Printer Friendly

Chapter 7 Ticket refunds.

This chapter will familiarize the student with the procedure of issuing airline ticket refunds using the refund/exchange notice (REN).
LEARNING OUTCOMES

At the end of this chapter, the student should be able to:

1. Complete the REN document for a refund on the full ticket amount.

2. Complete the REN document for a refund on a partial ticket amount.

3. Complete the REN by referring to unused flight coupon(s) from
   both manual and automated ticket stock.


KEY TERMS

* refunds

* refund/exchange notice

(REN)

INTRODUCTION

This chapter describes how to calculate the refund amount for different types of fare situations and how to complete the support document called the refund/exchange notice (REN).
refund/exchange
notice (REN)

An ARC traffic document
that is used to process
ticket refund and ticket
exchange transactions.
The REN is a nonaccountable
ticket document.


The travel agent is permitted to refund any ticket or ticket section purchased originally through the agency. The travel agent is not permitted to refund any ticket or ticket section that was purchased originally through the airline carrier or through another travel agency.
refund

The process to return
money paid by the airline
passenger for a ticket that
was partially or totally
unused.


Although a refund means a reduction of commission earnings, the travel agent should respond to a refund request in a prompt and expedient manner. This efficient service will produce a satisfied client who will return with future travel business.

Refund Documentation

The following documents are involved in every refund transaction:

* Unused flight coupon(s): The agent must receive all unused flight coupons from the ticket that is returned for a refund. Without these coupons, the agent cannot begin the refund process.

* Support documentation: The document that is used to record ticket refund information is called the refund/exchange notice or REN for short. The REN is completed if the original ticket was purchased by cash, check, or credit card.

Both the returned flight coupon(s) and a copy of the REN are sent to ARC on the agency's weekly sales report, for accounting purposes.

Step-by-Step Procedure

The client is returning his ticket for a refund. The ticket was originally purchased by check. These are the steps to follow:

Step 1: Collect the unused flight coupon(s) from the client and print the word REFUNDED across each coupon.

Step 2: Complete the refund/exchange notice (REN) document.

Step 3: Send the unused flight coupon(s) and a copy of the REN document to ARC on the agency's next weekly sales report.

Step 4: If the original ticket was purchased by cash or check, refund the client for the appropriate amount shown on the REN document. The refund amount is drawn on the agency's check. If the original ticket was purchased by credit card, the refund amount will be credited to the cardholder's credit-card account on the next billing cycle.

REFUND/EXCHANGE NOTICE (REN)

The refund/exchange notice is a nonaccountable ticket document. It does not have a form and serial number. The REN form is not accountable to ARC on the weekly sales report and may be destroyed if a mistake is made.

The REN is unlike most other ticket documents because the travel agent does not validate this form. The agent handwrites all pertinent information directly on this document.

[FIGURE 7-1 OMITTED]

The REN is a relatively simple document. It contains three coupons (Figure 7-1). A description of each and its distribution follows:
Coupon Name        Location        Distribution

Carrier's copy     First coupon    Multicolor coupon with specific
                                   sections in white, green, and
                                   yellow. Attach to the returned
                                   flight coupon(s) and send on
                                   weekly sales report.

Agent's copy       Second coupon   Pink in color. Keep in agency
                                   files.

Passenger's copy   Third coupon    White in color. Give to passenger
                                   as a receipt of the transaction.


Breakdown of the REN

The refund/exchange notice document serves two major purposes--to record straight ticket refund transactions and to record ticket exchange transactions.

Some of the sections of the REN are to be completed only for straight refund ticket transactions. Other sections are to be completed for ticket exchange transactions. In this chapter you will learn how to process normal ticket refunds that do not involve a ticket exchange. Figure 7-2 shows a sample REN with sections highlighted. These sections are completed for a straight refund transaction. A completed REN is also displayed for your reference as you read through the description of each section.

[FIGURE 7-2 OMITTED]

1 Agency Code No.

[ILLUSTRATION OMITTED]

Enter the eight-digit travel agency code (located in the agency validation box on the old/unused ticket).

