Travel Credits Are Not Refunds. How Passengers Are Getting Hosed Even On Refundable Tickets

Customers whose events are cancelling are getting travel credits, often without change fees, from major airlines. While hotels are waiving cancellation penalties and refunding non-refundable bookings, airlines are not.

For a leisure traveler perhaps they’ll use a travel credit for another trip in the future. In most cases they’ve got 12 months from original date of purchase (not date of the trip) to use the credit. For managed business travelers their company may be paying for the booking directly, and is on the hook for trips not taken. But what about unmanaged business travelers who submit receipts for reimbursement after a trip?

One such person is a reader who contacted me. He’s been a United 1K since the late 1990s. His wife recently took a job as director of a hospital. They were to take an international trip together for an international medical conference that’s instead going to be held virtually.

  • They bought refundable business class tickets on United
  • They paid ‘about 30% more’ to fly United because of their loyalty

However they:

  1. Cannot get reimbursed until after a trip has been taken, and this trip will not be taken
  2. Cannot get a full refund, they did not realize the tickets come with a $500 fee per person to cancel
  3. Cannot use two $4000 travel credits personally, and may not be able to use them on reimbursable trips either.

My advice to them is to eat the $1000, and get $7000 back net. Fortunately it sounds like they’re both professionals, with good incomes, and this will not break them. However you can bet that 22 years of loyalty has been flushed and that two United elites will not be sticking with the airline in the future.

Most unmanaged business travelers aren’t buying refundable tickets and are stuck with travel credits and perhaps no reimbursement. They’ll have to use the credit either for a future business trip or a personal trip, rather than seeing any money back now.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. […] Almost always, travel reservations are more expensive when you want the ability to refund them. Go look at any airline, and compare the prices for refundable tickets against nonrefundable tickets. Still, if you’re worried you might need to cancel the trip, there’s definitely a case to be made. Just like an insurance policy, you’re paying a little extra, to make sure you have peace of mind. What about buying refundable tickets when you’re traveling for work? […]

Comments

  1. They paid 30% premium due to loyalty but at someone else’s expense.
    Eat the $1,000 and go home with your tail between your legs.

  2. @ Gary — Credit card disputes are the first line of defense when companies attempt to rip you off.

  3. This is the time for an airline to shine and step up. Or they can continue with their collective “Screw the pax” approach. And we need to provide another bailout for the airline industry in 2028, but then for $100 billion.

    Maybe it is time to rethink how airlines treat their pax.

  4. I always thought you could cancel without fees if the airline changes the time of your flight? Most airlines are moving people to different flight times because of cutting down flights. Not saying their flight has yet, but I was waiting for airlines to change or cancel my flights themselves for my travel over a month away.

  5. If it’s refundable why can’t you get all your money back, I’ve started to book a lot more refundable tickets on UAL because its not much more to book and it gets me more flexibility because i got tired of paying 200 change fees, the difference on AA is a lot more for refundable.

  6. If they actually bought fully refundable tickets, they could have gotten a full refund as per the fare rules. They didn’t do that at $2000 per person roundtrip for international business class, hence the $500 fee to cancel. It’s not United’s fault that the customer didn’t know that the fare was not fully refundable.

    Otherwise, If they are so loyal to United, they can certainly use the $4000 credit personally or for business travel. United even extended the ticket validity to 15 months, rather than 12, to give people more time to use their travel credits.

  7. Something doesn’t seem right about this story? The most a fare class charges for international cancellations is $400 per United’s website. For a “refundable” business class ticket to be charged $500 each? Unless they bought two one-ways and the cancellation is $250 per person per way. In which case it definitely is NOT a refundable ticket.
    Something isn’t adding up.

    Basic Economy – Not permitted
    Non-Refundable -$200 for domestic flights and up to $400 for international flights depending on fare class
    Refundable -$0

    Am I the only one that thinks something is missing here?

  8. Although I have sympathy for the couple, agree with @Sam here. Many business class fares allow refunds with a fee. I know most people don’t read the rules, but they’re in there and I think providing travel credits instead of charging the fee is a fair balance.

    My company has the same requirement and I had several tickets to cancel. I work for a large tech company and we now have a published COVID exception to this rule that allows for reimbursement upon demonstrating that we were given travel credits as opposed to a refund and pledge in writing to use those travel credits toward future business travel. I know not all companies will have written exceptions, but if they haven’t already, it’s worth reaching out to whoever controls expense policies and asking for exceptions. In extraordinary times like this, employers should be willing to bend rules like this in situations where the employee has no control and is out of pocket.

    If I were to lay blame here, I would put it on the employer if they’re completely unwilling to work out a solution. These are reimbursement policies that make sense under normal circumstances, but do not today. It’s not just the airlines who need to show flexibility.

  9. @Gary – I have 6+ trips I will have to cancel, all on the same airline (AA). Most are for events that will not get rescheduled. Do you know whether I will able to combine the “credits” from multiple trips to purchase a single new trip, and/or to purchase a flight for a family member? Or is this really just no change fee for each booked reservation (where presumably I pay any fare increase, but if my original ticket was no refundable don’t get back the difference for any decrease)?

  10. Had booked an April trip to Madrid with 2 components – award travel JFK-MAD in business, and PBI-JFK in paid first class. All legs on Delta. When the event cancelled, I called Delta to cancel.

