Can my tour operator pocket my airline refund?

Question: My wife and I have traveled for more than 45 years together with no real problem with tour agencies and travel companies, including many third-world countries and remote places — until now. We were returning from a tour of India and due to weather in London, our flight was canceled by British Airways.

We were able to make alternate arrangements with Air India for a direct flight to the United States since British Airways did not resume flights for three days. British Airways refunded our flight to the tour operator, Overseas Adventure Travel. But the tour operator claims it is their policy not to refund this to us because it is part of a land-plus-air package.

Our travel insurance company paid us for all the expenses we incurred but not the cost of the flight, since they said we should be reimbursed by Overseas Adventure Travel.

Elliott Advocacy is underwritten by Allianz Travel Insurance. The Allianz Travel Insurance company has built its reputation on partnering with agents all around the world to provide comprehensive travel insurance for their clients. Contact Allianz Travel Insurance for a comprehensive list of coverage.

I have talked several times to a representative from Overseas Adventure Travel, but they say this is their policy. Before I consult an attorney, I would like your comment. — Donald Kne, Chagrin Falls, Ohio

Answer: OK, here’s my comment: It’s your money. Overseas Adventure Travel should return it. Immediately.

If British Airways refunded the unused portion of its flight to your tour operator, it shouldn’t pocket the money. But here’s the problem: Airlines typically don’t offer refunds on nonrefundable tickets when there’s a weather-related delay. But in this particular instance, BA bent its own rules and offered a refund.

The Overseas Adventure Travel representative with whom you spoke didn’t believe BA would do that. She thought you’d made alternate arrangements to come home, and were asking for a refund to which you weren’t entitled.

A company representative told me they were unaware of the refund in their system, and that the phone agent was simply repeating the company’s policy that it can’t refund a nonrefundable airline ticket.

Putting your grievance in writing might have changed the answer, forcing Overseas Adventure Travel to either consult with BA or to check with its own accounts receivable department, both of which would have readily confirmed the refund. Instead, you reached a representative who just parroted company policy.

For what it’s worth, I don’t think Overseas Adventure Traveler would have kept your money. If you’d asked an attorney to send a letter to the company, it would have coughed up a refund quickly.

How to avoid a situation like this? You could have either asked British Airways to refund your ticket directly to you at the time of the cancellation, and if it couldn’t, to verify in writing that it had sent the money to your tour operator. Sending Overseas Adventure that documentation might have persuaded it to do the right thing.

None of that should have been necessary. The company should have sent you a check for the refund as soon as it had the money.

“Clearly, we didn’t communicate well internally on this one,” a spokeswoman told me.

Overseas Adventure Travel refunded you $882 for the unused airline tickets.

35 thoughts on “Can my tour operator pocket my airline refund?

  1. SO grateful that NO ONE voted “yes”. This seems to be just a misunderstanding of what the refund was, and who was due it.

  2. Here’s what I don’t get… if a flight is cancelled (instead of delayed), a refund is ALWAYS an option, even with the lowest-rent pile-o-tin airline. Spirit will do it, RyanAir, Allegiant, whoever.

    It beggars belief that the tour operator was unaware of this fact.

    1. But the clients said it was cancelled due to weather, in which case the airlines then tried to re-accommodate them, just that it would have been days later. So they chose to make a change to Air India (it sounds like on their own). IF they had called their travel insurance provider IMMEDIATELY, then the insurance company would have made the necessary changes for them, and would have let OATS know about it. Don’t know why he chose to do this on his own if he already had insurance anyway!

  3. The only way the tour operator should be allowed to keep the refund is if THEY worked out the alternate arrangements to get you home. Since they did not in this case (we don’t know if they were asked to and refused or the OP just made the alternate arrangements without discussing it with the tour company) the refund should have automatically been sent with no need to contact them.

    I doubt that a company the size of OAT is “unaware” of refunds. I think they simply hoped the OP would overlook the fact that the refund was made. I have seen many reports on the web about OAT that would seem to indicate they are very reluctant at best when refunding anything.

    1. Or… they received a refund with no explanation what it was for. Depending on how they paid for the ticket and if they are an ARC agency, it could be that they had a $882 credit show up on a credit card. Unless it was the end of the month, they wouldn’t necessarily know it was there. Depending on the size of OAT and if OP told them the amount, there may not have been anyone that put the two together until Chris’s email.