2 Today's Date

[ILLUSTRATION OMITTED]

Enter the date you are completing the REN, not the date of original issue of the unused ticket.

3 Passenger Name

[ILLUSTRATION OMITTED]

Enter the passenger's name as it appears on the old/unused ticket.

4 Cardholder/Corporate Name

[ILLUSTRATION OMITTED]

* If the original ticket was purchased by a credit card and if the cardholder's name is different from the passenger name, enter the name of the cardholder as it appears on the front of the card.

* If the original ticket was purchased by a corporate/company credit card, enter the name of the company as it appears on the front of the card.

[ILLUSTRATION OMITTED]

* If the original ticket was purchased by cash or check, leave this box blank.

5 Form of Payment/Account Number

[ILLUSTRATION OMITTED]

You must refund the document to the original form of payment. If you are refunding to a credit-card account, enter the two-letter credit designator (e.g., AX for American Express) and the account number. If the original form of payment was cash or check, leave this box blank.

6 Transaction Type

[ILLUSTRATION OMITTED]

Check one of the four types:

* Straight Refund: For full or partial refunds without ticket exchange

* Add Collect: For ticket exchange involving additional collection from client

* Even Exchange: For ticket exchange when no money changes hands

* Refund with Exchange: For ticket exchange with refund back to client

7 Old Ticket Number(s)

[ILLUSTRATION OMITTED]

You many enter up to four flight coupons per line, and you may enter up to three lines of old ticket numbers (i.e., for conjunction tickets):

* Flt. Cpns.: Enter the coupon number(s) that is (are) being returned for refund.

* Carrier: Enter the three-digit code of the validating carrier on original ticket.

* Form/Serial No.: Enter the form and serial number of original ticket.

8 New Ticket Number(s)

This area is completed only for ticket exchange transactions. For straight refunds, leave it blank.

9 Amount to Be Refunded

[ILLUSTRATIONS OMITTED]

This column of nine boxes breaks down the refund calculation. Each box is lettered A through I for easy reference:

* Box A Total Cost of New Ticket(s): This is completed only for ticket exchange transactions. For straight refunds, leave it blank.

* Box B Base Fare of Old/Refunded Ticket(s): On a complete refund, enter the base fare (without tax) of the old/unused ticket. If you are doing a partial refund, determine the base fare value of the unused or refunded portion of the ticket.

* Boxes C, D, E Taxes on Old/Refunded Ticket(s): On a complete refund, enter the tax amounts as they appear on the old/unused ticket. Enter the US tax first, followed by the ZP and XF tax amount, if applicable.

* On a partial refund, enter the breakdown of taxes for the unused or refunded portion of the ticket. In the small box marked CODE, enter the tax code as it appears on the document, for example, US, ZP, XF, and so on. If you have more than three taxes, enter the first two in boxes C and D and combine the remaining taxes into a single combined tax (code XT) in box E.

* Box F Total Cost of Old Ticket(s): Enter the sum of boxes B + C + D + E.

* Box G Total Cost of New Tkt(s) Minus Total Cost of Old Tkt(s): The amount is obtained by calculating box A minus box F. For straight refunds, box A is always blank or at zero. On a straight refund, this amount will always be the same as in box F but with a negative value. The negative value means that a refund is due your client.

* Box H Administrative or Penalty Fee: If the fare on the old/unused ticket requires a cancellation penalty fee, enter the amount. If the fare on the old/unused ticket does not require a cancellation penalty, enter zero.

* Box I Amount Refunded to Client: This amount is always the sum of boxes G plus H. Remember, you may be adding a positive number (box H) plus a negative number (box G). Box I is the amount you will actually refund to your client (this amount will be a negative number).

10 Commission on New Ticket(s)

[ILLUSTRATION OMITTED]

This area is completed only for ticket exchange transactions. For straight refunds, enter zero.

11 Commission on Admin/Penalty Fee

[ILLUSTRATION OMITTED]

Travel agencies are sometimes allowed to earn a commission on cancellation penalty fees; the amount differs from airline to airline. For example, $5 is a standard amount of earned commission on a $75 penalty amount. If not applicable, enter zero.