    No problem. The representative worked for about 2 minutes. All reservations were cancelled, the paid portions were refunded to Amex (both fares and taxes on the award travel), and the miles were redeposited.

    So, it seems that the issue is airline specific. Their first mistake was paying a premium to be loyal to United.

  11. I’m curious, Hospital Director, unmanaged travel arrangements? Why doesn’t she have a Corporate credit card provided by the Hospital Corporation/Group? Why did they use their personal funds? As one who works in such settings, this is difficult to believe. If they’re awaiting reimbursement, in times such as these the companies will usually make an exception due to extenuating circumstances. If the hospital is too small of an organization to have such options (Community, County, City, Not for Profit), they likely will not have paid for such travel expense in whole due to expense caps. I feel there is more to the story.

    Just my $0.02

  12. Wow, I wasn’t aware companies wouldn’t reimburse travel expenses until the trip actually took place. I had to cancel a $4,500 ticket to South Korea but I was re-imbursed back in January when I bought it, and the travel credit is just sitting in my United account.

    If you’re worried employees are going to game the system and buy tickets, cancel them, and use the credit for non-work purposes, just issue corporate cards?

  13. It seems that WN have stepped up a bit inasmuch as they have extended the expiration of travel credits until next June, regardless of purchase data. Not as good as a refund, but an improvement nonetheless.

    AA, so far not so much.

    Cheers.

  14. @Retired Lawyer
    No, the first mistake was being loyal to United, period.

    This is from experience.

  15. It appears that United is not crediting charges for seat preference upgrades either, only the cost of the basic economy ticket plus taxes.

  16. We canceled our tickets to Shanghai on Hainan and eventually got our fares fully refunded, and substituted a March 13 flight JFK-BRU flight on Icelandair.

    We’d already repositioned to NYC from our home near SEA when we ultimately decided to cancel our March 13 flight. We now are among hundreds if not thousands of unhappy customers (just check out their Facebook page).

    Their recorded phone announcement (“We’re not taking any calls”) initially asked customers to get in touch with them via Facebook or Twitter, and the results have predictably been chaotic.

    We learned after several hours of effort getting through that Fl will not offer a flight credit, but instead:

    1. Only one rebooking to be chosen immediately,
    2. To be completed by August 31 (later amended but apparently not retroactively),
    3. To be in the same fare class, which with its suspiciously high fares would have effectively more than doubled our Saga Class sale fares, making them more expensive than some of the majors’ flatbed fares

    Of course there’s no guarantee that the world will be back to normal by then. We’d also be facing another repositioning flight to JFK. We see it as throwing good money after bad. Instead, the Icelandair says they’ll refund “some” of the fees and taxes, which will end up being about 10% of the total fares paid.

    The airline subsequently canceled one of our return flights BRU-KEF, a possibility we’d also considering when deciding not to fly.

    Oh, and they’re touting the fact they’ve “waived change fees” as part of their “Peace of Mind Policy.” The irony!

    I’ve made complaints along with a lot of other customers, including to our credit card company, but don’t expect much to come of it.

    What’s funny is that we probably wouldn’t even have used a flight credit, but we could have considered it out of SEA, and we would have considered it a satisfactory goodwill gesture. We’re AS 75Ks but don’t intend to fly Icelandair again.

  17. We just made our way back from Montevideo to Boston via Miami. We had cheap J flights Miami to Cordoba Argentina. Nonrefundable, and I knew that going in. We were due back from Cordoba to Miami on 29 March. While in Jose Ignacio Uruguay last weekend I noticed the Argentine border start to rumble closed. I also noted that Uruguay was closing bars and restos as of Sunday 15 Mar. I reached out to AA plat line (I am life plat). Took several calls but got thru multiple times to friendly, competent people.

    All change fees were off the table. AA moved us to MVD to MIA on Monday 16 March. Difference in fare was $600 per person, so a no brainer. The flight went off 5 hours late, they had to dead head a crew down from MIA who then needed rest. When we got to MIA there was no line at immigration, and the TSA just waved us thru for the domestic leg. The Admirals Club was down to shrink wrapped food and half staff (flagship lounge) but still a welcome respite from the madness of the concourse where all bars were open and people were celebrating St Paddy’s day.

    All in all, our escape from Uruguay was smooth and easy. The people at AA were great, the Plat line fantastic. I especially appreciate the FAs and pilots who dead headed down to get our flight back to MIA. They did not need to do that and they got plenty of exposure. I am grateful for their dedication, not sure I would have gone that extra mile were situations reversed.

  18. Right now the cruise lines are offering 100% cash refund or 125% future cruise credit for those passengers on canceled cruises. Could this work in the airline industry in some cases?

  19. All the airlines need to do (and are doing) is say the cancellations are “beyond their control.” If so, you are lucky to get future flight credit. Nevermind that AA, for instance, will expire that credit a year from the ticketing date, so badically free money for them.

  20. @retiredlawyer. Yes you should be able to get a refund from RENFE. I can remember buying tickets on RENFE out of MAD to several places and seeing their refund policy.
    Good luck.

  21. Retired Lawyer says:
    March 20, 2020 at 9:23 am
    Does anyone know if I can cancel the rail component Madrid-Córdoba on RENFE?

    Yes, you can. I just cancelled Madrid-Granada-Madrid for May 2020 on Renfe yesterday. They promised me a full refund. Just log into their website, pull up the trip, and hit cancel.

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