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Refunds, a further ordeal for travel agencies already in crisis

The agencies say they have lost 90 per cent of their business this year.
The agencies say they have lost 90 per cent of their business this year. / Ñito Salas
  • The businesses say they are trapped due to a lack of funds, because the money they have to refund to clients is still being held by airlines and tour operators

After having to deal with the closure of borders and a drastic fall in the number of travellers, travel agencies are now facing the ordeal of trying to obtain refunds for services not provided. Six months after the state of alarm began, numerous people have still not received the money they had spent because of delays in payment by airlines and tour operators, and this is overwhelming a sector which is already suffering from a lack of business.

The travel agents, who act as intermediaries between the clients and service providers, say they feel they are trapped in a deadend, because the money their clients entrusted to them for their holidays is still in the hands of the companies or hotel chains, and they cannot refund it until these operators give it back to them.

The president of the Agencias de Viaje Asociadas de Andalucía association (Aedav), Sergio García, says they are well aware that many payments have still not been refunded since the crisis began. "We are the weakest link in the chain," he complains. According to Aedev's calculations, the sector has suffered losses of 90 per cent compared with turnover last year.

The problem for the agencies, he adds, is that most of them are small businesses with little financial muscle so they are unable to refund clients from their own resources. And, of course, all the consumers can do is be patient and wait for their money. Nor do the travel agents feel they have enough power to go into battle with major airlines which operate all over the world.

The law called Ley de Viajes Combinados stipulates that refunds must be paid to clients within a maximum period of 14 days, or within seven days if they had only contracted flights. Despite this, the vast majority of agencies are unable to pay these sums within that time and they are asking patients to understand their situation.

"In general they know we are suffering from the pandemic and they are being patient; but they need to know that it isn't a case of us not wanting to refund their money, it's just that it hasn't been repaid to us, so we can't," says García.

Joint action

The delays in payment and problems being suffered by the agencies have led the sector to call for the government to intervene, although so far there has been no progress. Sergio García says they are even thinking of taking joint action: "We are talking about millions of euros that are in the hands of the airlines. If they have liquidity problems, let them sell planes or do something like we have had to, such as apply for loans so we don't have to close down."

José Luis Ruiz, who runs the Shalam travel agency, admits that he still has to refund his clients about 16,000 euros. He explains that some airlines are offering vouchers instead of money, but not all clients want those. When the state of alarm began the government authorised refunds in the form of vouchers, but later had to backtrack on that to comply with EU regulations. Now, vouchers are only offered if that option is accepted by the clients. For that reason, many cases are ending up in the hands of consumer organisations.

For Ruiz, the issue of refunds is causing a significant financial loss, because 100 per cent of the cost of the trips is being returned, including the commission the agency normally receives. "The losses are incalculable; we don't know how all this is going to end, because of the restrictions," he says.

However, he is confident that the agencies will come out of this crisis stronger, because people who have made reservations online have nobody to fight for them with the airlines or travel providers.

"Those people are on their own. The clients who booked through us do at least know that sooner or later they will get their money back," he explains.

Ana Belén, who runs Viajes Gastor, agrees. In her case, she spends part of each day sending emails and calling the companies on behalf of her clients. "They give you the runaround; they answer, but the time limits keep being extended," she says.

Ana Belén says it would be impossible for her to refund the clients directly because her business would have to close and then the clients would never receive their money.

"When I phone the clients with good news, I am almost more excited than they are; I don't want to hold on to anything that isn't mine," she says.

For this reason, all the travel agents agree that customers need to be prudent and patient, because it is better to be paid a little late than never receive any money back because thousands of small businesses have gone into liquidation.