Issues & Trends – June 2010
TCF legal action looms against airline, consolidator not passing
on ticket refunds to consumers
THE Travel Compensation Fund (TCF) could soon launch court action against an airline, and possibly a consolidator, over non-payment of an airline ticket refund to a consumer. The TCF’s annual report for 2009 reveals its board of trustees is concerned by a loophole that has seen consolidators pocket airline ticket refunds rather than pass them on to the consumers who paid for the ticket.
The annual report, recounts the case of a customer who asked his agent to cancel a ticket. The airline refunded $5000 to the consolidator who issued the ticket to the agent.
The consolidator kept the money because the agent had collapsed owing money to the consolidator.
The TCF ultimately decided to reimburse the consumer from its own funds but it clearly believes the consolidator should have done this, albeit it does not dispute the consolidator was owed money by the collapsed agent.
But the TCF revealed it also sought legal advice from senior counsel about recovering “the amount paid to claimants who have lost refunds in these circumstances”.
The annual report continues: “The TCF, once a claim is paid, can exercise the claimant’s legal rights against other persons.
“In this case, the TCF board considered that the airline was likely in breach of its legal obligations to the claimant.”
According to the TCF board, the airline should have either paid the refund direct to the consumer or it should have ensured the consolidator did so.
“Just making payment to the consolidator was not payment of the refund to the claimant,” the TCF annual report states.
“There were also grounds for including the consolidator in any TCF action to recover for payment of such claims.”
The TCF notes that some consolidators do pass refunds on to consumers after the retailer has collapsed with a debt to them.
“This, in the TCF’s view is the correct approach,” the annual report states.
Meanwhile, TCF chief executive Glen Wells told travelBulletin that another case has arisen recently. He said the TCF board is considering what action to take.
The TCF annual report said that, if such a situation were to arise again, “the TCF will take up the matter initially with the airline and consolidator, and if there is no satisfactory outcome, consider whether and what legal recovery action is appropriate.
“Therefore, if airlines and consolidators do not wish to find themselves in such a situation, the obvious solution is to ensure that airline refunds reach the consumer.”