‘ADMs for chargebacks on unflown flights are unlawful’

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In a case study published by Travel News’s sister publication, Tourism Update, on February 12, inbound tour operator – Rhino Africa – went on record about its success in concluding a series of multimillion-rand chargebacks against SAA for services that the airline did not deliver due to the suspension of its operations. In a follow-up story published by Travel News on February 17, ‘SAA refund loopholes – Asata warns of risk’, Asata warned agents that chargebacks could come back to bite them, as SAA had issued a trade notification threatening to ADM agents if either they or their clients initiated chargebacks against the airlines for cancelled flights.

Travel News contacted the travel agency commissioner (TAC) for EMEA, Andreas Körösi, to understand more about travel agents’ rights relating to undelivered airline services. Sarah Robertson reports…

“The answer to the principal question, whether airlines are allowed to issue ADMs for chargebacks raised by agents due to airline services not delivered, is no.

“Not according to Resolutions and not according to EU legislation. Resolutions 824r section 2.1.1 is very clear and takes precedence over the provisions in resolutions governing ‘chargebacks’,” said Andreas. This was extracted from an email to one of Europe’s major agents and airlines this week about this matter.

“Having stated the above, and also taking Resolution 812 section 6.6.7.1, referring to Resolution 890 section 4.7 about dispute resolution for chargebacks in mind, it is my conclusion and firm belief that not allowing ADMs to be disputed via BSP for chargebacks, as per Resolution 812 section 6.10.1.1 (f) – when the underlying issue is cancelled flights, it isnot only a contradiction in Resolutions but directly unlawful,” he added.

In further correspondence with Travel News, Andreas said refunds for issued tickets, when the flights had been cancelled, should be authorised for repayment in the following remittance cycle (mostly weekly or sometimes bi-monthly).

“Iata has no means to sanction its members, and for obvious reasons repayment was not an option for SAA for the past 10 to 11 months. Agents facing demands from clients have in most countries legal obligations to repay the client within weeks of demand. Most governments have allowed airlines to offer a voucher, but this is an offer the client can refuse according to a recent verdict in Europe. I have not checked South African consumer protection legislation but I am quite sure there are similar demands,” said Andreas.

He added, “So agents, when facing a situation where Iata does not allow set-off of debts, do what can be done to financially survive. Chargebacks are one option, and it is a totally legitimate move by agents. Iata cannot, and has not to the best of my knowledge, interfered.”

Andreas said that while some airlines were countering this move by issuing ADMs against agents, these ADMs had no basis in Resolutions. SAA’s policy of issuing chargeback ADMs was therefore not sustainable when there was absolutely no legal support for them to mandate this, explained Andreas. “They have other means to ‘punish’ agents, but not within the BSP system.”

“When agents do face the situation where illegitimate ADMs form part of the billing, and Iata expunges them and forces agents to deposit, the TAC can and should order Iata to expunge illegitimate ADMs or to alternatively allow the agent to short-pay with the corresponding amount. I have ruled so on multiple occasions,” said Andreas.

Iata responds about SAA chargebacks

Iata spokesperson, Perry Flint, responded to Travel News’s queries about SAA refund loopholes as follows: “The refund process is entirely the responsibility of the airline. Iata’s role is to execute transactions in the BSP that the airline has approved and to ensure relevant Iata resolutions are being followed by all parties. Iata does not ‘refund’ tickets. Iata operates a settlement system through which refunds may or may not flow at the instruction of the authorising party.”

Original Article Posted on SA Travel News