CRM News: Travel: Skybus Customers Seeking Refunds Put Strain on Banks

Banks and credit-card issuers are seeing a spike in service calls from customers left stranded by the bankruptcy of Skybus Airlines, which canceled all of its flights over the weekend. The airline told customers to seek refunds from their card issuers, and that has forced banks to add staff to keep up with calls.

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Jilted Skybus Airlines passengers clogged the phone lines of banks and credit unions this week as they attempted to secure refunds for their airline tickets to nowhere.

Thousands of travelers sought reimbursement yesterday from their card issuers on the first business day after the startup Columbus airline went belly-up Friday evening. The requests kept customer-service workers busy and forced some financial-services companies to grab anybody they could find to help answer the phones.

Skybus had about 1.8 million seats available on its Web site from April through August, the latest month for which it had released flight schedules. It's believed that only a fraction of those seats had been sold, as the airline said tepid future bookings contributed to its failure.

Much to Unravel

Even if it had sold only 10 percent of those seats, 180,000 ticket sales would have to be settled. Representatives of banks and credit-card issuers say that everyone should get their money back because of federal regulations that protect failed credit-card purchases.

But handling all the requests has proven to be an arduous task, and bankers warn it could take months for the process to run its course.

"We moved two individuals who normally work in the back office up to the front line to respond to the inquiries," said Danielle Chatfield-Beres, community affairs director for Midstate Educators Credit Union. "We had quite a few members who needed to help us simplify the (reimbursement) process."

Customer Service Spike

Representatives of JPMorgan Chase, Fifth Third and other banks that issue credit cards also said their customer-service calls have spiked since homegrown Skybus said late Friday that it was calling it quits. Skybus filed for Chapter 11 bankruptcy protection yesterday in the state of Delaware, saying it has up to US$100 million in liabilities.

Skybus Chief Executive Michael Hodge said yesterday he did not know the exact number of future bookings the airline had amassed before it folded. "The credit-card companies will refund folks, and then effectively draw upon the restricted cash," Hodge said.

The Electronic Funds Transfer Act and Federal Reserve Regulation E establish safeguards for consumers using credit cards. One of them is that Visa and MasterCard offer protection for purchases for 120 days from the scheduled time of delivery.

Credit Card Protection

When a credit-card transaction is made, the bank that issued the card pays a merchant bank for the company providing the product or service. In this case, Huntington Merchant Services processed payments for Skybus.

Huntington spokesperson Jeri Grier-Ball said the bank will "follow all the guidelines as described by Visa and MasterCard and American Express" in reimbursing money.

Delane Starliper, vice president in charge of operations for Fifth Third Processing Solutions, said that typically when cardholders request reimbursements, they first need to make a good-faith attempt with the airline to settle the dispute. Skybus already has told customers to seek rebates from their card issuers.

Visa did the same in a statement yesterday.

Forms Available

Starliper said customers must write to the bank or fill out a dispute form that includes information such as when the ticket was bought, the price and the scheduled date of departure.

Those forms are available at local offices, by mail or in some cases online. Starliper said rules differ for debit-card purchases, but in most cases, Skybus tickets were processed as credit transactions.

"There's no real hurry on it," she said. "They do have 120 days. (Consumers are) well-protected under cardholder rights for both Visa and MasterCard."

Unhappy Customers

One Skybus customer said his card issuer, Capital One, told him he had only 60 days to file a claim. He said he found that out after waiting on hold yesterday for an hour and a half.

"Skybus knew the people who were stranded," said the customer, who requested anonymity. "They should have reimbursed the credit card (holder) immediately instead of making them go to the card companies."

At Midstate Educators, Chatfield-Beres said the credit union handled the requests in stride with the extra help on hand. "We've had a pretty normal, calm, measured response to it," she said.