Are travel agencies about to make a money grab on refunds?

By | March 23rd, 2016

Remember that animated discussion about whether travel agencies should be able to impose their own cancellation penalties?

I suggested this act of keeping a refund — even when an airline had surrendered the money — was rare. But that was before I heard from Robin Mewoh.

She recently booked a Singapore Airlines ticket through a brick-and-mortar travel agency in order to attend her mother’s funeral.

“A few minutes later, I found a much cheaper fare with ANA,” says Mewoh. “When I called the travel agent to cancel, he informed me that I’d get an $800 penalty fee for cancellation.”

That’s odd. Under the Department of Transportation’s (DOT) 24-hour rule, Mewoh should have been able to receive a full refund.

“I checked Singapore Airlines’ cancellation policy and US DOT’s guidance on the 24 hour reservation requirement,” she says. “Both state that there is no penalty fee if canceled within 24 hours of purchase.”

So what’s with the $800 cancellation penalty?

Well, that would be the travel agency imposing its own cancellation fee, which Mewoh agreed to when she used the agent.

“I have emailed the travel agents a couple of times, but have not received any reply,” she says.

In order to avoid the $800 fee, she agreed to accept a credit on Singapore Air. That way, she’ll only pay $250 and reuse the credit, instead of losing $800.

But the problem goes far, far beyond one little agency socking a grief-stricken daughter with an unconscionable cancellation fee. Given that we’ve had two agency-cancellation penalties, it makes me wonder if we’re not looking at the beginning of a trend.

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I mean, imagine what would happen if one of the large online travel agencies got on board and started charging a nonrefundable $25 “cancellation” fee even when a full refund is issued under the 24-hour rule for cancellations, or for a death in the family? Think of all the money they could steal — uh, I mean, make.

Are you as disgusted by this as I am? To be clear, these are full refunds being given by suppliers, with middlemen essentially helping themselves to the money. They are doing nothing to earn it.

This is an area where the DOT can do real good by issuing guidance that clarifies who should get the refund, and how much. Consumers deserve to get all their money back. No fees should be charged for getting the refund. Full stop.

I’m still trying to understand the other side of this argument. What makes anyone think they are entitled to part of a refund? Why should an agent be able to charge Mewoh $800 for canceling her flight? There must be someone who can present the argument in a way that consumers can understand.

I’m still waiting.

Should travel agents charge cancellation fees even when a client gets a full refund?

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  • Flyonpa

    I’m OK with a predefined cancellation fee for the service they provided, (Assuming they did not charge a fee to do the service) If they provided a “Free” service, I’m OK with them charging ~$25 cancellation fee for the work they did,

    But Not a huge Price grab of hundreds or thousands of dollars

  • Jeff W.

    Here is the only defense that seems plausible to me.

    If the TA does not charge a booking fee when you do business with them, then I believe the TAs are entitled to some form of compensation. They should receive something for their work when booking and cancelling the trip. In Robin’s case, I really doubt it was $800 worth of work, so that is a money grab, pure and simple.


    My TA charges me a fee to book. ($40.00 domestic and $60 international). I often book my own domestic flights but book international through her. And I have her check quite a bit before booking. I have cancelled several times within the 24 hour time frame. I get a full refund on the ticket but do not get a refund on the ticket fee. (Though for a family emergency she refunded that too.) I think that is fair as my agent has done quite a bit of work on the international tickets. However an $800 cancellation fee, especially within the 24 hour cancellation window, is simply highway robbery.

  • John Baker

    Without knowing all the details of the ticket and what the TA told the client before purchasing the ticket, its hard to judge what happened. If its a straight $800 fee, that’s way too high but … The TA may have done some “travel hacking” to get a better flight and purchased a “non-standard” / consolidator fare on the traveler’s behalf which have much tighter T&C. They may have purchased it from outside the US where the DOT rule wouldn’t apply.

    As I said, it all came down to what the TA told Mewoh before purchasing the ticket.

  • DChamp56

    I voted yes, because who knows how long this person kept the TA on the phone looking at different options, call backs.. etc. The amount however, should be reasonable.