12 Commission Returned on Old Ticket(s)

When you refund a ticket, you generally have to return your commission to the airline carrier. Enter the dollar amount of commission you are returning. Enter zero if no commission is being returned. This amount is always a negative because you are returning this amount.

13 Commission Due to/from You

Add boxes 11 and 12 together. Remember, you are combining a positive number (box 11, if applicable) and a negative number (box 12). On a refund transaction, the end result is usually a negative, indicating that you are returning commission to the airline carrier.

14 Unused PFCs from Old/Refunded Ticket(s)

[ILLUSTRATION OMITTED]

These boxes are to be completed only if one or more passenger facility charges are applicable to the refunded portion of the ticket. Any unused PFCs that you are refunding must be shown here. Enter the airport code, not the city code (e.g., LGA not NYC), and the amount of the charge (3). Remember, these are the unused PFCs from the refunded or returned ticket coupon(s).

FULL REFUND: COMPLETED EXAMPLE

Figure 7-3 is the ticket that passenger Miller is returning. He is returning the full ticket (flight coupons 1 and 2) for a refund. As you can see, the original ticket was for a roundtrip between Chicago O'Hare and Daytona Beach. The amount of commission on the original ticket was $39.07.

The first thing you do is to write REFUNDED across each old/unused flight coupon. In this example, you would write across flight coupons 1 and 2.

The next step is to complete the REN. Figure 7-4 is the completed REN for Mr. Miller's refund. You completed the REN on April 6.

[FIGURE 7-3 OMITTED]

[FIGURE 7-4 OMITTED]

A Look at the Refund Computation Breakdown

[ILLUSTRATION OMITTED]

Box A: For straight refunds, leave blank.

Box B: Enter the base fare value of the full ticket.

Box C: Enter the US or U.S. transportation tax amount.

Box D: Enter the ZP or segment tax amount.

Box E: Enter the XF or PFC tax amount.

Box F: Calculate: $781.40 + $58.60 + $6.00 + $6.00

Box G: Calculate: 0 minus 852.00 equals -852.00

Box H: Enter zero if no penalty for cancellation.

Box I: Calculate: -852.00 plus 0 equals -852.00.

This is a negative number and represents the amount of refund you owe to Mr. Miller.

A Look at the Commission Boxes

[ILLUSTRATION OMITTED]

* Commission on New Ticket(s): For straight refunds, enter zero.

* Commission on Admin/Penalty Fee: Because there is no penalty for cancellation, enter zero.

* Commission Returned on Old Ticket(s): Because this is a full refund, $39.07, or the full amount of original commission, must be returned by the agency.

* Commission Due to/from You: Add any commission earned or kept from a penalty fee and the commission returned on old ticket. In this case, zero minus $39.07 equals negative $39.07. This is the amount the agency must return.

A Look at the Unused PFC Boxes

[ILLUSTRATION OMITTED]

Because this is a full refund, all PFC amounts are listed. Remember, enter the airport code followed by the amount of each unused PFC.

CHECK POINT 7-1

Figure 7-5 is the round-trip ticket for passenger Gordon from New York to New Orleans. She is returning both flight coupons for a refund. Complete the REN (you are completing the REN on August 30).

[FIGURE 7-5 OMITTED]

[ILLUSTRATION OMITTED]

FULL REFUND: WITH CANCELLATION PENALTY

Some discounted airfares charge a penalty if the passenger cancels or changes the ticket. The penalty amount is deducted from the refund total. The travel agency usually keeps part of the penalty fee as commission. The amount of commission earned on a penalty differs from airline to airline and should be checked in each case. However, the standard commission on a $75 penalty fee is $5. This is recorded in the commission box on the REN document.

A statement regarding a cancellation and or change penalty should appear in the Endorsements/Restrictions box on the original ticket.

Here is an example. Figure 7-6 is the one-way ticket that passenger Zuckerman is returning for a refund. Notice that a $75 penalty is stated in the Endorsements/

Restrictions box on the original ticket. The travel agent earns $5 from the penalty fee as commission.

