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DOT and Lawmakers Push Airlines for Refunds
Airlines around the world have made it widely known that they have relaxed and changed their change and cancellation policies due to the Coronavirus pandemic. In the United States, however, airlines have not changed their policies when it comes to refunds. This has struck a bad note with some consumers.
The U.S. Department of Transportation (DOT) has seen a spike in the number of complaints from customers regarding ticket refunds. In a normal month, the agency receives around 1,500 air service complaints. This number has jumped to 25,000 over the past two months. Many of these complaints have been in regards to eligible passengers not receiving refunds.
A second warning has been issued to U.S. airlines from the DOT with regards to refunding cancellations, the first having come in April. The initial warning stated that the airlines must change their policies to “make it clear that it provides refunds to passengers if the carrier cancels a flight or makes a significant schedule change.” The issue with this statement is there were no definitions laid out of what constitutes a significant schedule change or cancellation. In an enforcement note sent to the airlines, it was stated that the airlines must develop a reasonable interpretation of these two terms. The other issue not addressed in the first warning was if the passenger cancels their booking.
Most of the major U.S. airlines have been offering flight credits for later use if a customer wishes to cancel a planned trip. Unless the purchased ticket was a fully refundable one, there is no way for a passenger to get their cashback. In a time where the economy is struggling and many people are losing jobs, this is an issue that has been brought up by a group of Democratic Senators.
The group of five senators notably includes Elizabeth Warren, Kamala Harris and Ed Markey. Together, they have created the Cash Refunds for Coronavirus Cancellations Act of 2020. The bill calls for all airlines to offer a refund on any ticket whether the flight is canceled by the passenger or the airline. It was formally introduced to the Senate on Wednesday morning. The idea of the bill is that the airlines have just received a significant amount of money provided to them by the CARES Act that was passed by Congress on March 27, so they should be capable of offering refunds.
In a quote to ABC News, Sen. Markey said, “People are desperate, people need money, people are out of work, people are worried about taking care of their families.”
While the airlines have received this extra money, they were never explicitly told that it had to be used for refunds, and due to the wording of the original warning from the DOT, it is not shocking that the airlines have been somewhat reluctant in giving refunds. Having to issue refunds to all passengers that are affected by the Coronavirus pandemic could be a big blow to the airlines. The offering of flight credits allows the airline to retain important revenue in today’s cash strapped economy. With airlines experiencing a huge drop in bookings, having to offer full refunds means that the airlines would be handing already generated revenue to the customers.
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