A ‘MISUNDERSTANDING’
of their rights has
consumers up in arms
and even threatening legal
action against airlines and
travel agencies.
When the Consumer
Protection Act was introduced
three years ago, one of the
most contentious issues for
the travel industry was that
of the provision of refunds if
an air ticket was cancelled.
In 2011, then-commissioner,
Mamodupi Mohlala-Mulaudzi,
said airlines would have to
comply with the Act, even
saying there would no longer
be such a thing as nonrefundable
tickets. However,
airlines continue to sell these
tickets in South Africa.
According to the Act,
a supplier can charge a
‘reasonable cancellation
penalty’ if an air ticket is
cancelled, taking into account
a number of factors including
the length of the notice period
of cancellation provided by the
consumer and the potential for
the service provider (airline) to
resell the ticket.
Gareth Cremen, partner
at Ramsay Webber, says the
airlines’ fare rules need to
be brought in line with the
wording of the CPA. He says
the main reason behind many
consumer complaints is that
consumers are not notified of
the fare and the cancellation
policy of the airline on that
specific fare. Further to
this, not many consumers
understand the travel industry
and especially the relationship
between the travel agent,
as an intermediary, and the
airline, as it is not explained
to the consumer. He adds
that the National Consumer
Commission has been
ineffective in enforcing the Act.
According to Gareth, in 2011
following a complaint raised
through the Commission, an
international airline threatened
to pull out of the country if it
was forced to comply with the
Act. This threat, he says, saw
the Commission back down
and there has yet to be a case
tried in court since then.
Simon Newton-Smith,
chairman of Barsa, says when
it comes to the sale of nonrefundable
tickets, airlines are,
in fact, complying with the CPA.
“At issue here is a selective
interpretation of the law and
Chapter 2, Section C, 17.4 (d)
references ‘general practice
of the relevant industry’ as an
exception. As a global industry
practice, airlines typically
offer a choice of fares with
restrictions ranging from nonrefundable
to fully refundable
and customers self-select the
most appropriate and best
value option,” he says.
Simon says if airlines were
compelled to make every ticket
fully refundable, the consumer
would ultimately suffer from
higher ticket prices. “If airlines
were forced to sell refundable
tickets only, the ticket prices
would be forced up, demand
would go down and many
routes to South Africa would
become unsustainable.”
Reports in newspaper
consumer columns tell stories
of consumers being burned
by the terms and conditions
airlines impose on the sale
of their tickets. They believe,
and are backed by legal
representatives, that they
should be refunded when
cancelling a trip far in advance.
Last year, Travelstart dealt
with an incident of this nature
and actually paid a full refund
to the client and then set out
to recoup the money from the
airline. Michelle Kleu, country
manager South Africa for
Travelstart, says: “We offered
the customer an interim refund
as the airline takes weeks
to process the request. The
customer at this stage was
very unhappy and this was the
least we could do.
“Unfortunately the airline
industry is a very complex
one... Consumers are used
to quick and straightforward
solutions when it comes
to changing or cancelling
purchases. The average
person cannot be expected
to understand off-hand why
the airline won’t give them
their money back and why
the refund can’t be done
instantaneously,” she says.
Stephan Ekbergh, founder
of Travelstart, says that since
this incident Travelstart has
not refunded clients unless
airline rules allow, or the
agency has been in the wrong.
“I know this sets bad industry
standards but we went against
our own better judgement.”
Stephan adds that the CPA
“just causes confusion for
consumers buying travel”.
The body tasked with
resolving these complaints,
The National Consumer
Commission, is failing to do
so, says Gareth. According to
him, the Commission doesn’t
communicate effectively with
those who lodge complaints
and doesn’t seem to have any
interest in opening cases. But
Gareth says this isn’t to say
the Commission won’t one day
tackle the issue.
A statement on the
Commission’s rather
outdated website reads: “The
Commission agrees that
the practices of the airline
industry may need to be
tested at the Tribunal at a
later stage, however this can
only be done after exhausting
all negotiations with the
industry in general, and after
an investigation has been
concluded. The Commission
has not yet made a decision
to investigate the airline
industry.”
It can’t be determined when
this statement was posted
but it also says that the
Commission had received 164
cases involving cancellations
of airline tickets, 96 of which
were active complaints from
April 2012. All attempts to
contact the Commission for
comment and updated figures
were unsuccessful. Simon
says however, that to Barsa’s
knowledge, only 11 airlinerelated
CPA cases have been
raised in the last six months.
Gareth says until such time
as a case is tested, travel
agents should ensure that
they explain the limitations of
lower fare tickets, including
that airlines could in fact
charge a cancellation fee of
up to 100%, depending on
the fare.