  • Asiansm Dan

    I am not a travel agent and I don’t expect travel agent working for free.
    Slavery is over century ago and cheap labor is OUT and despicable.
    If they can find a cheap ANA flight why ask the travel agent book them on SQ. Some like lavish, luxury life and don’t want to pay the price accordingly.

  • pmcw

    I voted no, but with caveat. I think it’s sad that there is a law that says you can’t yell “fire” in a theater. However, common sense and decency fails some people, so the law is necessary. Likewise, I think it’s sad that we have so many regulations that prevent businesses from taking advantage (raping) their customers. However, it appears you’ve come across yet another example where a new regulation might be needed. But there is another point to consider too.
    As some posters have correctly noted, travel agents often invest considerable time, and share considerable knowledge with clients. I’m sure in many cases these clients simply “take” this knowledge, and use it as they go forward to book at the cheapest prices they can find on the Internet. In these cases, the travel agents make nothing for what is more often than not good service. I’m sure very few of us would stiff a waiter for good service, but that’s what often happens to travel agents.
    In some cases people forego the option of taking the travel agents’ information and going DIY, and in some of these cases, the traveler has to or decides to cancel the reservations. Since the travel agency sits between the traveler and the services booked, the refunded fees go to the agency, and there is where things can get sticky.
    In some cases the agency has actually incurred costs beyond the time the specific agent invested on behalf of the traveler. In some cases the time invested was significant. Is it fair to totally stiff the agent and agency, which is often abused by DIY travelers that just want some free information? I don’t think so.
    If there is a new regulation I think it needs to have room for true brick and mortar travel agencies (not companies like Priceline, Expedia, etc.) to retain the portion of a refund that covers direct costs, and a modest cancelation fee (something along the lines of $100, which is not uncommon for a condo association when a traveler cancels).

  • Bill

    Exactly how it should work …

  • Tanya

    I am OK with a travel agency charging a cancellation fee. If you do not want to pay a travel agent’s cancellation fee, make the arrangements yourself. To me, this would be like a new client coming in and having us file an extension, then deciding not to use us, but also not wanting to pay us for our time. Did it take very long to file that extension, no, but we did have to take 20-30 minutes out of other billable time to input a new client, pay our software company for the use of another return, etc. It was my time that was spent, why would i not be entitled for pay for a service? The TA booked the flight for the passenger, taking time out of his/her day to do this for a client. Using a system that the travel agency pays for that is not available to me to use without a huge expense on my end. Then, the TA also had to go through the steps to cancel the ticket. Now, the 800 is excessive, in my opinion, but not all fees are. $25 for a cancellation now that the TA will no longer get commission on the flight sale, that is reasonable to me. If it is not to you, then don’t use a TA.

  • Joel Wechsler

    I’m a TA and this is exactly how I work, which my clients think is fair

  • MarkKelling

    I am OK with a fixed fee for each service a Travel Agent does for their clients that is disclosed in advance and I happily pay those reasonable fees when I use a travel agent.

    But is this $800 fee a percentage based fee? In other words, was the ticket purchased maybe $8000 last minute walk up and the cancelation 10%? On an inexpensive domestic ticket, 10% would probably be around $50 at most. But is there that much more time and effort involved in canceling a higher priced ticket that could justify the $800 fee? Not being a travel agent I don’t know, but I seriously doubt it.

  • Algebralovr

    Did the travel agent charge a fee to book the ticket? If so, then there should be no cancellation fee. If they did not charge a fee to book the ticket, a modest fee might be reasonable, perhaps based on a rate of $50 per hour for investigation for their expertise. $800 is sheer robbery.

  • Annie M

    As an agent, there is a lot of time that goes into most bookings. Researching takes time and for air, most airlines do not pay commission for booking. When a consumer cancels and trip and get a full refund, the agent gets zero compensation for all the work they did before hand. A reasonable cancellation fee compensates the agent for the time they spent on the transaction.

    EXCESSIVE fees are the problem. There is no way in heck an agency can say that they did $800 work of work to book a ticket. That fee is absolutely ridiculous – but people need to read terms of their booking to ensure those fees are disclosed.

    You can argue that the woman booked under the agencies terms but that fee is absolutely excessive.