      1. I doubt it would show up on a credit card since [bulk] sales are normally handled through bank payments (money just credited/debited electronically). But usually the agency on record initiates the refund request so it knows to expect a refund.

        In the OP’s case, I wonder why EC261 did not play a role. The European airline still has provide accommodations for flight delays and cancellations.

        1. @TonyA_says:disqus If they aren’t part of ARC, it could be an electronic deposit showing up without any explanation.
          All I was alluding to is that we seem to always assume universal knowledge within a company. Anyone in business knows that it’s rarely so. Just because accounting knows they got money back from BA doesn’t mean that they necessarily know that it was for John Smith, maybe just contract XYZ. It also doesn’t necessarily mean that CSRs know that accounting has money they are looking for a home for.

          1. The eticket numbers can provide an audit trail. Every refund refers back to travel documents issued prior.

          2. Yes the etkt number provides a trail, but what isn’t being mentioned in the article, is that there isn’t anything the issuing agency can do until they get notified of the refund, which is up to the carrier to process and ARC , too. Then the issuing agency has to contact the carrier to find out the reason for the returned funds before they would release them. It isn’t immediate as many might think.

          3. Exactly. That’s why I posted the EC261 7-day refund requirement for the AIRLINES. So they (airlines) must issue a refund even if the issuing agency did not request or know about it. AMERICAN agencies issuing tickets on EU community carriers should know the effects of EC261 on their operations especially for CASH sales.

          4. True – which is why speaking with a res agent got the client nowhere, and speaking with accounting would have been a better bet for him.

  4. Please people. When you buy a tour including air travel, the operator buys a ticket with your name on it but pays the airline for it. Any refund is always returned to the original form of payment and that payment was the one done by the tour operator, not you. So they will get their money back and you will have to deal with them to get yours back. It is essentially like a third party purchase. The passenger did not pay the airline directly.

    How can this be just a miscommunication problem? Sounds to me like the tour operator was trying to keep it as an income.

  5. Why is it these companies dig in their heels with the customer but when Chris contacts them they’re always sweetness and light, complete with a plausible, but not probable, explanation?

    1. I’d say its a split between not wanting to look bad in the media and a media contact driving people with more authority to look at a situation.
      This case could be nothing more than the OP and the on phone CSR talking past each other plus no one seeing the refund request and the refund at the same time. Chris’s email may have caused two internal phone calls that cleared up the mess.

    2. But perhaps the client didn’t call the right department. If he had JUST gotten back, they probably didn’t even HAVE the refund yet. Asking to speak to the accounting department would have been a better bet than reservations, as they would have had a clearer understanding that BA had AGREED to refund a nonrefundable ticket, and could have followed up with them sooner.

      1. The client had enough time to file an insurance claim, get reimbursed for other expenses, and subsequently contact the travel company representative “several times.”

        How many departments does a tour company like this have, and whose job is it to direct clients to the right department?

  6. Chris, can you find out more?
    EC261 Article 8 says:

    Article 8
    Right to reimbursement or re-routing
    1. Where reference is made to this Article, passengers shall
    be offered the choice between:
    (a) — reimbursement within seven days, by the means provided for in Article 7(3), of the full cost of the ticket at the price at which it was bought, for the part or parts of the journey not made, and for the part or parts already made if the flight is no longer serving any purpose in relation to the passenger’s original travel plan, together with, when relevant,
    — a return flight to the first point of departure, at the
    earliest opportunity;
    (b) re-routing, under comparable transport conditions, to their
    final destination at the earliest opportunity; or
    (c) re-routing, under comparable transport conditions, to their
    final destination at a later date at the passenger’s convenience, subject to availability of seats.
    2. Paragraph 1(a) shall also apply to passengers whose
    flights form part of a package, except for the right to reimbursement where such right arises under Directive 90/314/EEC.

    Seems to me that BA is simply living by its responsibilities. They gave the passenger a REFUND under EU261. That said US tour operators need to be aware that monies will flow back through them if the tickets were issued in bulk and/or the form of payment is CASH.

