Airlines still owe travelers billions in refunds for flights canceled in 2020

Airlines still owe travelers billions in refunds for flights canceled in 2020

Though COVID-19 added a brand new degree of stress to flying, the largest supply of traveler gripes as of late is the flights that folks did not take. 

In 2020, the U.S. Division of Transportation obtained practically 90,000 complaints about ticket refunds, up greater than 5,000% from lower than 1,600 in 2019. Airlines still owe prospects anyplace from $20 billion to $90 billion in refunds for flights that had been canceled final 12 months, specialists say. 

“There has never been a year like last year for complaints about refunds,” Invoice McGee, aviation adviser at Client Experiences Advocacy, informed CBS MoneyWatch. “The airlines obviously made some conscious decisions not to do the right thing and give refunds — even when they were required to by law.” 

Refunds stay a significant supply of competition after erupting early on in the pandemic as airways lower flights, governments enacted journey restrictions and would-be travelers canceled journeys.

Hemorrhaging money, many airways opted to protect capital by not reimbursing shoppers for canceled flights as air journey got here to a digital cease. Underneath U.S. legislation, airways are required to supply refunds to passengers when a flight is canceled or the schedule is considerably modified. Still, there are not any such ensures for those that willingly decide to not fly, even on account of a world pandemic. 

“If they can keep you from demanding a cash refund and hold onto all that working capital, that was the objective during most of 2020 and even into 2021 in some cases,” mentioned Robert Mann, a former airline government and now trade analyst based mostly in Port Washington, New York. 

The surge in refund complaints is “clearly a widespread, chronic problem, and it continues to this day,” McGee added.

As highlighted in an evaluation of publicly obtainable data launched Thursday by the buyer advocacy group U.S. PIRG, complaints to the DOT hit a peak of twenty-two,000 in Could 2020, and practically 21,000 had been from shoppers who’ve had issue getting reimbursed for canceled flights final 12 months.

“In March, April and May of 2020, airlines were in a really precarious position. To preserve liquidity, they decided to make it harder than ever to get refunds for canceled flights,” recalled Zach Griff, an analyst at The Factors Man, a journey web site. “It’s against DOT policy, but it’s still something we’ve seen over time.” 

Within the 5 years earlier than the pandemic, the DOT obtained a mean of roughly 17,000 aviation client complaints yearly, with refund points accounting for about 8% of the full. In 2020, the company obtained a record-high 102,561 client complaints, up 568% from the earlier 12 months.

Complaints persevering with into 2021

The outcry has continued into 2021, with folks submitting greater than 22,000 complaints with the DOT. Of the grievances obtained over an 18-month interval going again to early 2020, 84% involved refunds, federal data present.

The amount of complaints stays greater than pre-pandemic ranges “because airlines continue to put up roadblocks for consumers seeking refunds,” PIRG said in its report

Still, DOT numbers present enchancment. In July, the company obtained simply over 5,000 complaints from shoppers, with greater than half regarding refunds. The general tally is down practically 55% from the roughly 11,000 filed in July 2020, according to the DOT.

Carriers have largely rebuffed calls from advocates and lawmakers that they provide money refunds to prospects who canceled flights in the course of the COVID-19 disaster. And people whose flights had been canceled in many instances had been provided vouchers for future journey with various expiration dates.

“The uptick in travel during Memorial Day weekend clearly shows that the airline industry is in recovery mode, yet these companies continue to sit on more than $10 billion in unused flight credits and are still refusing to return consumers’ hard-earned money, more than a year after the pandemic began,”senators Edward Markey, D.-Massachusetts, and Richard Blumenthal, D.-Connecticut, stated in June.

The $10 billion cited by the lawmakers is probably going nearer to $20 billion, based on Mann, whereas McGee views the determine as simply the tip of the iceberg, estimating the actual determine to be $90 billion or extra.

As refund complaints poured into the DOT, different authorities entities additionally heard grievances on the subject. 

Colorado’s legal professional common final fall called for a federal investigation into Denver-based Frontier Airlines, saying he’d heard from shoppers in 30 states with complaints of denied refunds or unredeemable journey credit.

“During the COVID-19 pandemic, we received more complaints about Frontier’s conduct — failing to honor its commitment to provide refunds — than any other company,” Phil Weiser, the state AG, said in his enchantment to then-U.S. Secretary of Transportation Elaine Chao. 