[FIGURE 7-6 OMITTED]

Figure 7-7 is the completed REN for this refunded ticket.

[FIGURE 7-7 OMITTED]

A Look at the Refund Computation Breakdown

[ILLUSTRATION OMITTED]

Boxes A through F are completed normally. Box G shows the total cost of the old/unused ticket, or $357. At this point the total refund back to the client is $357. However, the airline charges a $75 penalty for refunds. Enter the amount of penalty in box H.

To obtain the final refund amount, add boxes G and H (remember, you are adding a negative and a positive number): -357 + (+75) = -282.

The final refund to the client is $282.

A Look at the Commission Breakdown

[ILLUSTRATION OMITTED]

The travel agency earns $5.00 on the penalty fee as commission. This amount is entered in the Commission on Admin/Penalty Fee box. It is a positive number because it represents what the travel agency earns or keeps. The amount of commission on the old/unused ticket is $16.47. This is a negative number because it represents what is to be returned.

The figure in the last box--commission due from the travel agency--is obtained by adding the previous two amounts. Again, we are adding positive and negative amounts: +5.00 + (-16.47) = -11.47.

The result is a negative $11.47, which is the commission due from the agency.

CHECK POINT 7- 2

Figure 7-8 shows the flight coupons passenger Bigelow is returning for a refund. The original ticket was a round-trip between Nashville and Milwaukee. The fare requires a $75 penalty fee for cancellation; the travel agency earns $5 of the penalty fee as commission. You are completing the REN on Feb 27.

[FIGURE 7-8 OMITTED]

Complete the REN for this refund transaction:

[ILLUSTRATION OMITTED]

PARTIAL REFUND: COMPLETED EXAMPLE

Sometimes the passenger uses part of the airline ticket and returns the unused flight coupon(s) to the travel agent for a refund. The procedure is the same for a partial ticket refund as it is for a full ticket refund. The only difference is that only part of the fare is refunded, not the full value of the airline ticket. The part of the fare that is refunded represents the flight coupons that are unused or being returned.

Here's an example. Figure 7-9 is the flight coupon that passenger Duffy returned for a refund. The original ticket was issued for a circle-trip: Boston to Dayton to Detroit to Boston. Mr. Duffy is returning flight coupon 3 for a refund. Flight coupon 3 was valid for the flight from Detroit to Boston. Remember, everything about the flight from Detroit to Boston will be refunded. The flights from Boston to Dayton and Dayton to Detroit were used; they will not be refunded.

[FIGURE 7-9 OMITTED]

The amount of commission earned on the original ticket was 5 percent of the base fare, or $29.44.

Figure 7-10 is the completed REN for this transaction. Notice that all the refund information pertains to the unused or refunded part of this ticket: Detroit to Boston.

[FIGURE 7-10 OMITTED]

A Look at the Refund Computation Breakdown

[ILLUSTRATION OMITTED]

Box B: This is the base fare that applies to the unused part of the ticket: Detroit to Boston. The base fare for this segment is $222.33 (refer to the original ticket fare ladder). Notice that a fuel surcharge in the amount of $1.86 was part of the total price on the original ticket. The fuel surcharge applied to the departure from Boston; because it is not part of the refunded portion of the ticket, it is not added to box B.

Box C: This is the amount of the U.S. transportation tax to be refunded. Calculate: $222.33 ??7.5% = $16.67. This is the amount of US tax to be refunded.

Box D: This is the amount of any segment tax (ZP) to be refunded. Because a segment tax applied to the departure from Detroit (flight coupon 3), this amount is refunded.

Box E: This is the amount of any PFCs (XF) to be refunded. Because a PFC applied to the departure from DTW (flight coupon 3), this amount is refunded.

Box F: Enter the sum of boxes B + C + D + E: $222.33 + $16.67 + $3.00 + $3.00 = $245.00. This represents the total cost of the unused portion of the ticket (base fare plus applicable taxes).

Box G: This amount is obtained by subtracting: box A minus box F, or -$245.00. This is a negative because it represents the amount of refund back to the client.

