Airlines are still refusing to pay cash refunds

A frustrating and infuriating report from the Wall Street Journal this week (subscription required) reveals that travelers are still losing out on thousands of dollars in ticket refunds for flights that were canceled due to the pandemic. When the pandemic first broke out, the Transportation Department warned every airline operating in the U.S. that they had to offer cash refunds for tickets for flights that were canceled if the airline couldn’t offer an alternative without imposing a “substantial schedule change.” But based on what the WSJ found when investigating many customer complaints, almost all of the major U.S. carriers have been dodging that requirement as much as possible, only offering a cash refund if the government or the media intervened.

Refunds delayed and denied. Vouchers worth thousands of dollars that have already expired, or are so rule-bound they’re useless. Interminable telephone holds, unanswered emails and complaints ignored.

Consumers continue to battle airlines over canceled tickets. At stake are literally billions of dollars—and likely lasting animosity toward airlines over punitive policies.

U.S. travel agencies have already handled more than $1 billion in airline cash refunds, according to Airlines Reporting Corp., which processes tickets. That doesn’t count refunds issued directly by airlines, which likely more than doubles that total. Then there’s the far more common outcome of a voucher issued instead of a refund, allowing the airline to hang on to a customer’s cash.

Several of the airlines are clearly dealing from the bottom of the deck as is demonstrated in the linked article. And they’re doing this despite the fact that they all lined up at the trough for federal bailouts and are currently implementing buyout programs to leverage workers out the door before they are allowed to have actual layoffs next month. As usual, it’s the taxpayers who will be left paying the bill when this is all over.

One California traveler named Gerald Brown requested a refund on two business-class tickets between San Francisco and London that cost him $5,354. United Airlines refused, saying he would have to take a voucher instead. But when Brown took his case to the press and they called United, they suddenly realized they had “made a mistake” and refunded his money. Another traveler spent more than $10,000 on tickets for his whole family to fly to St. Thomas on American Airlines. After the flight was canceled, American insisted on issuing vouchers to everyone (including the minor children) rather than refunding the cost back to the purchaser’s credit card. After his complaints went public, the airline allowed him a cash credit for one of the 14 tickets he purchased. How generous.

The airlines have successfully pressured a number of travelers into taking vouchers instead of refunds before “officially” canceling the flights. In some cases, these vouchers have an expiration date of 90 days. But with most people canceling their travel plans until the pandemic ends, a large percentage of the vouchers are expiring unused and the airlines simply pocket the cash anyway.

This looks like a problem without a ready solution unless it comes in the form of a class-action lawsuit or an in-depth congressional investigation. The airlines are clearly bending the rules in their own favor and only complying with the regulations in individual cases after they are called out on it. How many complaints don’t receive any attention from either the government or the media? We’re talking about tens of millions of dollars here, if not hundreds of millions. And yet this story has been getting buried under all of the election and pandemic news and is flying under the radar.

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