Why Airline and OTA Refund Timelines Differ Clearly

In this article, I will examine what is often a confusing issue for travelers, namely the differing timelines in refunds from airlines and OTAs when cancellations happen.

Since airlines handle refunds within their own systems and OTAs are intermediaries, this creates additional steps and delays in the processes.

Knowing this helps travelers manage their expectations and make informed decisions when booking their flights.

Overview

Travel refunds are one of the many hidden intricacies of the industry that most passengers become aware of only when things don’t go as planned.

You book a flight, you cancel it, you expect a refund only to become aware that the timeline of holding a refund varies based on whether you purchased directly from the airline or through an Online Travel Agency (OTA).

This often frustrates passengers, but it is not irrational as there are specific reasons behind the policies, systems, and financial structures of the airline and the OTA. Let us explore and break this down.

Key Reasons for Differences

Intermediary Process: In the Merchant Model, you make a payment to the online travel agency (OTA) which, in turn, makes payment to the airline. In the event of a cancellation, money has to go back the other way; from the airline to the OTA and then to you.

Approval and Settlement Layers: The airline has to approve the refund and if it was booked through an agency, it needs to settle through the BSP, which is the IATA Billing and Settlement Plan, or the ARC, which adds additional time to the transaction.

Operational Bottlenecks: During periods of high volume cancellations, OTAs experience large surges in call volume and processing bottlenecks which delays their processing of incoming funds.

Separate Policies: In addition to the airline’s, OTAs have their own service-level agreements and processing times which adds to the delays of not having booked direct.

The Direct Airline Pathway

When customers book through the airline directly, the customers’ payments integrate directly into the airline’s systems.

Airlines build their own reservation systems, ticketing systems, and payment systems. If necessary, a refund can be processed in the airline’s system, without third-party coordination.

Ticketing Privilege

Directly through the airline’s Global Distribution System (GDS) or other systems, the airline can issue tickets. From there, the airline can cancel and issue refunds without needing external confirmations.

Policy Implementation

The airline is able to determine their own refund policies. Whether that is for no reason, partially, or with a fee, they can make that decision without third-party involvement.

Banking Privileges

The airlines have settlement cycles with either a bank or card network which allows the airline to refund customers quickly.

This reason is why it is said that refunds processed from airlines may not be instant, but they can be processed quickly.

The OTA Middle Layer

However, OTAs are intermediaries. They do not have ownership of flights; they simply ticket on behalf of airlines.

When a customer books a ticket through an OTA, the customer’s payment goes to OTA’s system first, and then the system pays the airline. In the case of cancellations, the system has to go through multiple stoppages before making a refund.

Airline Dependency

OTAs cannot refund customers until the airline authorizes the refund. In case the airline takes a long time, the OTA cannot do anything.

Double Processing

Once an airline gives the green light, the OTA has to do a number of things before giving a refund to the customer. The OTA has to do an internal refund, account reconcile, and then process a refund.

Refund Checks

OTAs tend to be extra cautious to make sure they are not doing a refund for a different booking, and especially so with complicated flights.

A lot of the things mentioned above are the reasons why this process takes longer than direct airline refunds.

Payment Method Complexities

The way to receive your money back is also affected by how you made the payment. Depending on the method used (credit card, debit card, e-wallet, or net banking), the company experiences different settlement cycles.

Regulators are defined by the airline, where the refunds are sent directly to the credit card, and the OTAs are forced to send the refunds to their payment gateways before they push them out.

Take for example the following scenarios:

Credit cards: The average issuer cycle takes between 7 and 14 business days for the process to be completed.

E-wallets or vouchers if they have been issued by the OTA, they should be available instantly. However, if they are connected to the airline’s system, they may be subejct to delays.

International payments: because of the banking systems involved and the different currencies, international payments tend to be delayed more.

System Integration Challenges

Airline and OTA systems don’t always sync in real time. Many OTAs rely on GDS platforms, which act as intermediaries between airlines and agencies.

If the airline updates its system but the GDS lags, the OTA cannot proceed. This technical gap often explains why customers see “refund initiated” but don’t receive funds immediately.

Policy Differences and Partial Refunds

Refund timelines also vary depending on the type of cancellation. A full cancellation is straightforward, but partial cancellations—like dropping one leg of a multi-city trip—

require recalculating fares, taxes, and penalties. Airlines handle this internally, but OTAs must wait for airline recalculations before processing.

Additionally, airlines may refund directly to OTAs rather than to passengers. The OTA then has to reconcile and pass the money along, which adds another layer of delay.

Communication Styles

Airlines usually update customers directly through their systems. OTAs, however, act as messengers.

They must wait for airline confirmation before informing passengers. This difference in communication often creates the perception that OTAs are slower, even if the actual delay is only a few days.

Why the Gap Persists

The primary reason why timelines vary is because of structure. Airlines have full authority over their processes, while OTAs are stuck in the middle.

Despite advancements in technology, the travel ecosystem is still highly fragmented, with airlines, OTAs, GDS systems, banks, and card networks all part of the travel refund ecosystem.

Refund timelines will continue to differ as long as airlines and OTAs remain intricately disconnected. OTAs might increase speed by automating reconciliation, but they will continue to rely on airlines to move things forward.

What Travelers Can Do

Book directly for flexibility: If the speed of refunds is important, direct bookings with the airlines are usually safer.

Check policies before booking: While OTAs may offer cheaper fares, refunds can be even more time-consuming.

Track communication: Always keep OTAs and airline communications regarding cancelation confirmations.

Understand international refunds will take longer: Cross-border transactions tend to take longer and airline refunds are usually extend delays.

Conclusion

In cocnlsuion Refund timelins vary across airlines and OTAs due to Control, dependency, and system complexity.

While airlines handle the entire refund process on their end, OTAs the handle refund process on may multiple layers.

The gaps in payment methods, cross-border banking, and communication styles only widen the gaps even more.

For travelers, this distinction is important to understand in order to set realistic expectations.

Booking with OTAs provide great convenience and great deals, but they will almost always take longer to process

A refund than if you booked the flight directly with the airline. Ultimately, the difference is not about fairness, but about the structure of the travel industry.

FAQ