Flight Centre has chosen to waive its cancellation fees for bookings that have been scrapped as a result of COVID-19.

Last week hundreds of people reportedly indicated they would participate in a class action against the travel giant over cancellation fees that saw some customers entire refund disappear, while some groups were given the option of paying thousands or transferring their booking to a travel credit.

Flight Centre’s cancellation fee cap was initially set at $300 per person on international trips and $50 per person on domestic trips.

Under a new policy introduced last week, customers would have been charged at a cap of $600 all up on international bookings and $100 per booking on domestic trips.

However, Flight Centre executive general manager, Allisa O’Connell said in an update sent out on Saturday the travel giant would waive its usual cancellation fees for bookings where the travel provider had cancelled its service as a result of COVID-19.

“Our business and our industry have also been significantly impacted by the unprecedented travel restrictions that have been implemented to slow the virus’s spread,” O’Connell said.

“However, our customers remain our highest priority and to support you at this difficult time.”

She said the decision will impact the business but believes it is the right thing to do.

The waiver will be applied retrospectively to bookings cancelled as a result of COVID-19 on or after 13 March 2020 through to 30 June 2020 where a cancellation fee was charged, however, it only applies to Flight Centre’s fees and not that of third party suppliers.

It will also apply to cancellations fees charged by Aunt Betty, Travel Associates, Student Universe, Universal Traveller and Jetescape Travel (trading as Byojet Travel), which are part of the Flight Centre group.

“Our people will, of course, continue to perform the time-consuming task of processing refunds and following up with individual suppliers on your behalf,” O’Connell continued.

“We will also do what we can to speed up the process, although this is largely outside of our control and dictated by the supplier in question.”

O’Connell also announced Flight Centre will offer an additional credit of up to $200 per person for customers who opt for a travel credit instead of a refund.

“We hope that our steps to support our customers alleviate any ongoing concerns you may have with your travel booking,” she said.

The Australian Competition and Consumer Commission (ACCC) has applauded Flight Centre’s decision to scrap cancellation fees, which came after the watchdog threatened to take the company to court.

The ACCC said it received a large number of complaints about Flight Centre’s cancellation fees from consumers.

“We are continuing to discuss issues in relation to refunds and cancellations with the travel sector, and encourage travel providers to treat consumers fairly in these exceptional circumstances,” ACCC chair Rod Sims said.

“While we know some consumers are very concerned about getting a refund or credit for their cancelled travel plans, we do ask people to be mindful of the significant impact that this pandemic has had on the travel industry.”

Earlier today, Flight Centre revealed it is tracking towards its $65 million per month cost base target as outlined last month.

In a release to the ASX, Flight Centre said it now expects the cost reductions will be implemented with less than the $210 million in one-off costs initially anticipated.

Despite heavy restrictions, the company said it continues to generate some sales, with total transaction value (TTV) tracking at approximately five to 10 per cent of normal levels at this time of year.

“There has been some ongoing activity in most countries and we are seeing a slight uptick in bookings in countries like China as travel and trading restrictions ease,” said managing director Graham “Skroo” Turner.

“Importantly for the future, we continue to win and implement new corporate accounts that will help drive TTV growth when conditions recover and normalise.

“The timeline for this recovery remains unclear, but we anticipate an increase in activity in countries like Australia as soon as interstate borders reopen, which we expect will happen in the coming months.

“Given that domestic travel represents roughly half of the leisure tickets that we normally issue in Australia and the overwhelming majority of our corporate volume, we are well placed to play a positive roll in the recovery and are keen to work closely with tourism bodies, airlines and other suppliers in the coming months.

“We also believe that Virgin Australia will play an important role in this recovery and we look forward to continuing to work closely with it and its management team.”

Featured image: iStock.com/Mimadeo