  7. I think the crucial error the OP made was trying to sort this out over the phone. There were too many details here (including lots of codes / credit card numbers, etc., I’m sure) and the CSA wouldn’t have been able to resolve it immediately anyway. Sometimes we just want things done quickly, but in this case, I’m not surprised there was a miscommunication. Glad it worked out in the end, though.

  8. What is really interesting about this article, is that this occurred on the return portion of the trip. At first glance, other than obligation of the carrier, there may have been no refund due. Refunds are calculated by taking the full net of taxes fare minus the portion used, not 1/2 of the ticket. At that point, insurance trip interruption clauses would kick in. The fact that a refund was made, means that the agency should have immediately informed the customer of the refund. There is a huge agency in Morgantown that pockets all refunds, rate reductions, and rebates. He deals with mainly university students, so they don’t know any better. That is why I have preached for years to know the agency that you are working with and ask if you are protected financially in these cases. If the agency is an ARTA, ASTA, or USTOA member, report them for irregularities. Stay the heck off the internet, so you can look the agent in the eye.

  9. “confusion” and “miscommunication” aside (and not part of the incident explanation), why was it incumbent on the traveler to have to make alternate return air arrangements? OAT is a better company than that. The Kne’s should not have been involved with burdened with the chore of securing alternate return air transportation. And, even if OAT did not get involved, the travel insurance company to which the OP alluded ought have offered to assist. Travel Guard (and I am sure other travel insurance companies as well) offers concierge service for just such an eventuality, including a phone number to call collect from anywhere in the world.
    At some level we see another example of customer service personnel who either can’t, won’t, or aren’t allowed to deviate the slightest whit from published policy on a subject even if common sense clearly suggests extraordinary circumstances. Time and again, we we see instances wherein if a staff member were given even the slightest latitude in applicaition and enforcement of a policy that a minor situation that mushroomed into an epic proportions problem might have been avoided.

    1. My question, too. IF they couldn;t contact OATS, the insurance would have been the best bet, as they would make all arrangements, and notify the tour operator to boot!

      1. And this is where EC261 threw a monkey wrench in our standard USA process where agents were so accustomed for INITIATING the refund requests so they know what is coming down the pike. With EC261 the airline can simply initiate the refund without the agent in the loop. My 2 centavos.

  10. Chris, did you really mean to write “Airlines typically don’t offer refunds on nonrefundable tickets when there’s a weather-related delay.”? While they may not offer additional compensation, accommodations, or meals for weather related delays, my strong understanding is that in almost all jurisdictions (not just the EU covered by stronger laws), if they can’t operate the flight for whatever reason, you *always* have at least the option to cancel and get a refund, even on an otherwise nonrefundable ticket. Not doing so would violate some basic consumer law concepts.

    Where it gets interesting is how they calculate the refund (sleazy tricks like refaring the other part of a round trip as a last minute one-way, then claiming the return has no value, etc), but that doesn’t sound like the issue here.

    And yes, if the refund went to the agency and they weren’t the ones who paid for the alternate travel, they absolutely do not have a right to keep the refund.

  11. To which the OP now owes that money to the travel insurer.

    Correct me if I am wrong- a trip to India. They bought Travel Insurance. BA Canceled their flight home. They made arrangements on another airlines and bought new airline tickets on Air India. The travel insurance paid for the new tickets . BA refunded the money for the canceled flight.

    If thems the facts, they owe the $882 to the travel insurance company – otherwise – they get a $882 windfall. They need to pay that money to the travel insurer. Insurance is not there to earn you a profit.

    1. Not true – the OP clearly stated that the travel insurance covered everything EXCEPT the cost of the return tickets! Go back and read the article again:

      “Our travel insurance company paid us for all the expenses we incurred
      but not the cost of the flight, since they said we should be reimbursed
      by Overseas Adventure Travel.”

  12. “Airlines typically don’t offer refunds on nonrefundable tickets when there’s a weather-related delay.”
    from Day One, i have been authorized to process a refund if a passenger can’t get to their final destination due to weather. same with Air Traffic Control delays.

    however, i do not get to choose “to refund your ticket directly to you at the time of the cancellation”. it goes back to the original credit card that bought the ticket, no options whatsoever to refund it back to the passenger if it was purchased by someone else.

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