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Jakarta Post

Most customers yet to receive cash refunds for canceled flights

  • Riza Roidila Mufti¬†

    The Jakarta Post

Jakarta   /   Fri, June 19, 2020   /   02:47 pm
Most customers yet to receive cash refunds for canceled flights Keeping a distance: Passengers maintain a safe distance while in line for their health and immigration check at Soekarno-Hatta International Airport in Tangerang, Banten, on Thursday. (Reuters/Ajeng Dinar Ulfiana)

Airlines have yet to approve most passengers’ requests for cash refunds of cancelled international flights following the massive number of cancellations amid the pandemic, the Indonesian Travel Agent Association (Astindo) has stated.

From Rp 2.45 trillion (US$173.2 million) worth of cash refunds requested for cancelled international flights issued between January to February this year, only Rp 852 billion have been refunded so far, according to Astindo data collected from its members.

“This is only for international flights, not to mention domestic flights,” Astindo secretary-general Pauline Soeharno told The Jakarta Post on Thursday, adding that customers still preferred cash refunds over travel vouchers.

However, she added that travel agents have had difficulties in assisting customers’ cash refund requests as airlines has scrapped their auto-refund scheme, hence prolonging the process, as it requires the agents to manually follow-up the requests.

With the auto-refund scheme, airlines usually automatically approved the refund request and transfer the money to travel agents within two to three weeks. However, airlines scrapped the system in March this year.

The ongoing COVID-19 crisis has severely battered the travel industry, including airlines, as travel demand slowed and operational costs burden the companies. Airlines have also been forced to cancel flights due to travel restrictions to contain the virus.

The International Air Transport Association (IATA) estimates a 49 percent drop in passenger numbers and an $8.2 billion drop in revenue for the Indonesian airline industry this year, compared to last year.

Astindo travel agents have also reported a 90 percent drop in sales since the pandemic started.

The refunding problem also plagues cancelled domestic flights, as travel agents are unable to help by refunding customers from their internal cash due to slumping sales.

Airlines have only provided refunds in the form of credits and deposits for future booking to travel agents, which cannot be cashed out.

Aviation observer Gerry Soejatman said on Thursday that both airlines and travel agents are in the middle of an unfortunate situation at the moment.

“Through travel vouchers, airlines are trying to uphold consumer rights without making themselves bankrupt. If the airline goes bankrupt, the travel agent will also get affected and customers will be upset,” he said. 

He encouraged customers to use the travel vouchers option for the refunds, considering the current situation.

“The best middle ground now is travel voucher as a form of refund,” Gerry said.

IATA CEO Alexandre de Juniac said in a statement on April 3 that passengers had the right to get their money, as they had spent money on a service that could not be delivered.

However, during this difficult time, airlines were facing an imminent depletion of cash. 

Providing vouchers as a refund that could be used for future travel would give the industry “vital time to breathe” and eventually survive the crisis, he said.