Feds Come to Rescue of Flyers With Hardball Mandate to U.S. Airlines on Refunds

U.S. airlines must refund passengers when they cancel flights due to the coronavirus pandemic, the federal government said Friday, a blow to at least two carriers that have been making it difficult for customers to recover their money.

The pro-consumer move is consistent with the U.S. Department of Transportation’s usual policy, though there was some question whether the government would waive its rules because of the unusual circumstances. Normally, if an airline cannot fly a passenger within a couple of hours of the scheduled time, it offers a refund. Because those situations are rare — airlines generally cancel a small percentage of flights — carriers usually return money without delay.

But recently, JetBlue Airways and United Airlines took the position that these were extraordinary circumstances and altered their policies. At points during the past four weeks, both essentially said they were permitted to cancel a flight and retain the money, so long as they could rebook the customer on a new flight within about one day. Customers who were upset could take a voucher for a future flight.

Get the Latest on Coronavirus and the Travel Industry on Skift’s Liveblog

United loosened its policy slightly after customer complaints, but still made it a priority to keep money as long as possible. Meanwhile, JetBlue had dug in so much that The Points Guy called its policy, “one of the most customer-unfriendly moves we’ve seen since the outbreak of the virus.”

However, the Department of Transportation said Friday its rules had not changed. If airlines rebook customers on a flight within a few hours, they can hold onto the money. Beyond that, the government said, customers are due refunds, not vouchers.

“Airlines have long provided such refunds, including during periods when air travel has been disrupted on a large scale, such as the aftermath of the September 11, 2001 attacks, Hurricane Katrina, and presidentially declared natural disasters,” the government said. “Although the COVID-19 public health emergency has had an unprecedented impact on air travel, the airlines’ obligation to refund passengers for cancelled or significantly delayed flights remains unchanged.”

JetBlue did not immediately reply for a request for comment. A United spokeswoman said the airline is offering refunds to eligible customers.

“Eligible travelers on domestic flights – and now customers with international tickets – can request a refund on United.com or may call our contact centers if their flights have been severely adjusted or service to their destination suspended either due to government mandates or United schedule reductions related to COVID-19,” the spokeswoman said.

American and Delta More Lenient

Not every airline took such a hard stance on refunds. American Airlines and Delta Air Lines, among others, generally followed earlier precedent, offering refunds when they canceled flights, assuming they could not rebook passengers within a couple of hours.

But it an expensive proposition. Over the next two months, U.S. airlines have slashed schedules, operating between roughly 30 and 60 percent of their usual domestic flights and almost no long-haul international flights. They now must offer refunds to passengers who had booked many of those now-canceled flights, even though many of those customers had no intention of traveling.

In an attempt to hold onto the money, some airlines have been creative with buying off passengers. American is giving customers an extra bonus if they choose a travel credit over a refund. They can choose a full refund, or a travel credit worth 120 percent of the value of the ticket.

“They are putting effort into it,” Brett Snyder, an airline analyst and blogger, said in an interview. “I think that’s a pretty admirable thing to be doing.”

Delta also been taking care of customers, as well, said Snyder, who also runs a travel agency. He said Delta’s agents seem have wide latitude to offer refunds.

“Delta has been more quiet but they have always been like that,” he said. “They leave more to your imagination with their policies. But they lean on the side of, go ahead and do it.”

Airlines are also extending how long passengers will have to use vouchers, which usually expire one year after the ticket is issued. Some Delta vouchers are now good through May 2022.

No Refunds for Voluntary Changes

Not all passengers will receive refunds, despite the government’s order.

If the airline is still operating the flight, the customer may cancel, but the passenger typically only is due a travel credit, not a refund.

This article was updated with a comment from United Airlines.