  • Michael__K

    The DOT should move forward with it’s May 2014 Notice of Proposed Rulemaking and extend the 24-hour rule to ticket agents that sell air transportation.

    Agents could still charge an up-front fee for their services, with specific disclosure as to what is refundable or held for 24-hours.

  • Mark

    Silly question, but why is an international flight any more complex to book than a domestic flight?

  • Lindabator

    We charge a fee to issue the ticket, and yes, we keep that when you cancel — after all, we do NOT get paid to do all the work and then you cancel after it is done.

  • Lindabator

    Yep – I refund for emergencies, too. And I DO have a package cancellation fee, but will waive for a good reason as well. But I hope no one begrudges me getting paid for doing the work!

  • Lindabator

    depends – can usually get a ticket much cheaper thru my connections, and if you are doing a convoluted itinerary, nice to have an agent to guide you and have your back!

  • Lindabator

    this may have been a bulk fare – and has many more restrictions, generally

  • Lindabator

    unless this was a bulk fare, which is FAR more restrictive

  • Maxwell Smart

    if we didn’t have refundable fares, fares would be cheaper. What idiot introduced the 24 hour rule in the USA ? We don’t have any such nonscience in Australia & fares are a lot cheaper. No one buy non-refundable fares unless they are stupid or not paying for them, themselves. Only a very small percentage of people, even change flights, let alone ever seek a refund.

  • Maxwell Smart

    because there’s 3 times the bureaucratic red tape. Visa waivers, making sure people have 6 months validity left on their passport. The list goes on.

  • Maxwell Smart

    why on earth would you ever waive fees ?
    My lawyer would laugh if he heard that one. They charge by the minute, including small talk.

  • cscasi

    Obviously things here are not the same as you mention they are in Australia.

  • cscasi

    “I’m still waiting.

    Should travel agents charge cancellation fees even when a client gets a full refund?”

    Yes, a travel agent has to take the time to research, then book the ticket and issue it, so he/she should be paid a fee even if one decides to cancel the ticket a few minutes later. The travel agent has to go through the process of canceling the ticket which takes more time. Hey, travel agents have to make a living, just like most people. If you don’t want to pay one to do it for you, then do it yourself.
    While I do agree that $800 seems like an unreasonable cancellation fee, companies can charge what they want in the way of fees. Charge too much and people will not continue to use them and they will go out of business.
    People should make themselves aware of all charges and penalties that can occur when booking a ticket with a travel agent. If you are not sure, ask. Be an informed consumer.

  • Éamon deValera

    I’d love to see what the consumer agreed to or signed allowing the agent to retain anything besides a de minimis paperwork fee.
    I’d be inclined to litigate that.

  • Éamon deValera

    Travel agents are compensated by the suppliers of travel in most cases. I’m told that in some cases the airlines don’t pay a commission but for a travel agent to bill more than a lawyer from a white shoe firm gets per hour is unconscionable.

  • Éamon deValera

    Generally by the 10th of an hour (six minute increments). Always write down what you have to chat about and remember you’re on the meter.

    Lawyers do occasionally waive fees. I’ve found the older one gets as they practice law, and the more noble the cause the lower the fees.

  • donna gyland

    $800 is a bit much, and if I am not mistaken, there are limits to what an agency can charge, depending on their pre defined class and how much time and effort went into the ticket. Often there is a lot more involved then just pushing a couple of buttons. I am a TA and I charge cancellation fees, and booking fees for airline tickets. The airlines no longer compensate, and I am a professional, and therefore my time and expertise is valuable. I charge more for international than domestic, as there is a lot more work involved, such as checking passport info, visa requirements, travel warnings, immunization requirements, just to name a few. The laborer is worthy of hire. The TA deserves to be paid, but $800? hmmm. I surely would love to see a justification of that fee

  • donna gyland

    clause, not class

  • judyserienagy

    This story makes no sense to me. If the airline would cancel within 24 hours for no fee, how then they decide to charge $250 to cancel and issue a credit? Where does the $800 and the travel agency come into this? She should have cancelled within the 24 hours and taken the TA to small claims court. Unless, of course, it was a $15K international first class ticket that the TA had put many hours of research into AND informed the client of their fee up front.

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