Airlines are cancelling flights and downsizing their operations because of the global coronavirus pandemic. When they don’t fly the flights they’ve sold, they have to refund customers’ money.
The European Union’s rule 261 applies and requires these refunds. The E.U. reiterated that last month. However European airlines have been ignoring this and not processing refunds, at least for their European customers.
The U.S. reiterated that airlines have to refund tickets for cancelled flights, and threatened fines if they do not. European airlines have been generally willing to refund tickets for flights to and from the U.S. I had no problem getting a refund for cancelled KLM tickets.
The airline trade association IATA objected to the refund requirement saying airlines should be able to keep the money because they need the money, and therefore should be entitled to no interest loans from customers providing only vouchers for future travel instead.
Now 13 European nations are asking to change the rules to allow airlines to keep their customers’ money despite not providing the services customers purchased.
Belgium; Bulgaria; Cyprus; Czech Republic; France; Greece; Ireland; Latvia; Malta; Netherlands; Poland and Portugal all argue,
- Returning cash is hard on airlines
- Rules requiring refunds were written without considering the circumstances of this pandemic
These nations collectively are asking for EU261 to be amended offering a wavier of the refund requirement.
Nearly all law and regulation was written without considering the circumstances of this pandemic. And the current situation we’re in certainly shows that many rules make no sense. For instance, laws limiting health care competition and preventing addition of new hospital beds and rules that stood in the way of virus testing seemed to make little sense. Rules that prohibited restaurants from delivering alcohol have been waived in many jurisdictions.
Does it make sense to let airlines keep consumer cash? They’re facing challenges but so are individual customers who may have lost their jobs, may have gotten sick and won’t be able to travel, and won’t find vouchers useful with changing airline flight schedules and where the airline whose voucher they have may not be offering them the best deal in the future.
Of course airlines want to keep money, and build in a constituency of people hoping their airline script is worthwhile and therefore support further government bailouts. In fact the letter from these 12 governments explicitly calls for these bailouts,
Moreover, as consumers are offered vouchers with a long-term validity, it is crucial to discuss ways to protect voucher owners against the risk of bankruptcy of the airlines that issued those vouchers. We are ready to explore this on a European level and call upon the Commission to take this aspect into account.
However if airlines do not have enough money to continue operating without stealing customer cash then they are essentially bankrupt and should be restructured. Customers shouldn’t be forced to become unsecured creditors without the protection of an administrator.
As I have previously stated, the U.S. Senate should step-in immediately to support U.S. consumer laws and DOT/FAA policies requiring full refunds in lieu of worthless vouchers. The EU Carriers may be able to blow past EU 261 regs; however, if they attempt to do so after 15 May, the U.S. Senate, working with DOT/FAA, should revoke their landing rights until all American passengers have been fully refunded-no ifs, ands, or buts.
Senator Ted Cruz chairs the Senate Sub-Committee on Aviation, and would have no problem implementing this program to protect Americans. With Lufthansa requesting bailouts from the EU countries it operates their national carriers, and BA preparing us for a hard fall, why should we be stuck with interest fee funds payable in vouchers that could become Charmin if these carriers belly-up.
@ Gary — YOUR. BEST. HEADLINE. EVER.
@ M.E. Singer- I would generally agree with you…With a huge “Yeah, But”…
Should the market forces do its job and put airlines out of business, what’s then? Rest assured, all these points, and miles, and aspirational first/business class redemptions, and perks, and free breakfasts, etc, etc, etc. (and, last but not least, all these bloggers and influencers) are done with for a long time….We then will go back to one vacation to Florida every few years IF we are lucky…..Will travel as we knew it ever rebound? Of Course! In 3-5 years from now in best case scenario….
“However if airlines do not have enough money to continue operating without stealing customer cash then they are essentially bankrupt and should be restructured. Customers shouldn’t be forced to become unsecured creditors without the protection of an administrator.”
Bravo.
I fully disagree. This is an unprecedented crisis. The sheer number of cancelled flights (through no fault of the airlines) upends the assumption that airlines should have the liquidity to reimburse customers for cancelled flights. To put it another way, it is not reasonable to expect airlines to have the cash to make as many refunds as they would be required to make under these circumstances. If a customer bought a non-refundable ticket and the airlines are willing to waive penalties for cancellations, then customers should not be complaining about receiving credit. I’m probably sitting on $3000 of tickets for 2020 travel that we won’t use. I am perfectly happy to use that to pay for my family’s 2021 travel. Some airlines have extended validity to 2022 and I expect more will do so if conditions warrant. Bottom line, airlines are fighting for survival and it is not reasonable to expect a refund from a pool of cash that simply does not exist and does not exist through no fault of their own.
Scrip
@Gary: Just curious — how have you dealt with the this issue in your award booking business? I assume that plenty of people paid you to help book award flights that they will never take. Did you reimburse those costs? (We have a holiday rental apartment which had many bookings for the upcoming year, all of which we’ve reimbursed without question).
I wonder if this is going to affect how early/last minute people will book travel plans in the future. Will travelers be less inclined to book early?
It is scrip not script FWIW, maybe nothing. I’m still lacking understanding why the airlines don’t offer refunds in miles at a penny a mile. Rather than trick or blackmail customers, why not entice them?
Simply put – if airlines are allowed to change the rules of contract retroactively and keep the money – why would anyone ever buy a ticket in advance for future travel, again? In fact, why would anyone ever buy any future service and pay in advance, again? I for my part will only buy a ticket in advance again, if circumstances impose so, at least for long-haul travel. Living in Europe, I will probably travel more by train, from now on, anyways.
The parties trying to protect companies from long-allowed litigation (including litigation over employee and customer health and safety being compromised by companies) and from enforcement of long-held contract rules should be opposed tooth and nail by the general public.
If they would offer vouchers at, say 130% of value, I’d consider that. Even Ticketmaster are offering that (for Live Nation promoted events and Live Nation venues) at 150%. I’ll take that any day.
But offering at only 100% is not attractive.
Cheers.
@brp TAP Portugal is currently offering vouchers at 120%. I am waiting for them to officially canfel flight to try for refund as no confidence they will be around in 2 years or that travel will be normal then.
@Tom,
Thanks. Most of our stuff is with AA (usually AA vacation packages). I’d welcome it from them as I know they will be around 🙂
Cheers.
Plain and simple. AIRLINES ARE STEALING OUR MONEY. Where are the cops. This is no difference to someone putting their hand into your purse and taking out your hard earned cash. Theft. Pure and simple.
It’s theft plain and simple. I booked a flight and it was cancelled the next day. Haven’t even got a voucher yet (even if I get a voucher it is completely useless to me- I never fly Turkish Airlines). If I started any other business taking money for a perceived service and keeping the money and running with it, I would be in jail. Why aren’t governments on our side. Yes there will be airlines going bankrupt. Is it customers fault? Should we be penalised? Of course not. I’ve got a family to feed just like they do. The big guy is stealing from the little guy trying to stay alive. That’s not ok.
Airlines are shooting themselves in the foot by not giving refunds. I feel very insecure about buying a ticket now because I feel like I’m going to get robbed for the 3rd time. I’m expecting the flight to get cancelled and my money to be withheld indefinitely (again). How can I return home? I’ve been stranded for 4 months. A swim across the Pacific seems a more sure bet.