Error In FAA Reauthorization Bill Could Finally Let Airlines Put Travel Agents Out Of Business

The Senate passed the FAA Reauthorization bill as well as a short-term FAA extension, because the House had gone into recess. The House still needs to pass it when it returns.

The bill added language to protect new Department of Transportation rules that require automatic refunds for passengers when flights are delayed or cancelled and they don’t accept alternative arrangements from their air carrier.

One interesting wrinkle about the bill is that it requires travel agents to provide refunds where they are the vendor of record charging the customer – even when they’ve paid the airline and the airline hasn’t given the money back to them. Senator Rand Paul (R-KY) had tried to fix this.

  • This is not really a problem if Expedia sold you a package. Consumer protections from Expedia are probably a great thing.

  • But small agencies selling package travel, where a whole group faces a delay from the airline, will have to front the cash and fight airlines to get their money back. This could bankrupt an agency.

Enilria says that this error in the FAA bill could “finally kill travel agents.”

Travel Agents must now provide refunds for tickets sold. That probably sounded innocuous, but the money is long gone from the travel agent by the time the flight operates. Travel Agents are lucky if they make anything selling airline tickets. All or nearly all of the money immediately goes to the airline. I’d call it an error, but since lobbyists write almost all legislation, maybe it isn’t an error.

Airlines have been at war with the agencies selling their tickets for decades, and American Airlines is now at the forefront of this effort – on the verge of ending awarding frequent flyer miles to most customers who book through agencies that haven’t changed their practices to become ‘preferred agencies’ of the airline, adopting the technology to sell add-on fees for the carrier.

The major airlines sought to have the Department of Transportation rule, which included new standards for fee disclosure, require agencies and websites disclose fees but not require airlines to provide those fees. Agencies and websites would have had to buy access to those fees from the airlines, or could have access denied entirely. That would have given airlines the option of putting any ticket seller out of business.

That didn’t make it into the final rule, but requiring agencies to front refunds to customers before receiving cash from airlines (if they ever do) gives those airlines similar leverage.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Maybe the work around is that travel agencies will now have to have a signed waiver so that the passengers get airline tickets refunded when the agency gets refunded?

  2. Good – travel agents are the buggy whip manufacturers of the 21st century. They have zero value to an informed traveler and only take money from service providers. Now if the economics were changed and airlines, hotels, cruise lines, etc didn’t pay any commission but the person wanting their assistance paid for it maybe that would be practical. As it is they only inflate cost for the service provider which is passed to other passengers through high fares.

  3. Looks to me like this will be an issue for the big travel agents as well, like Expedia. They will be immediately fronting money back to customers and then have to have an entire team dedicated to getting the money back from the airlines into their pockets. Sounds like a mess. The small travel agents make almost nothing on airline tickets anyhow so if I were them, I would book the ticket directly with the airline for the customer on the customer’s credit card (just like I were the customer) and then charge them for this service.

  4. @AC
    I see you haven’t traveled since before Corona…

    With the crazy world that we live in, travel agents are still necessity.
    When you have to get that flight to Chicago to make the meeting or its your sisters wedding, having a travel agent can spell the difference between that million dollar deal or your sister disowning you ;).

  5. @moe – good laugh – the ‘million dollar deal’ in chicago and sister’s wedding

    That said there’s a case for agents, but it’s for time starved people in complex high dollar products like luxury hotels, cruises , luxury trains, large meetings, and some corporate travel

  6. @AC you may not find value in travel agents, but that doesn’t mean others don’t. I for one find an experienced travel agent a great value for more intricate or exotic trips. For example, just went to Southeast Asia for two weeks for which my travel agent planed and put it all together for me. I did not have the time, experience or contacts to arrange such an amazing trip. Worth every penny.

  7. If I buy a washing machine from Sears the deal is between me and Sears, not the manufacturer. If I ask a jeweller to find me a Rolex watch the deal doesn’t actually involve Rolex …

    So why is it different with airline tickets?

  8. The obvious solution would be to require that airlines and every other provider which travel agents represent be allowed to collect revenue from refunded tickets on the same timeframe that airlines/cruise lines etc are required to provide refunds to passengers – but that is too simplistic.
    When the point is to provide an advantage to anyone in the chain – such as consumers – someone will sadly pay the price.

  9. Travel agents are still needed. There are people who travel that aren’t particularly internet savvy so they use travel agents as well as those who speak languages different than those promoted by the airlines. About a year ago on another forum a user said he was having trouble finding seats for three people from eastern India to Singapore. I suggested that he use a travel agent and consider breaking up the group into two and one with the person needing to get to Singapore fastest for business going first and the spouse and child going later. He ended up doing that and the travel agent was able to book flights. He thanked me for the suggestions. Travel agents often have access to better price and details comparisons of flights and may have access to unadvertised consolidator tickets.

  10. Storm in a teacup. Agents have the option to have the airline make the charge; if they don’t, it’s because they want to hide an overcharge, so let them take this ridiculously infinitesimal risk.

  11. Travel agents no longer directly book airline tickets for consumers. Any packages are booked through wholesalers like Expedia. Airlines stopped paying commissions to travel agents 25 years ago.

  12. Companies like booking and Expedia are not usually the vendor of record so in most cases, this doesn’t impact them

  13. A better idea is that airlines could not charge your credit card until the flight actually operates.

  14. Love @Bob’s comment: “Just like real estate agents: useless, but harder working”.

    This is where I’m parked too, for sure they both add some value, but in the case of RE Agents, nowhere near enough value to be commensurate with the fee. I’m less clear on what Travel Agents earn, I’d guess that the value proposition is more reasonable, but frankly this is not my area of expertise.

  15. This idea is being pushed by American Airlines (of course). I actually like to use a travel agent sometimes when taking a significant trip or vacation. AA is in the business of making travel worse for everyone. Don’t fly American Airlines!

  16. This is probably the exact reason why I prefer to book with airlines directly. Cuz I f my flight is canceled and I had booked with a travel agency, I’m essentially screwed since most travel agencies don’t work directly with the airlines.

  17. There’s a lot of misconceptions in these comments about travel advisors* and thier business relationships with the airlines. Also the article’s claim that this spells the end of the travel “agent” is preposterous. Wasn’t the internet the supposed end of the travel “agent” ? Actually the term travel agent* ended a few years ago but that’s about all that has ended. And there’s more to the travel advisor business than selling tickets. I’ve been in this business a long time, though thick and thin. I was involved in ASTA’s efforts to get the FAA and Congress to do the right thing . They didn’t so it looks like 5 years until we can fight for its removal. We’re a service industry that’s supported and appreciated by those that choose to work with us, and our customer base continues to grow each year. Therefore, on behalf of all my travel advisor colleagues I thank you. This dinosaur still roams the earth.
    P.S. Aaron most agencies/advisors work directly with the airlines and if you bought your ticket from them they are there to help. If you didn’t they can’t help you because the ticket you hold wasn’t issued on their ticket stock.

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