American Airlines has just sent back $900,000 in taxes to AAdvantage members who redeemed award tickets, and were overcharged. These were tickets where a child was traveling, where lower taxes applied to child travel, but American billed the full adult rate. I bet most of them did not even know that they were overcharged in the first place and certainly don’t know the story of how their refund came out.
The Department of Transportation, in a new order, tells the story.
- American was overcharging taxes for travel to or from 14 different jurisdictions that apply a lower charge to child passengers but the airline was charging the full adult rate. These are Antigua and Barbuda, Australia, Belize, Cayman Islands, China, Colombia, Greece, Hong Kong, Italy, Japan, Saint Kitts and Nevis, Saint Lucia, Trinidad and Tobago, and the UK.
- American claimed it was all a mistake, that they didn’t keep the money for themselves, but that they were only submitting claims for overpayment to the relevant taxing authorities on behalf of customers when passengers asked them to do so.
- In the case of the Japanese overcharges, they actually argued it was up to them whether the higher taxes were due from their customers and they decided to charge AAdvantage members more.
American explains that the determination of whether the 50 percent discount applies turns on whether the child is traveling on a “child fare ticket.” If not, the full rate of the J-PSFC is applicable and is to be collected by the carrier.
American asserts that the issue of whether a ticket is a “child fare ticket” is left to the carrier’s discretion. American states that it does not consider award travel for children to be a “child fare ticket.” Therefore, American argues that it properly collected the full J-PSFC.
On April 17, 2015, Mike Borsetti filed a formal complaint with DOT because he was overcharged taxes on award tickets from Italy and also Japan, and that he noted they were overcharging on coach awards out of the UK as well. The airline said they fixed all of this at the time.
The DOT Office of Aviation Consumer Protection says that American violated the law by misrepresenting the amount of taxes due with their award tickets. However, “American has issued refunds to all passengers affected by the overcharges, in the amount of over $900,000.”
According to DOT, American stopped overcollecting taxes by May 2015. That’s not correct because I wrote about them still doing it on UK coach awards in 2016 and they acknowledged the issue at that time.
Because it took the federal agency 11 years to reach this stage with the Borsetti complaint (“because of the significant amount of time that has passed since the incident occurred”) they “have determined that enforcement action is not warranted.” It pays for an airline to run out the clock!
I had previously written about American imposing illegal fuel surcharges on British Airways Hong Kong tickets, where they committed to refund customers the overcharge. This is a different, separate, overcharge issue. It’s funny how often these run against the customer.
Mike Borsetti is the reason that American Airlines publishes their full fare rules on their website, and has a current complaint with DOT over the airline’s policy of downgrading passengers and only giving partial credit for the difference between first class and coach.
The sometimes-commenter on this blog is mentioned in the DOT order approving the American-Qantas joint venture. And he’s successfully forced United to return transferred points when they induced a transfer by showing award availabiltiy that wasn’t actually bookable.
I do wonder whether DOT should just accept that American has processed all $900,000 in refunds, though, since after many years original form of payment is likely no longer valid for many of the affected customers. I’d want actual certification that this was completed. But if you got a surprise refund from American out of the blue, this story may explain it!
The DOT isn’t enough. We need bipartisan legislation to reign-in the greed of corporations in the transportation industry. It happened before when railroads and steamships took advantage of their passengers. We need an EU261 equivalent as a baseline in the US, including duty of care (overnight accommodations, meals) and compensation for excessive delays and cancellations under their control. We also need price transparency, no more junk fees, and to ban AI surveillance in marketing. At the very least, bring back Rule 240. We deserve so much better.
I had at least a dozen J & F award flights NYC to/from/via TYO, HKG & PVG in which I traveled with a lap infant and/or child pax between 2009 and 2016. I also had Y to J SWUs for same pax & routes. I also have a bunch of HKG, PVG & TYO to elsewhere in asia awards for same pax. I haven’t had a penny refunded to me. I likely used my long gone SPG card back in those days. I can probably find PNRs.
So, Obama, Trump (part I), and Biden administrations couldn’t fix this. True bipartisan failure.
@1990 – Rule 240/120.20 is technically still part of IATA’s ticketing regulations. Its the fact we’ve gone from paper tickets to e-tickets where there’s a technical issue. Airlines have to have an interline E-ticket agreement, and of course space, do to that. And airlines have to WANT to reissue the ticket as an INVOL and push it over to the operating carrier.
Except, due to cost savings, airlines have now blocked this. Its a 2 second entry in a system like Sabre, but the airlines purposely make it difficult, if not impossible, for your gate or counter agent to do it. I think America WORST started the process when they migrated everyone off Shares and into QIK, err SLO overlay. It literally takes an agent 4 minutes to rebook, reissue, and send the passenger on their way, while a USAirways Sabre agent can do it under a minute.
But hey, we’re told to worship Scott Kirby and Poug Darker.
What an awful AI-generated pic. The woman’s index finger is longer than her middle finger. Just use some stock pics.