Why some airline refunds take so long

The cancellation of any vacation is always a difficult one. Delaying a week of poolside paradise due to unforeseen events (like a global pandemic) is never fun. To add to the challenge, it can sometimes take weeks or even months for an airline refund to show up in your bank account. If you booked your trip with an online travel agency (OTA) like Orbitz, and are still waiting on yours, here is everything you ever wanted to know about airline refunds and credits, and why yours might be taking longer than expected.

RELATED: Is working for an airline really worth the travel perks?

Exactly how do OTAs like Orbitz work?

To put it simply, travel suppliers (like hotels, airlines, and car rental companies) distribute and market their products on third-party sites like Orbitz in order to reach millions of travelers around the world. They load their available inventory into the OTA’s system, then set the pricing, and publish. By making their platforms accessible for a variety of travel suppliers, OTAs like Orbitz can offer travelers a convenient way to book their entire trip, delivering the largest variety of travel offerings across flights, accommodations, rental cars, and activities.

When I purchase an airline ticket through an OTA like Orbitz, where does my money go?

Most OTAs allow you to either book a single flight, hotel, or car; or book a package that’s a combo of those. This is done primarily through either a merchant or agency model.

Under a merchant model, the online travel agency facilitates the booking of hotel rooms, alternative accommodations (like vacation rentals), airline seats, car rentals, and destination services from travel suppliers and acts as the merchant of record for such bookings. This means the OTA is the one charging the customer directly. Most merchant model transactions for OTAs like Orbitz are related to lodging bookings.

Under the agency model, an OTA facilitates travel bookings and acts as the agent in the transaction, passing reservations booked by the traveler directly to the relevant travel provider. The OTA in turn receives commissions or ticketing fees from the travel supplier and/or traveler. This means the travel provider is the one charging the customer so that when you look at your bank statement, the actual supplier (like the airline, for example) will show up and not Orbitz.

If I am owed a voucher, refund, or credit, will it come from the OTA or the travel supplier? 

Regardless of the business model, terms and conditions and rules and restrictions for the booking are set by the supplier and not the OTA. For example, whether or not a booking is refundable, or whether a change fee is charged are all determined by the supplier. However, OTAs typically employ large customer support teams that advocate for the customer in the event there is a dispute or issue between the customer and the supplier, and they’ll work directly with the supplier to find a resolution on behalf of the traveler. During the first few months of the global pandemic, for example, OTAs navigated more than 3,000 separate airline cancellation policies; many such policies called for travelers to be issued credits. Orbitz, for example, built a “one-click” cancellation feature that gave travelers the ability to cancel directly through SMS or via the app, thereby alleviating the stress and long hold times involved with mass cancellations.

How long does it usually take for a refund, voucher, or credit to show up in my account?

As soon as an OTA is granted approval from the airline or hotel to process the refund, voucher, credit etc., it processes that request promptly on behalf of the customer. However, under the agency business model (which is how most of airline partners are set up), the supplier (meaning the airline) controls the refund process and timeline. COVID created massive delays on this front for a variety of reasons (including the sheer scale of requests), but generally speaking, airlines process refunds within a credit card billing cycle, though some of the smaller or mostly international carriers may take longer. As for credits, it usually takes around 12 hours, assuming there aren’t any sync issues between the airline and the OTA.

How are OTAs treating unused flight vouchers issued to customers?

Orbitz launched new self-service tools so that customers can easily redeem their existing flight credits without having to call in. For example, if you have an account with Orbitz, its new Coupons and Credits page is a central place within your account where you can view and use any credits or vouchers you have, start a chat with a virtual agent, and redeem credits in addition to accessing a customer service line.

Why was I offered a credit when I could have received a cash refund?

When cancellations due to the pandemic were at peak levels, many OTAs, Orbitz included, launched a series of campaigns proactively allowing customers to cancel bookings without having to call in. The best solution Orbitz had at the time was to cancel and issue a flight credit or voucher. However, since then, the company has gone back and made sure all customers whose bookings were eligible for a refund, based on the airline or hotel’s policies, have been offered a path to get a refund instead.

Are OTAs extending airline credits due to longer lockdowns in Europe and Canada?

Airline credits have varying expiration dates, which are set by the airline. Many airlines extended credit validity into 2022, but this varies depending on the airline. OTAs are continuing to actively advocate on behalf of their customers and work with their airline partners to get the best resolution possible for travelers.

How are OTAs helping customers still waiting for refunds?

Over the last several months, OTAs like Orbitz have made sure any customers who originally received a credit or voucher but were refund eligible have been offered a path to a refund; Orbitz has promised to continue to work closely with its airline partners to advocate for its customers.

What should I do if I am still waiting for my flight refund? 

Sit tight! While OTAs work closely with their airline partners to ensure travelers get their refunds as soon as possible, ultimately it is up to the airline to refund the traveler as OTAs like Orbitz pass on the payment to the airline as soon as the ticket is purchased. There are still a number of outstanding refunds owed from some airlines.

Tagged: Feature