Senators Markey, Blumenthal, Warren, Harris Reveal, After Bailout, Airlines Sitting on Customers’ Billions but Refuse to Give Cash Refunds During Coronavirus Pandemic

 

Lawmakers’ investigation found that most airlines still refuse to offer cash refunds to customers who cancel their tickets during the current public health emergency

 

Washington (April 17, 2020) – Senators Edward J. Markey (D-Mass.), Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.), and Kamala Harris (D-Calif.) today released their findings from an investigation into the consumer refund policies of the airline industry during the coronavirus pandemic. The Senators received this information after leading a group of their colleagues in a recent letter to eleven major domestic airlines, demanding that each company issue full cash refunds to all customers who cancel their flights during the ongoing public health emergency.

 

Although airlines are already required under federal law to give full refunds to customers who request their cash back after the company itself cancels a flight, travelers who cancel their own tickets during the coronavirus crisis are only receiving airline credits. Unfortunately, these travel vouchers do the public little good in this time of emergency, when Americans need money now to pay for basic necessities such as food, housing, and medical care.

 

“The ongoing pandemic is placing enormous financial strain on millions of Americans. In light of this pressing need, and the unprecedented multi-billion-dollar bailout that the airline industry just received from Congress, we are absolutely outraged that so few airlines are willing to offer real cash refunds to consumers who must cancel their tickets,” said the Senators in a joint statement. “Although most companies refused to say just how much money they are sitting on in the form of travel vouchers, we estimate that the airlines could be holding onto over $10 billion of hard-earned money from American travelers. If these companies released that money back to the public, it would provide a significant stimulus for struggling families. That’s why we once again urge the airlines to end their anti-consumer policies and offer real refunds during this emergency.”

 

All of the airlines’ replies can be found HERE.  

 

The Senators’ overall findings from the airlines’ responses include:

  • Although every airline is offering cash refunds when the company itself cancels a flight, as required by the Department of Transportation, only two airlines – Allegiant and Spirit – are offering refunds to passengers who voluntarily and proactively cancel their own tickets during the coronavirus crisis.

  • Notably, none of the biggest carriers with the most revenue, including United, American, Delta, and Southwest, offer similar refunds.

  • These policies force many consumers into a waiting game, where they have no choice but to either accept a travel voucher or hope the airline eventually cancels the entire flight so they can get their cash back.

  • Most airlines refused to share the total value of all travel vouchers and credits they have issued during the coronavirus pandemic.

  • However, JetBlue indicated that it issued over $20 million per day of travel credits to consumers in the first few weeks of March.

  • Based on JetBlue’s 5.5 percent share of the domestic market, and assuming a similar trend throughout the industry over the last month, this figure could mean that the airlines are sitting on more than $10 billion in customer cash, instead of returning this significant sum of money to the American public.

  • If airlines dispute this exact figure, the Senators welcome more information from each company, which know exactly how much of their customers’ money they are currently holding onto in the form of travel vouchers. Most airlines have refused to share this information to date.

  • Only one airline – Hawaiian – is offering cash refunds to passengers who proactively cancel their tickets but then subsequently have their flight cancelled by the airline itself. Passengers that canceled their tickets on other airlines are stuck with travel vouchers even if their flight never takes off.

  • American Airlines reported that over 90 percent of its customers that were offered a refund for flights the company itself cancelled chose that option over a travel voucher, highlighting the public’s clear need and preference for cash refunds instead of airline credits during the coronavirus emergency.

  • Many airlines are now cancelling between 60-80 percent of their flights. Passengers on those cancelled flights are entitled to full refunds under federal law. However, many airlines have been obfuscating this right by offering travel vouchers as the default option, requiring passengers to take burdensome steps to request refunds instead. In some cases, only travelers who know to ask for a refund and not accept the default voucher are able to receive their cash back.

  • While many airlines are issuing travel vouchers valid for up to two years, some airlines are making their vouchers expire within one year, which is an insufficient amount of time due to unknown duration of stay-at-home orders and the disruption that Americans can expect to continue even after the dangers of travel subside.

 

The Senators’ original letter can be found HERE. A copy of this letter was sent to the following companies: Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines, Sun Country Airlines, and United Airlines.

 

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