US AIRLINES are estimated to be sitting on more than US$10 bil (RM43.9 bil) in travel vouchers that should have been cash refunds from cancelled flights, a group of senators released a statement on Friday.
Many US airlines are cancelling between 60% and 80% of their flights, and under federal law passengers on those flights are entitled to full refunds, Senators Ed Markey, Elizabeth Warren and Richard Blumenthal said in a statement.
“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,” they said.
The Democratic senators had asked Alaska Air Group Inc, Allegiant Air, American Airlines Inc, Delta Air Lines Inc, Frontier Airlines, Hawaiian Airlines, JetBlue Airways Corp, Southwest Airlines Co, Spirit Airlines Inc, Sun Country Airlines, and United Airlines Inc to each provide details on their refund policies during the pandemic.
In the airlines’ replies, which were reviewed by Reuters, most did not share the total value of the travel vouchers and credits they have issued during the pandemic.
But JetBlue, which has 5.5% of the domestic market share, said it issued over US$20 mil per day of travel credits to consumers in the first few weeks of March.
“Assuming a similar trend throughout the industry over the last month, this figure could mean that the airlines are sitting on more than US$10 bil in customer cash,” the lawmakers said, while inviting airlines to provide more information if they dispute the figure.
According to their findings, airlines are offering cash refunds when the company itself cancels a flight, as required by the US Transportation Department, but only Allegiant and Spirit are offering refunds to passengers who voluntarily cancel their own tickets.
“None of the biggest carriers with the most revenue, including United, American, Delta, and Southwest, offer similar refunds,” it said.
In their replies the airlines generally said their policies are consistent with DOT guidelines.
Sun Country, a Minnesota-based ultra low-cost carrier, said refunding all of its non-refundable tickets outside of DOT guidelines “would put the company’s future at risk.”
Among replies by larger carriers, Delta said it had processed over 1 million refunds totaling more than US$500 mil in March, for passengers that had requested a cash refund for flights that Delta cancelled or changed.
American Airlines said in its reply that over 90% of the customers who were offered a refund for flights the company itself cancelled chose that option over a travel voucher.
If passengers do not specifically request a refund, they are issued a travel voucher. While many airlines have made the vouchers valid for up to two years, some airlines’ vouchers expire within one year. – April 20, 2020, Reuters
