Airlines have long been required to offer passengers a cash refund when their flight is canceled.
Travelers who cancel their own trips aren’t covered, but that must change now that the coronavirus pandemic has ground travel to a halt, a group of Democratic U.S. senators say.
On Wednesday, they proposed legislation that would require airlines to offer refunds to all passengers. Most airlines are only offering vouchers and travel credits to travelers holding nonrefundable tickets who proactively cancel their flights.
“At a time when families are struggling to pay for food, for housing, for prescriptions, it’s absolutely unconscionable that the airlines won’t return this money to consumers, especially after they received a multi-billion bailout from the Congress using American taxpayers’ dollars,” Sen. Ed Markey (D-Mass.), said at a news conference.
Markey introduced the “Cash Refunds for Coronavirus Cancellations Act of 2020′ along with fellow Massachusetts Democrat Sen. Elizabeth Warren, Richard Blumenthal (D-Conn.), Chris Murphy (D-Conn.), and Kamala Harris (D-Calif.)
Markey, Blumenthal and others have repeatedly called on airlines to offer refunds to all passengers who request them during the pandemic, but major airlines have not budged. Markey said discounters Spirit and Allegiant have been more receptive.
“Unfortunately, it is very clear that most airlines won’t do the right thing on their own,” he said.
The senators estimate airlines are sitting on about $10 billions of travelers’ money in the form of future travel credits issued during the pandemic. Markey called that “profiting on the back of American consumers.”
“Returning this money back to consumers would be a significant stimulus to the public,” he said.
Markey said he will push to make sure that the next government stimulus package contains a provision guaranteeing airline refunds for all who request them.
“We cannot continue to bail out big business while only giving scraps to individuals and families in need,’ he said.
Markey and consumer advocates from Consumer Reports pointed to a flood of complaints from travelers frustrated about getting a travel credit instead of a refund. Many said they don’t know when they will travel again given continued public health concerns, rendering a voucher useless.
The U.S. Department of Transportation on Tuesday said it has received 25,000 complaints from travelers about refunds in the last two months. Although many of them are eligible for a refund, they’re having a hard time actually getting one.
Markey said there is a “tidal wave of outrage that is now heading towards the airline industry.
“It’s time for us to play hardball with the industry because the industry is playing hardball with consumers, with passengers, with families that need the money, desperately, that they’ve given over to the airlines for a flight that many of these families will never take,” he said.
Anna Laitin, director of financial policy for Consumer Reports, said the usual refund rules shouldn’t apply during a global health emergency.
“There’s not a difference between a canceled flight by the airline and a trip that a consumer decides not to take because of the coronavirus,” she said.
The legislation would:
- Require major airlines and third-party ticket sellers to offer full cash refunds for all canceled tickets during the coronavirus pandemic, regardless of whether the airline canceled the flight or the passenger canceled their individual ticket
- Permit airlines and third-party ticket sellers to offer travel vouchers as an alternative to cash refunds, as long as that voucher is valid indefinitely and the offer includes clear and conspicuous notice of the flier’s right to a cash refund
- Allow airlines to pay for cash refunds with any emergency money made available by Congress, except for the CARES Act grants designated for supporting worker payroll expenses and employee benefits
- Establish that the new right is retroactive to any flight on or after March 1, 2020, so that passengers who previously received a travel voucher, but have not used it, can ask for a cash refund now
- Mandate that cash refunds be available until 180 days after the end of the nationwide COVID-19 emergency declarations, which will give consumers six extra months of flexibility and peace of mind so they don’t have to travel until they truly feel safe flying again
At a Senate hearing last week, the head of the airline industry trade group Airlines for America said already struggling airlines would go bankrupt if they were required to issue refunds to everyone.
U.S. airlines have grounded more than half of their planes since the coronavirus crisis began and quickly decimated travel. All have reported heavy losses and say travel demand remains anemic, with just 23 passengers on the average flight versus 85 to 100 before the pandemic.