Travel agency Helloworld has slugged customers with thousands of dollars in cancellation fees after their holiday plans were thwarted by the pandemic.

One man was charged more than $5700 to cancel an $18,000 trip, with Helloworld charging almost $2200 in labour and operating costs to cover the time it allegedly took the company to find and cancel his bookings.

Another was charged $800 in so-called “administrative costs”.

Helloworld – which is the recipient of a major government contract, and initially failed to process the payment for then finance minister Mathias Cormann’s flights to Singapore – declined to comment when The New Daily asked it to explain the massive cancellation fees.

But consumer groups and specialist academics said consumers should be entitled to a full refund if a flight is cancelled for reasons beyond their control.

Customers left out in the cold

It took Adelaide man Frank Barbaro three years to save for a family trip to Japan.

He wanted to take his wife and son to Tokyo, Mt Fuji, Kyoto and Osaka in March in what would have been their first overseas trip together.

He made the booking in December 2019 and spent a total of $14,068.

But the pandemic forced him to change his plans.

Rather than cancel his flights, Mr Barbaro pushed back his trip until September to avoid being hit with a 20 per cent cancellation fee.

One week later, Helloworld allegedly pressured him to pay an additional $4035.25 in rebooking costs – taking his total outlay to $18,103.25.

But then his flight provider, Singapore Airlines, announced it would waive all cancellation fees for flights up until September 30 – meaning Mr Barbaro could now claim a full refund for his trip.

This was just as well, because the Australian government had by this stage banned Australian citizens and permanent residents from travelling overseas unless they qualified for an exemption.

But when Mr Barbaro approached Helloworld for a full refund, it was unwilling to play ball.

“I went to the agent and said, ‘Look, they’ve put this waiver in place, what do we do?’ And that’s when they came back with a $5700 cancellation fee,” Mr Barbaro told The New Daily. 

Helloworld refunded Mr Barbaro just $12,372.

And of the $5731.25 they withheld from him, $2172 was for ‘non-refundable revenue’ allegedly owed to Helloworld.

According to an itemised list provided by the travel agency – and seen by The New Daily – that money was to cover the 55 hours of labour that Helloworld says it took to prepare, rebook and cancel Mr Barbaro’s bookings – and to cover the money it spent on rent and electricity in the process.

Third-party suppliers, including Singapore Airlines and the Japan Travel Bureau, also pocketed more than $3550 in travel credits, rebooking and cancellation fees – despite Mr Barbaro never cancelling his trip.

The itemised list of Mr Barbaro’s expenses, sent by Helloworld

“This experience has put a bad taste in my mouth,” he said.

“I’m a first-time traveller and put my trust in the agent to do the right thing – but they didn’t as they never told me about wholesalers’ fees, which were not specified on the terms and conditions.

“I’m anxious I’ll be losing that money I’d saved up.”

A worrying pattern

Wollongong truck driver Mick Merlo, 63, also ran into troubles with Helloworld.

He told The New Daily that Helloworld deducted $800 in “administrative costs” from his refund for accommodation in a COVID-affected trip to Las Vegas, Los Angeles and Hawaii.

With third parties also withholding $6000 in flight refunds, Mr Merlo said he and his wife could “not afford to lose that money” as they were nearing retirement.

“I’m p-ssed off because if they were to give us our money back, we would have gone on another flight somewhere [else],” Mr Merlo said.

The Australian Competition and Consumer Commission is working with travel services to ensure consumers get the refunds to which they are entitled. Photo: AAP

Meanwhile, Cairns retiree Julie Charles said she gave up her fight to retrieve $750 from Helloworld, despite her cruise provider confirming it would refund full amounts to travel agents like Helloworld for trips affected by COVID-19.

Helloworld already had its commission, she said, but once the refund from Celebrity Cruises came through, it held on to the commission and charged another fee equal to 15 per cent of the booking cost.

“We emailed backwards and forwards and the agency was coming up with excuses, citing their cancellation policy to cover out-of-pocket expenses, but there was none in our case,” Ms Charles told The New Daily.

“I even went as far as Fair Trading, QCAT and the ACCC – but in the end, the process was too stressful given all the hoops I had to jump through.”

Travel agencies under pressure to abide by consumer law

Helloworld is not the only travel agency to have tried it on this year.

Early on in the pandemic, Flight Centre was charging customers a cancellation fee of $300.

But it stopped doing so in May when consumers campaigned against them and even threatened a class action.

Consumer advocate Adam Glezer, who runs three Facebook groups with more than 15,000 members including Travel Industry Issues, was one of the driving forces of those campaigns. 

He told The New Daily a significant number of customers had been hit with unfair cancellation fees.

“This problem is certainly not limited to Helloworld. It is a widespread issue across much of the industry,” he said. 

To be clear, travel agents can charge a “reasonable fee” in the event of a cancellation.

But Choice travel expert Jodi Bird said it was a grey area and the exact fee should be stipulated in the terms and conditions.

Thousands of Australian travellers have had to wait months for refunds on trips cancelled due to COVID-19.

Meanwhile, University of Melbourne professor in contracts and consumer law Jeannie Paterson told The New Daily customers whose trips were cancelled for reasons beyond their control should be given a significant or complete refund.

That’s because the government’s travel restrictions triggered what’s known as a “frustration of contract”.

This is when unforeseen circumstances like a travel ban significantly affect the services agreed to in the contract, or prevent them from being carried out altogether.

And that makes contract items relating to refunds void, unless they also have detailed force majeure clauses.

“If the contract is frustrated, there’s no contractual provision that entitles [the provider] to keep a customer’s money,” Professor Paterson said.

These people have been charged for cancelling and changing trips that they could never take, therefore they shouldn’t be treated in the same circumstance as someone who’s fickle or changing their mind.

“It’s unfortunate [for agents], but that’s the way the cookie crumbles.”

A spokesperson for consumer watchdog ACCC told The New Daily it could not comment on individual cases, but said it has processed “tens of thousands of travel-related complaints since March”.

He said the ACCC expected travel agents and suppliers to abide by the terms and conditions set out at the time of the booking, including only charging fees to which they are legally entitled.

“If travel companies don’t act in accordance with terms and conditions, they may be misleading consumers as to the rights and remedies available,” he said.

“Such misleading conduct may breach the Australian Consumer Law.”

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CORRECTION, NOVEMBER 6: An earlier version of this article incorrectly stated that Helloworld had “paid for the family of former finance minister Mathias Cormann to fly to Singapore”.

Helloworld said in a letter to Mr Cormann dated February 19, 2019 that the flights were never “free” and its failure to process the payment was “a regrettable administrative error”.