A 12 months later and with Pete Buttigieg at its helm, the Transportation Division launched investigations into 20 airways for allegedly failing to offer well timed refunds, with 18 still pending. 

The DOT in late September reported that “thousands of passengers who had initially been denied refunds have received or are receiving the required refunds.” A minimum of 9 airways have modified their insurance policies to clarify persons are entitled to a refund when their flight is canceled, relatively than the vouchers or credit initially provided, based on the company. 

The DOT is contemplating whether or not to create a rule that will broaden the phrases for when an airline would give a refund, however the company doesn’t have the authority to make it retroactive. “So we continue to fight this on all fronts,” mentioned McGee, amongst these scheduled to speak Thursday at a public assembly on the problem by the DOT’s Aviation Client Safety Advisory Committee. 

“The DOT, during 2020, they did nothing — that may correspond to the then-DOT view of policy on the matter — and hope the problem goes away,” Mann mentioned. “The new administration’s DOT has stated the policy several times and is, I think, seen as a shot across the bow for U.S. carriers.” 

However the company to this point has restricted its enforcement to an airline based mostly outdoors the U.S. Air Canada final week agreed to pay $4.5 million to resolve a DOT probe into what the company termed “extreme delays in providing refunds to thousands of consumers for flights to or from the United States that the carrier canceled or significantly changed.” 

The proposed settlement comes after the division in June said it was looking for a $25.5 million effective in opposition to Air Canada, alleging the provider stored a no-refund coverage in place in violation of U.S. legislation for greater than a 12 months. Greater than 6,000 complaints had been lodged in opposition to Air Canada over its refusal to refund shoppers for flights canceled or considerably modified between March of 2020 and mid-2021, based on the company.

The reluctance or outright refusal to reimburse folks for canceled flights was in widespread apply on the outset of the pandemic, however some airways had been extra blatant in their refusal than others, based on The Factors Man’s Griff. “It was a very big issue with United [Airlines], which made a strategic decision to drag its feet with refunds.” 

United Airlines has been the topic of probably the most refund complaints in the course of the pandemic, based on information from the DOT and Client Experiences, specialists informed CBS MoneyWatch. On a per passenger foundation, Frontier Airlines tops the checklist. 

“Those two airlines had a chronic problem with not paying refunds,” McGee mentioned.

Neither United nor Frontier responded to requests for remark. 

Airlines for America, or A4A, a commerce group representing seven U.S. carriers mentioned its members adjust to all federal legal guidelines and laws. 

“Since the onset of the pandemic, carriers have issued approximately $20 billion in cash refunds. In 2020, U.S. passenger airlines issued $12.8 billion in cash refunds, up 72% from 2019. For A4A carriers, cash refunds issued in 2020 accounted for 25% of passenger revenues versus 4.4% in 2019. Additionally, in the first three quarters of 2021, U.S. carriers have issued 3.5% more cash refunds than they did in the same period of 2019 despite generating 46% less passenger revenue. In turn, cash refunds in 2021 are running at 8.2% of passenger revenue, nearly double the 4.4% of passenger revenue in 2019,” the commerce affiliation, which represents Alaska, American, Delta, Hawaiian, JetBlue, Southwest and United, said in an electronic mail.  

In current months, many of the complaints to Client Experiences have been about vouchers, as their expiration dates are coming due, McGee mentioned. He advises persistence, saying that folks report ultimately getting refunds after calling, emailing, texting or shaming carriers on social media a number of instances. 

Those that bought tickets with a bank card may file a grievance beneath the Truthful Credit score Billing Act, which permits folks to dispute costs for items or companies that weren’t obtained. “The bank gives you a refund and fights it out with the other entity.” 

Airlines finally obtained billions from the federal government to maintain paying their workers, but pilots and flight attendants had been furloughed and laid off as carriers strived to stay aloft, leaving them understaffed and overbooked as a principally vaccinated returns to air journey.

Spirit Airlines forged dangerous climate and labor shortages as the principle culprits behind journey chaos that the low-cost provider canceling greater than 1,700 flights in August. The situation replayed in September, when Southwest canceled hundreds of flights in the course of the course of a weekend, and once more in October when 1000’s of fliers had been grounded after American shelved greater than 1,800 flights nationwide over a three-day interval.

“We the taxpayers gave the airlines $58 billion,” McGee mentioned. “The airlines did as well as any industry in terms of taxpayer bailout, yet they continue to hold onto our money.” 

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