Travel agencies in Nigeria are on the verge of being thrown into debts as customers demand refund of unused tickets

Travel agencies in Nigeria are having a hard time and are on the verge of being thrown into debts as customers demand the refund of tickets they didn’t use due to the Coronavirus lockdown, though the requests are being declined by many foreign airlines.  

The airlines would not refund customers’ money due to cash crunch, however, about 1000 top-rated travel agencies in Nigeria are caught in-between paying customers’ refund and settling airlines’ mandatory remittances, both estimated to reach a total of N100 billion.  

According to The Guardian, so far only three airlines – British Airways, Emirates and Lufthansa – have pledged to issue refunds to “interested customers” in accordance to the 50 days rule.

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To make matters worse, the foreign airlines, through the International Air Transport Association (IATA), have mandated all travel agencies to pay up all tickets issued to date, whether used or unused, or risk being cut off from the business because of default.

The international air travel business is such that the travel agencies issue, sell tickets and collect fees on behalf of the airlines and their representative, IATA, in a Bill Settlement Plan (BSP).

 
Under the BSP arrangement, all enlisted agents must remit the payment for all issued tickets (which airlines had given on credit) every 15 days to the airlines through IATA. The consequence is that defaulters will be struck out of the selling platform and their bank collateral forfeited.

In the light of this payment schedule, the current restriction of all flights – local and international – and lockdown over coronavirus pandemic have plunged the travel agencies into difficulties.

Some of the agencies told The Guardian that they were owed by bulk-buying organisations and companies that have temporarily closed down. Other agencies are being troubled by customers who are insisting on ticket refunds.

 
The Chief Executive Officer (CEO) of Finchglow Travels, Bernard Bankole, said the nature of the business put many travel agencies in the middle of the global crisis and made them bear the brunt.

 
Bankole said the losses for travel agencies would be about N180 billion should the crisis last till July. This is going by last year’s N360 billion that the agencies raked in as total ticket sales revenue from international travels.

 
As at April, he said, unused ticket refunds and payments to airlines had already cost travel agencies over N100 billion.

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Bankole said: “We (travel agencies) are stuck in the middle. As it stands, we have to keep encouraging our members to pay the airlines on schedule. We have a lot of clients that have not paid us. Yet, we have to protect the integrity of the BSP, just like IATA also wants.

“But while we are keeping to our end of the bargain, the airlines are not. They don’t have money to pay and they are not even ready to push money into Nigeria to settle our customers, who cannot fly because the airspace is shut.

 
“The challenge now is for IATA to protect the travel agencies from these airlines because not all of them will survive this crisis. Yet, IATA is not doing much of that, putting us in heavy losses,” Bankole said.

The president of the National Association of Nigerian Travel Agencies (NANTA), Susan Akporaiye, confirmed the dilemma of many top-tier travel agencies, saying the main loyalty was to the customers.

Akporaiye said talks were ongoing with airlines and IATA to strike a balance between cumulative ticket refunds and remittances to the airlines, to ensure that the travel agencies do not suffer unduly.

She explained that the crisis had left many airlines without cash for settlement of refunds as required by some of the loyal customers.  

A Lagos-based travel agent, Lola Adewole, said all agencies were indebted and had had to lay off staffers lately.