 months.

Post a Reply

Your email address will not be published. Required fields are marked *