Airlines Ordered to Refund Cost of Flights Canceled by Virus
Airlines Ordered to Pay Refunds for Flights Canceled by Virus
(Bloomberg) --
Airlines must fully refund airfare to passengers whose flights have been canceled during the outbreak of Covid-19, the U.S. Transportation Department ordered on Friday.
It is receiving a growing number of complaints from people who say airlines have refused to pay refunds after flights were canceled, the agency said in a press release and an enforcement notice.
“The obligation of airlines to provide refunds, including the ticket price and any optional fee charged for services a passenger is unable to use, does not cease when the flight disruptions are outside of the carrier’s control,” the agency said.
The directive applies to domestic and foreign airlines for flights to, within, or from the U.S. People are also protected when an airline “makes a significant schedule change and the passenger chooses not to accept the alternative offered by the carrier,” according to the department.
The European Union on Wednesday issued a similar statement, saying EU law requires reimbursements to be made within seven days.
“Airlines must refund canceled flight tickets,” EU Transport Commissioner Adina Valean said in an emailed statement. “They can of course also offer a voucher but -- and this is very important -- only if the customer agrees to accept this.”
The U.S. order threatens to add more financial strain to an industry that is facing severe challenges from a dramatic plunge in demand even as it prepares to start receiving $50 billion in loans and payroll assistance payments contained in a government bailout package.
As of Thursday, passenger traffic had fallen about 95% compared with a year ago, according to the Transportation Security Administration. Only 124,021 passed through security that day compared with 2.4 million on the equivalent weekday in 2019.
In response, airlines have canceled thousands of flights a day and cuts are expected to remain for weeks or longer. Many carriers are applying for federal aid as demand evaporates.
The Transportation Department’s action came after a group of consumer advocates contacted the agency and asked it to intervene, said Charlie Leocha, president of Travelers United.
U.S. regulations are very clear that when an airline acts to cancel or delay a flight on its own -- as opposed to when flights are delayed by weather -- the carrier is responsible for repaying passengers, Leocha said. Most travelers don’t know their rights, however, he said.
“They are taking advantage of the fact that 87% of the passengers only fly once a year and they just don’t know all the minutia of the rules and regulations,” Leocha said.
United Airlines Holdings Inc. is one of the carriers that accounted for some complaints received by Travelers United, Leocha said.
In an emailed statement, United said eligible passengers can request a refund its website or by phone. The company has taken numerous steps to be flexible for passengers during the crisis, such as by waiving change fees, it said.
“We are proud of the role our company and our employee play during this crisis and continue to operate to nearly every domestic destination as well as six international markets across the globe including our partner hubs,” the company said.
In both the U.S. and Europe, the rules are different for people who opt to cancel travel themselves. In those cases, airlines may offer vouchers, but are under no obligation to refund the cost of the ticket.
In the U.S., passengers have been told by airlines they would only receive vouchers or credits for future travel, the DOT said in the release.
The rules requiring refunds have been in place for decades, according to DOT. They have been enforced after previous disruptions to the aviation system, such as the Sept. 11, 2001, terrorist attacks and Hurricane Katrina in 2005, the agency said.
The trade group for major carriers, Airlines for America, issued a statement Friday saying its members are working closely with the government and Congress during the virus emergency.
“Since the early stages of the crisis, carriers have worked to increase communications with customers, as well as introducing travel policies to accommodate passengers during this health crisis,” the group said in a statement.
The trade group didn’t directly address the extent to which U.S. airlines have been unwilling to make refunds or whether any carriers are changing their policies.
Initially, the government is giving airlines the opportunity to comply with the law on their own, the Transportation Department said. “However, the Aviation Enforcement Office will monitor airlines’ refund policies and practices and take enforcement action as necessary,” it said.
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