ASTA expressed "deep disappointment" that the Department of Transportation is requiring travel agencies to pay refunds to airline passengers if agencies are the merchant of record.
The DOT on Wednesday finalized regulations to broaden circumstances in which air passengers have a right to a ticket refund, and requiring merchants to pay refunds was a part of the new rules.
ASTA president and CEO Zane Kerby said requiring agencies to pay refunds was a "profound error." He said merchant-of-record transactions "make up a significant portion of business for many small agencies in our industry, especially those who specialize in group travel." Requiring these small businesses to pay refunds is "catastrophic," he said.
The Travel Technology Association, a trade group representing online travel agencies, also disagreed with the rule.
"The final refund rule will render ticket agents as airlines' de facto banks, forcing agents to float airlines' refunds potentially indefinitely," Travel Tech said. "Doing so unfairly places ticket agents in a precarious financial position that risks their ability to provide comparison shopping tools for consumers in the first place."
Kerby expressed frustration that "the DOT doesn't understand that in the limited situations where the agency is the merchant of record, payment is immediately passed on to the airline."
"This is a clear case of a federal agency overcorrecting a problem," Kerby said. "Now more than ever, we urge leaders in the House and Senate to maintain Section 710 of the House bill to reauthorize the FAA [H.R. 3935], which ensures ticket agents -- nearly 80% of whom are female small business owners -- are not responsible for providing airline refunds when they are not in possession of the funds."
On May 2 at 12 p.m. Eastern time, ASTA general counsel Peter Lobasso will provide ASTA with an analysis of regulatory changes announced Wednesday by the DOT. The new rules take effect 60 days from April 24.