Goodwill Lost: Customers Have Long Memories

Most businesses have faced significant issues due to COVID-19, particularly in the travel industry. With borders closed, many airlines have had to cancel flights and many tour operators have had to temporarily shut down. Millions of cruises, car rentals and hotel bookings have also been cancelled as would-be travellers have been stuck at home. But the way in which businesses have responded to this crisis has varied enormously.

Many airlines and travel businesses have done the right thing. They have communicated with their customers and, when required, refunded promptly. But some businesses have sadly treated their customers very poorly over these past months.

Refusing to refund money that customers are legally entitled to, or charging unfair fees to do so, may help a business to survive in the short term. But customers are not stupid. They have long memories and will remember how businesses treated them during the COVID-19 period.

Over recent months, Qantas has regularly been criticised for lengthy delays in providing refunds for cancelled flights. Many Qantas customers have waited well over 3 months to get their money back. But at least Qantas has generally processed refunds when they are due eventually – even if they did need a bit of a nudge from the ACCC at one point.

By comparison, Virgin Australia has refused to refund most travel cancelled due to COVID-19 at all. Since 21 April, it has told customers that it cannot provide refunds as the company is in voluntary administration. But Virgin Australia was refusing refunds for flights cancelled by the airline for a whole month before it entered voluntary administration. Virgin’s policy was always to provide a travel credit instead, even if the customer would prefer (and was potentially legally entitled to) a refund. Virgin even sent threatening letters to some customers that requested credit card chargebacks with their banks.

Tens of thousands of Virgin Australia customers now possess unwanted “future flight” credits – in some cases worth thousands of dollars. This is especially unfair to customers that had booked tickets to Los Angeles or Tokyo because Virgin has no intention to resume long-haul flights for several years. Customers that had booked $5,000 business class tickets to Los Angeles, for example, are now left with restrictive travel credits that can only be used on selected domestic flights. With Virgin likely to finally emerge from voluntary administration shortly, the new owners may want to consider throwing an olive branch to customers in this situation.

Of course, Virgin is not alone in failing to refund customers with cancelled flights. Air New Zealand too has been criticised for this, and an AFF member whose username ironically is MH_fan recently posted this on our forum after getting a runaround from Malaysia Airlines:

This has left a sour taste in my mouth and I will be far less supportive of MH in the future, especially in the post-COVID recovery period when competition for customers will be fierce (and I’m also a front of the plane flyer).

Tip for airlines: how you treat your customers now will translate into how they treat you when you desperately need them in the future.

I’ve personally been waiting six months for a refund from Austrian Airlines. Under European regulations, I was legally entitled to a refund within 7 days. The airline has still not even bothered to inform customers of when they can expect a refund for flights that never operated.

It’s one thing not to refund people’s money. But the lack of communication can be just as bad. If you have a look at that airline’s Facebook page, the comments on every social media post are littered with angry customers that are also still waiting for refunds and can’t even contact the airline. Why would any of these people give more money in the future to a business that has treated them like this in the past?

And who could forget when Flight Centre tried to charge its customers $300 each to access refunds from suppliers such as airlines – even when the cancellation was not the customer’s fault and the airline was refunding in full. The travel agency finally had a change of heart after the ACCC threatened legal action.

The outcome? Flight Centre had to refund all of those cancellation fees, but now also has thousands of angry customers that will never book with them again.

Equally, businesses that have communicated well and refunded promptly have earned praise and goodwill. For example, an AFF member recently complimented a travel agency publicly for their prompt service.

Customers will remember how businesses treated them during the COVID-19 period. Those doing the right thing now will be rewarded with loyal customers in the long run.

Matt Graham

The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 90 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil & Kazakhstan. His interests include aviation, economics & foreign languages, and he has a soft spot for good food and red wine.

You can connect with Matt by posting on the Australian Frequent Flyer community forum and tagging @AFF Editor.