Box H: There is no penalty; enter zero.

Box I: Enter the sum of boxes G and H, or -$245.00. This represents the total amount to be refunded to the client. Again, this amount represents the refunded flight coupon from Detroit to Boston.

A Look at the Commission Breakdown

[ILLUSTRATION OMITTED]

The travel agency earned a straight 5 percent commission on the original ticket, or $29.44 ($588.84 ??5%). It makes sense that the travel agency must return the amount of commission on the unused or refunded portion of the original ticket. The base fare amount on the Detroit to Boston segment equals $222.33 (see box B in the refund column). The amount of commission that is returned on the old or unused portion of the ticket is $222.33 ??5%, or $11.12.

A Look at the PFC Breakdown

[ILLUSTRATION OMITTED]

Notice that only the unused PFC from Detroit Airport (DTW) is listed. Remember, only the unused or refunded PFC amounts are listed here.

CHECK POINT 7- 3

Figure 7-11 is the flight coupon that passenger Jenkins is returning for a refund. Complete the REN. The date you are completing the REN is March 27.

[FIGURE 7-11 OMITTED]

[ILLUSTRATION OMITTED]

PARTIAL REFUND: WITH COMMISSION CAP

The following completed example introduces one new concept: how to refund a partial ticket when the original commission is not a straight commission amount but a cap amount (e.g., $25 and $50 for one-way and round-trip tickets, respectively).

Figure 7-12 is flight coupon number 2 that is returned for a refund. Passenger Pratt's original ticket was based on a round-trip from Chicago to Palm Springs. The unused flight coupon was valid for the return flight from Palm Springs to Chicago O'Hare.

[FIGURE 7-12 OMITTED]

First, complete all sections on the following REN form, except for the commission boxes--leave those blank for now.

[ILLUSTRATION OMITTED]

Figure 7-13 is the REN completed in full, including the commission boxes.

[FIGURE 7-13 OMITTED]

Let's take a closer look at the commission boxes. Because a commission cap was earned on the original ticket (and not a straight percentage), the amount of commission to be returned must be calculated in a different manner.

[ILLUSTRATION OMITTED]

To determine the commission amount on the REN, follow these steps for each refund you do:

Step 1: How much commission was earned on the original ticket? The answer is $50.

Step 2: Is this a straight percentage or a cap amount?

Step 3: If the original commission was based on a straight commission, proceed with a normal calculation (e.g., refund 5 percent of the fare refund amount).

Step 4: If the original commission was not based on a straight commission but a cap amount, go to the next step.

Step 5: Take the base fare amount (without tax) on the full original ticket and subtract the amount of the base fare (without tax) that is unused or being refunded:
$1,167.45   original ticket's base fare
-$ 581.40   refunded fare (coupon 2, PSP to ORD)
$ 586.05    amount of fare used by the passenger


If the result (the amount that was used) is equal to $1,000 or higher, the travel agency does not return any commission.

If the result (the amount that was used) is less than $1,000, the travel agency must return the difference. Continue to Step 6.

Step 6: Because the amount of the fare that was used is less than $1,000, you must calculate the amount of commission the travel agency is required to return (and show that amount on the REN). Take the original commission earned ($50.00) and subtract the amount of commission on the fare that was used by the passenger (passenger used $586.05 of the fare). The result is the amount of commission to be returned to the airline. This amount is shown on the REN:
 $50.00   commission earned on the original ticket
-$29.30   commission on the fare used by passenger ($586.05 x 5%)
= $20.70  commission to be returned


CHECK POINT 7-4

For each refunded transaction, complete the REN.

1. Miss Osgood is returning the following flight coupon for a refund. Complete the REN. The REN was completed on February 22.

[ILLUSTRATIONS OMITTED]

2. Kevin Jackson is returning flight coupons 3 and 4, his return from New York to Los Angeles, for a refund. The travel agency earned the commission cap of $50 on the original ticket. The REN is being issued on April 25.

