Airlines Granted More Flight Cuts as Consumer Complaints Surge

(Bloomberg) -- Struggling U.S. airlines will get more freedom to stop flying to some U.S. cities amid scant demand from passengers who’ve filed thousands of complaints to U.S. regulators about carrier refund policies, the Transportation Department said Tuesday.

The department said it would allow carriers to suspend flights to more cities, a change that could result in some locations being served by only one airline, according to a notice posted on the department’s website on Tuesday. Under the change, airlines can seek exemptions for as many as five airports or 5% of the locations where they’re required to fly, whichever is greater, the department said in a notice posted on its website.

Separately, the department issued its second legal notice to airlines since April, warning them about their obligations to refund the cost of tickets in some circumstances as a dramatic increase in consumer complaints poured in. The department received 25,000 reports of alleged violations in April and March, a more than eight-fold increase over normal rates, the department said in a press release.

The volume of complaints is “unprecedented,” which has prompted the department to closely examine the issue, Secretary Elaine Chao said in a press release.

“The Department is asking all airlines to revisit their customer service policies and ensure they are as flexible and considerate as possible to the needs of passengers who face financial hardship during this time,” Chao said.

Even as some parts of the U.S. begin planning to reopen their economies, low demand from passengers has pushed many carriers to ask the department for permission to stop flying to several U.S. cities under minimum service requirements airlines agreed to in exchange for the $50 billion U.S. government bailout of the troubled sector.

More than 90% of passengers have stopped flying and airlines have pulled down about three-quarters of flights since the start of the pandemic.

U.S. law requires airlines to refund the cost of a ticket in cash if the airline cancels a flight, and carriers are permitted to issue vouchers for future travel in instances in which the passenger opted not to fly. While airlines are following the law, carriers would go bankrupt if they had to make additional refunds, Nicholas Calio, president of the trade group Airlines for America testified before the Senate last week.

In its refund notice, the department warned airlines against misleading passengers about the complex nuances of the law and changing their policies retroactively.

©2020 Bloomberg L.P.