Editor’s note: this post was updated reflecting that the generous cancellation policy has been extended until April 30
There’s a lot of debate right now about how airlines should go about refunding the millions of dollars that passengers want back for trips they’re no longer taking.
The coronavirus outbreak has forced people around the world to stay home. Those with tickets want their money back. Those who want to travel in the late spring or summer are hesitant to book, not knowing when the pandemic might end.
That’s creating a giant cash crunch for the airlines, even with the prospect of a massive government bailout.
As TPG’s Zach Griff pointed out in this story, for flights within the U.S. or international ones departing from or arriving into the U.S., passengers are entitled to a full refund if the flight is canceled for any reason.
But that’s the last thing any airline wants to do right now as they try to keep cash in their coffers.
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Here’s where it gets interesting. All the major airlines have come out with pretty generous travel waivers, allowing passengers to change flights without paying a fee for travel, say, through May 31. (The policies differ by airline but you can see the latest ones in our frequently-updated guide.)
Yet the airlines aren’t canceling flights through May 31, even if they’ve announced capacity cuts on dozens of routes.
So instead of being able to demand a cash refund (well, most likely a refund back to your credit card), passengers are left with vouchers good for future travel on that airline. And those vouchers come with many strings (outlined here), including expiration dates. In some cases, they expire within a year of the initial ticket purchase.
This leaves the airlines with an interest-free loan from passengers, some who may never use those vouchers again.
Many airlines are steering passengers toward vouchers — even travelers are eligible for a refund — by offering them bonuses to leave their money with the airline.
Interestingly, Canada just backtracked on some air traveler consumer protections, including allowing airlines to offer vouchers instead of refunds. Luckily for Americans, the U.S. government’s policy still provides refunds for flights between the two countries.
And for award tickets, there’s an entirely different set of rules guiding refunds. Generally, you can cancel a flight for “free” but have to pay a fee — which can climb as high as $150 a ticket — to redeposit the miles into your account. Top-level elite members will usually have that fee waived.
Some airlines are waiving those fees for cancellations due to the COVID-19 coronavirus. TPG’s Nick Ewen has created a full guide here of all the major carriers. And most of the airlines that are waiving the fees are only doing so for bookings that match the window of their overall travel waiver.
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We’ve had a lot of criticism recently for Air Canada’s spun-off loyalty program Aeroplan. For one, they have had ridiculously long wait times on the phone.
But I found the current coronavirus mileage policy extremely generous.
Back in August, I found great availability on some nonstop, TAP Air Portugal flights in business class. (Yes, we plan out our vacations many months in advance.) My wife and I booked TAP’s Airbus A330-900neo from Newark (EWR) to Lisbon (LIS) and the Airbus A321LR from Porto (OPO) back to Newark. In all, I transferred 220,000 American Express Membership Rewards to my Aeroplan account to reserve the two business-class tickets on TAP — booked as two one-way itineraries as availability opened up.
We were supposed to be gone May 1-8, but with coronavirus cases still climbing in my hometown of New York and in Europe, I decided this week to cancel the trip.
Aeroplan’s coronavirus policy allows passengers to cancel any award flight, for any date, for free. That includes award tickets on partner airlines, like my TAP flights. You get all the miles back without a redeposit fee, plus a full refund of any associated taxes, fees and surcharges. But would the actual process of canceling be as straightforward?
Fortunately, the return flight from Porto (OPO) to Newark (EWR) was really easy to cancel online, and the miles posted instantly back into my account.
But for the other leg — from Newark (EWR) to Lisbon (LIS) — I had a problem. The ticket had been issued when I booked, but now it was showing up as not having been issued. That meant I couldn’t cancel online. (It turned out that TAP had already canceled that flight, hence why my ticket was no longer valid.)
I called up Aeroplan and prepared to wait and wait and wait. I even joked to a co-worker that I might be waiting longer than the flying time from New York to Portugal.
Thankfully, after 27 minutes on hold, I got a representative. She was nice, professional and really helpful. Eleven minutes later, I had my miles back for that leg too.
All in all, this was a relatively painless process, and I’ll look forward to rebooking these flights in the future. It’s worth noting that this policy is in effect for all cancellations made before April 30 (though I wouldn’t be surprised if it got extended).
I wish other airlines would take note of the strange times we are in and offer such flexibility. I know October and November are far away, but there might be some travelers who want or need to cancel trips now because of coronavirus — even though it will hopefully be under control by then.
Whatever moves airlines make now will stick with passengers long into the future. Airline executives will tell you that most travelers book only based on price and schedule. That’s probably true. But how the airlines act now will be remembered by the loyal passengers, the frequent flyers and those who are willing to spend heavily when air travel resumes.
Featured photo by Alex Kraus/Bloomberg via Getty Images
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