[ILLUSTRATIONS OMITTED]

REFUNDING FROM ATB

The automated form called the automated ticket/boarding pass (ATB) is used more frequently than manual tickets. Quite often you will have a passenger return one or more ATB coupons for a refund. The travel agent can complete an automated REN through the agency's computer reservation system or complete a manual REN; it does not matter.

To complete a REN for refunded automated tickets, the procedure is exactly the same as for a manual ticket. The only difference is you are able to read the information from the ATB rather than a manual handwritten ticket.

Reading ATB forms was covered in an earlier chapter. However, for a quick review, we will show you a completed example.

[FIGURE 7-14 OMITTED]

Figure 7-14 is flight coupon number 1 that passenger Adams returned for a refund. The original ticket was valid for three coupons:

* Coupon 1 was valid from Boston to Las Vegas.

* Coupon 2 was valid from Las Vegas to St. Louis (connecting city).

* Coupon 3 was valid from St. Louis to Boston.

She is returning flight coupon 1 for a refund. How do you know which coupon is being refunded? Look at the top of the coupon: flight coupon 1 of 3 is being refunded.

The fare breakdown is in the middle section of the ATB form. Like the fare ladder on a handwritten ticket, this provides the base fare, fuel surcharge, and breakdown of segment tax and passenger facility charges.

The form of payment is indicated in the middle section of the ATB at the beginning of the fare breakdown. The form of payment is CHECK.

The selling fare, tax, and total selling price are listed in the lower left corner of the ATB.

The amount of commission is not printed on the passenger's flight coupon. It appears on the auditor's coupon. The commission on this ticket was a straight 5 percent.

Figure 7-15 is the completed REN. All the sections are completed with standard entries (as they would be if you refunded a manual airline ticket).

[FIGURE 7-15 OMITTED]

CHECK POINT 7-5

1. Complete the refund based on the following returned ATB flight coupon. The validating carrier pays 5 percent commission with a cap. The REN was issued on March 25.

[ILLUSTRATION OMITTED]

Complete the REN:

[ILLUSTRATION OMITTED]

2. Complete the refund based on the flight coupon returned below. The validating carrier pays 5 percent commission with a cap. The REN was issued on July 15.

[ILLUSTRATIONS OMITTED]

Chapter 7 Test

NAME: -- DATE: --

Complete the REN for each exercise. In each case, the validating carrier pays a standard 5 percent commission with cap.

1. The following flight coupons are being returned for a refund. The date you are issuing the REN is April 25.

[ILLUSTRATION OMITTED]

Complete the REN:

[ILLUSTRATION OMITTED]

2. The following flight coupons are being returned for a refund. The date you are issuing the REN is May 2. The original ticket was purchased by the passenger's credit card.

[ILLUSTRATION OMITTED]

Complete the REN:

[ILLUSTRATION OMITTED]

3. The following flight coupon is being returned for a refund. The original ticket has a change penalty of $75. The travel agency earns $5 of the penalty amount. The date you are issuing the REN is July 23.

[ILLUSTRATION OMITTED]

Complete the REN:

[ILLUSTRATION OMITTED]

4. The following flight coupons are being returned for a refund. The passenger purchased the original ticket with a credit card. The date you are issuing the REN is April 30.

[ILLUSTRATION OMITTED]

Complete the REN:

[ILLUSTRATION OMITTED]

5. The passenger is returning the following coupon of her ATB for a refund. The date you are issuing the REN is March 30.

[ILLUSTRATION OMITTED]

Complete the REN:

[ILLUSTRATION OMITTED]

6. The passenger is returning the following flight coupons of his ATB for a refund. The date you are issuing the REN is November 28.

[ILLUSTRATION OMITTED]

Complete the REN:

[ILLUSTRATION OMITTED]
COPYRIGHT 2001 Delmar Learning
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Semer-Purzycki, Jeanne
Publication:A Practical Guide to Fares and Ticketing, 3rd ed.
Geographic Code:1USA
Date:Jan 1, 2001
Words:4440
Previous Article:Chapter 6 Ticketing, Part II.
Next Article:Chapter 8 Ticket exchanges.
Topics:

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters