Nigerian travel agencies are facing significant challenges and the specter of debt as customers insist on refunds for unused tickets amidst the Coronavirus lockdown. Many foreign airlines are declining these refund requests.
The airlines, grappling with financial constraints, are refusing to refund customers’ money. This has put approximately 1000 top-rated travel agencies in Nigeria in a tough situation, contending with the need to reimburse customers and settle airlines’ mandatory remittances, amounting to an estimated total of N100 billion.
According to The Guardian, only three airlines – British Airways, Emirates, and Lufthansa – have committed to issuing refunds to “interested customers” following the 50 days rule.
Complicating matters, through the International Air Transport Association (IATA), foreign airlines have mandated all travel agencies to settle payments for all issued tickets, whether utilized or not, or face exclusion from the business due to default.
In the international air travel business, travel agencies sell tickets and collect fees on behalf of the airlines and their representative, IATA, within a Bill Settlement Plan (BSP).
Under the BSP arrangement, all enlisted agents must remit the payment for all issued tickets every 15 days to the airlines through IATA, with defaulters facing disqualification from the selling platform and forfeiture of bank collateral.
The current restriction on all flights – local and international – and the lockdown due to the coronavirus pandemic have plunged travel agencies into financial turmoil, with some agencies being owed by temporarily closed bulk-buying organizations and companies, while others are facing pressure from customers demanding ticket refunds.
Bernard Bankole, the Chief Executive Officer (CEO) of Finchglow Travels, emphasized that the nature of the travel business has left many agencies bearing the brunt of the global crisis.
Bankole estimated that if the crisis continues until July, travel agencies could face losses of about N180 billion, considering the N360 billion in total ticket sales revenue from international travels last year.
As of April, unused ticket refunds and payments to airlines had already cost travel agencies over N100 billion. Bankole emphasized the challenges faced by travel agencies in meeting their commitments to airlines while protecting the integrity of the BSP.
Susan Akporaiye, the president of the National Association of Nigerian Travel Agencies (NANTA), confirmed that top-tier travel agencies were in a dilemma, emphasizing the primary loyalty to customers. She mentioned ongoing discussions with airlines and IATA to find a balance between ticket refunds and remittances to ensure that travel agencies are not unduly burdened.
Lola Adewole, a Lagos-based travel agent, highlighted the indebtedness of all agencies and recent staff layoffs, reflecting the severe impact of the crisis on the industry.