"Support Measures Are Only Temporary"... The Inside Story of the Travel Industry Scratched by 'Timeff'

Government to Provide 60 Billion Won Interest Differential Compensation Support
Reviewing Plan to Waive Minimum Airline Ticket Fees
Industry: "Significant Losses Unavoidable Without Rebooking"
Concerns Over Future Industry Downturn

The government has proposed a response plan to immediately inject at least 560 billion won in liquidity to resolve the unsettled payment issue involving TMON and WEMAKEPRICE, but the travel industry, which has suffered relatively large damages, remains lukewarm. Since travel agencies have already made advance payments using company funds to secure flights, accommodations, and tour schedules for popular destinations, they cannot avoid significant losses if customers do not rebook. Consumers, whose plans have been disrupted including during the vacation season, are expressing dissatisfaction with travel agencies and showing distrust toward purchasing products online, raising concerns about additional damages.

Victims requesting refunds are waiting for the company under umbrellas in front of TMON headquarters in Gangnam-gu, Seoul. [Image source=Yonhap News]

According to the industry on the 29th, the government held the second task force (TF) meeting of related ministries chaired by Kim Beom-seok, First Vice Minister of Strategy and Finance, and announced the 'Response Plan for the WEMAKEPRICE and TMON Incident.' Among the measures, the Ministry of Culture, Sports and Tourism, the main ministry in charge, decided to support 60 billion won for interest rate subsidies (compensation for interest rate differences) on loans to travel agencies and other tourism operators. Through this, the estimated interest cost savings for travel agencies and others are about 2.5 to 3 percentage points. Additionally, a plan is being promoted to waive fees (penalties) for unavoidable flight reservation cancellations through consultations between airlines and travel agencies.

An industry insider said, "For small travel businesses worried about cash flow due to delayed settlements from TMON and WEMAKEPRICE, loans and interest reductions will help to some extent, but if the rebooking of sold products does not occur, losses cannot be avoided." He added, "Waiving penalties for flight cancellations will also help considerably, but in the case of overseas accommodations, most operators are foreign companies, making communication difficult, so cancellation fees will likely have to be paid. Ultimately, support measures aimed at the travel industry can only be temporary solutions."

The amount unpaid to the travel industry due to the TMON and WEMAKEPRICE incident is estimated at around 100 billion won. This means that about half of the approximately 210 billion won in unsettled payments identified so far from all companies listed on the platforms is concentrated among travel-related operators. Another travel industry official explained, "Looking back, since around May, TMON and WEMAKEPRICE significantly increased discount benefits on early booking travel products through their own promotions. Travel agencies also provided a considerable amount of pre-secured flight seats and accommodations in consideration of the summer vacation season and Chuseok holidays, which increased the scale of damages."

Travel and accommodation-related companies are concerned that the unsettled payment issue with TMON and WEMAKEPRICE will not be resolved quickly, but they are taking measures to ensure that products with imminent departure dates proceed as scheduled to minimize consumer damages. This is based on the judgment that they must prevent disruptions to travelers who have been eagerly preparing for their trips and avoid damaging the company’s image and products sold through legitimate channels. Meanwhile, they are persuading customers that they will compensate as much as possible for discounts received from each platform so that customers can receive refunds from TMON or credit card companies and rebook the products through each travel agency. However, there is considerable opposition to shifting the travel agencies’ losses onto consumers, so they are not actively voicing their concerns.

An industry insider said, "Travel agencies and accommodation reservation platforms are also victims of this incident, but they are absorbing some losses by issuing their own points or waiving cancellation fees. It is frustrating because the travel market, which has barely begun to recover, may shrink again."

This content was produced with the assistance of AI translation services.