Payment only at check-in: Minister wants to abolish advance payment for travel

Payment only at check-in
Minister wants to abolish prepayment for travel

If you book a flight or a vacation trip, you usually pay the price in whole or in part long before you start your trip. Any reimbursements, on the other hand, are often hesitant. A push from the Saarland wants to change that fundamentally.

In the future, vacationers should no longer be asked to pay in advance when booking flights or trips: The consumer protection ministers of the federal states should discuss this at their next meeting following a proposal by Reinhold Jost, head of Saarland. "100 percent prepayment is not possible," said Jost of the German press agency in Saarbrücken. He advocates a significant reduction in upfront payments – and an automatic refund if the trip does not take place. This is particularly important for consumers in the corona pandemic.

Jost's proposal met with open ears from consumer advocates. "The best thing would be: The money will be debited at the exact moment when I start my trip," said the head of the Federation of German Consumer Organizations (vzbv), Klaus Müller. That is also the case in other areas of the economy: "If I buy a new television, then I also pay when I get it." The vzbv has long been demanding that the federal government advocate an end to prepayment for travel.

This requires a system change – from prepayment to payment at check-in, said Müller. A new report by the Lucerne University of Applied Sciences and Arts shows that a changeover is "economically feasible" for everyone involved and only associated with "moderate price increases" for consumers. Without advance payment, flight and travel providers would have to raise equity or borrowed capital for advance payments. Because of the extra costs for this, according to the report, the prices for flight bookings would be a maximum of 3.3 percent, and those for package tours by 1.1 percent more expensive. "It's not as expensive as many people feared," said Müller. The abolition of the prepayment practice is feasible as a step towards more consumer protection and belongs in the coalition agreement after the federal election.

Prepayment disadvantages financially weaker people

The advance is particularly urgent in pandemic times, said Jost. The prepayment system is particularly disadvantageous for the financially weaker people who have to pay months in advance. "We are now noticing that in the pandemic, where every euro that is there or that is not there is determined." In addition, there would be uncertainties as to whether booked trips could even take place due to Corona and concerns about possible bankruptcies of travel companies in a crisis-ridden industry. According to Müller, 100 percent of the flight price is required in advance for flights, and between 20 and 40 percent for package tours.

In the long term, Jost could imagine a completely "prepayment-free model". It should not be forgotten that travel agents have to pay advance payments. The minister therefore considers a gradual reduction to be more sensible. "It is utopian to believe that all of a sudden it can happen overnight." The automated reimbursement of down payments could come faster, said Jost. "Due to digitization, this shouldn't be a technical challenge."

The Federal Council had already spoken out in favor of the establishment of "automated refund procedures" in 2018. However, nothing has been implemented by the federal government. Therefore, Jost will also bring this topic to the consumer protection ministerial conference in early May, said the spokesman for the SPD countries in the body. According to the vzbz, complaints about flight and travel companies to consumer advice centers have increased more than tenfold in the past year. In the year of the Corona crisis, it was often about reimbursements of prepayment payments that were not made or were too late.

. (tagsToTranslate) Economy (t) Aviation (t) Tourism industry (t) Federal Office for Consumer Protection and Food Safety (t) Consumer Protection