At some point airlines on the receiving end of vast bailouts will need to put some of that cash back into the pockets of an overlooked demographic — the paying passenger — or risk brand erosion.
Nine Democratic U.S. senators on Tuesday urged the chief executives of 11 major airlines to issue full cash refunds to customers canceling flights during the coronavirus pandemic after Congress approved a massive rescue package for the hard-hit industry.
“We believe your company has a moral responsibility to provide real refunds, not travel vouchers, to consumers, and to support State Department efforts to repatriate any American citizens trying to come home,” Senators Ed Markey, Elizabeth Warren, Kamala Harris, Bernie Sanders, Amy Klobuchar, Richard Blumenthal, Chris Murphy, Sheldon Whitehouse and Bob Casey said in the letter.
Most U.S. airlines are temporarily waiving coronavirus-related change and cancellation fees but are not issuing cash refunds.
“Americans need money now to pay for basic necessities, not temporary credits towards future travel,” the senators wrote.
Economic stimulus legislation passed by Congress last week included $25 billion in cash grants and $25 billion in loans to the passenger airlines.
“The airline industry got $25 billion to keep workers on payroll – but they’re not the only ones hurting for money right now,” Warren said on Twitter. “I want airlines to provide customers cash refunds, not just travel vouchers, for canceled flights.”
American Airlines Group Inc said in response to the letter that the “comprehensive travel waivers we’ve put in place are designed to meet the full range of our customers’ needs.”
Southwest Airlines Co and Delta Air Lines Inc, which were also among carriers receiving the letters, did not immediately comment. United Airlines Holdings Inc said it was reviewing the letter and would respond.
The senators said they wanted the airlines to disclose “the total value of all travel vouchers and credits you have issued during the coronavirus pandemic” as well the total number of flights canceled.
This month, a group representing major airlines warned that a potential 30-day domestic flight ban would require them to repay consumers for all tickets purchased within seven days if the service could not be provided even for non-refundable tickets. That could boost liquidity losses by $7 billion to $10 billion, the group added. No such flight ban has been imposed.
The U.S. State Department said last week it was tracking 50,000 Americans abroad who might seek help to return to the U.S. during the health crisis and was helping to arrange dozens of flights to assist people in returning.
U.S. airlines are collectively canceling hundreds of thousands of flights. Southwest said on Tuesday it would cut more than 40 percent of flights from May 3 through June 5 amid a sharp decline in travel demand because of the pandemic.
Other U.S. carriers have said they are cutting 60 percent or more of their flights, including American, United, Delta and Alaska Airlines.
(Reporting by David Shepardson; Editing by Will Dunham and Peter Cooney)
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Photo credit: Senator Elizabeth Warren said airlines must provide customers cash refunds, not just travel vouchers, for canceled flights. Steve Senne / Associated Press