As a steep uptick in airline complaints persists compared to pre-pandemic levels, the U.S. Department of Transportation is considering new rules governing airline refunds.
New Regulations Under Consideration Concerning Airline Refunds In U.S.
During the early stages of the COVID-19 pandemic, many airlines either withheld refunds or dragged their feet, blaming cashflow concerns. In North America, Air Canada and United Airlines were the greatest offenders. In fact, the Department of Transportation proposed a $25 million fine against Air Canada for its refund practices (Air Canada ultimately settled for $4.5 million and has subsequently processed refunds).
But even today, airline complaints remain at elevated above historic annual levels and many of them center on refunds. With tremendous travel uncertainty present due to COVID-19 variants like delta and omicron, the Department of Transportation is considering whether to broaden refund rules, making it easier for consumers to obtain refunds, even when their flights are not cancelled or they buy highly-restricted tickets.
On December 2, 2021, the first meeting of the Aviation Consumer Protection Advisory Committee took place. It includes industry experts as well as industry insiders. The committee will continue to meet as the DOT considers whether to craft a new policy. Any change in the rules, which currently give airlines tremendous wiggle room in whether to offer refunds in case of flight cancellations and schedule changes, would not be retroactive and be presented for public comment before taking effect.
That meeting coincided with a release of a new report by the U.S. Public Interest Research Group (PIRG) concerning airline refunds. It details the difficulties travelers have had to endure to obtain refunds during the pandemic. It also condemns airlines for not paying reasonable expenses (such as for hotel rooms) when they cancel flights at the last minute.
But Airlines for America, present at the Advisory Committee meeting, pushed back. It noted that carriers have greatly loosened up refund policies and complaints are down significantly for the second half of 2021. Still, it argued that passengers who voluntarily buy non-refundable tickets and choose to voluntarily change their travel plans should not be entitled to a cash refund, regardless of their reason for doing so. The solution, it contends, is to buy pricier refundable tickets if more flexibility is desired.
Jacob van Cleef at PIRG argues that many passengers have neither the time or money to use credit and should not be held hostage by taxpayer-funded airlines due to policies and restrictions consumers have no say over.
My Take: Status Quo Works, Just Enforce It
Current regulations do require a refund for cancelled flights, but give airlines wiggle room in enacting “schedule changes” that may materially alter flight time (and in some cases, flight dates) but not technically be a cancellation.
I’m not convinced we need new rules rather than a stricter interpretation of current rules, which could require airlines to offer refunds if any change to the schedule is made.
But I’m impressed that U.S. airlines have largely eliminated change fees during the pandemic, which has greatly altered the way in which I buy tickets and been a huge win for customers.
I also am more sympathetic to the airline position that the mere declaration of a pandemic should not make all tickets refundable. Instead, a consumer can still weigh options, including whether to buy a pricer refundable ticket. One reason airline tickets are historically cheap in 2021 is because airlines choose to offer you the chance to lock in an inexpensive flight in exchange for making the ticket less flexible. That’s a bargained-for exchange and hardly represents coercion when so many other fare types are available.
Perhaps one change could be that refunds are required if travelers, though no fault of their own, are blocked from visiting a destination due to COVID-19 restrictions added after they booked their flight. In such cases, I do deem a refund appropriate and think a common standard could be helpful to adding certainty and stability to the U.S. aviation market.
Airlines acted horribly at the start of the pandemic, claiming they had no choice but to survive. Such action should never be allowed to be repeated. Steep fines against airlines that engage in such practice is appropriate. However, I’m not ready to side with a government fiat requiring all airline tickets to be refundable. That would mean higher-priced tickets for everyone, hurting the very people the policy intends to help.
What are your thoughts on mandatory refunds by U.S. airlines during the pandemic?