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American airlines are slated to receive $12 billion in grants as part of the $1.9 trillion stimulus package now making its way through Congress. That is on top of $34 billion the companies received in 2020.
Certainly, the airline industry — along with the entire travel sector — took a big financial hit when the coronavirus prompted governments to restrict flights and most people stopped traveling. Federal funding in two coronavirus relief bills helped to reduce the number of layoffs of airline employees.
Yet, the industry is seeking the additional help as it sits on billions of dollars worth of unused tickets. When the pandemic hit in the spring of 2020, many travelers put their plans on hold, often to comply with public health safety guidelines. If an airline cancels a flight, would-be passengers are entitled to a refund. But, if the passenger proactively cancels their plans, they often are not.
This has rankled consumer advocates because many people who canceled their travel plans were following public health recommendations to avoid all but essential travel as the pandemic worsened in the U.S. and other countries.
“This is a national emergency. To apply rules put in place before [the pandemic] is wrong,” Consumer Reports aviation adviser William J. McGee said in May. “If you want a voucher, great. But everyone who wants a refund should be entitled to get it, whether or not the flight was officially canceled.”
If a flight was not canceled but travelers changed their plans — to comply with state, federal and international health guidelines or because events were postponed or canceled, for example — they likely received ticket credit for future travel rather than a refund.
These credits allow the airlines to hold on to the money paid for tickets while giving passengers a year or two to use the credit amount for future plane trips.
In the early days of the pandemic, many airlines eased their cancellation rules and extended the expiration date for tickets credits to two years and waived ticket change fees.
More than half of those ticket credits are set to expire this year. If the credits are not used, the airlines keep the money.
Airlines don’t report how much money they hold in ticket credits or how many of these credits expire.
In a typical year, airlines hold up to $24 billion in unused ticket credits, travel advocate Christopher Elliott wrote last month. But in 2020, cancellations more than tripled, which means the airlines likely have even more ticket revenue they are holding on to.
In a typical year, according to Elliott, between 5 percent and 10 percent of these credits go unused.
But, with the disruptions caused by the pandemic — lost jobs and income, concerns about air travel and events that were canceled — a higher percentage of ticket credits are likely to expire without being used this year and next. That could leave airlines with a consumer-funded bailout.
Consumer Reports was among groups that pushed for a law change to require airlines to offer refunds in times of emergency, such as the COVID pandemic.
Rep. Chellie Pingree was one of 46 co-sponsors of the Cash Refunds for Coronavirus Cancellations Act, which would have required air carriers to offer full cash refunds for all cancelled tickets during the COVID-19 emergency period, regardless of whether the air carrier cancelled an entire flight or the passengers cancelled their individual tickets. Under the bill, which was introduced in May, air carriers and ticket agents could offer alternative forms of compensation, including credit, or vouchers, provided that they did not expire. These offers needed to include “a clear and conspicuous notice” of the passenger’s right to a cash refund.
The bill, which was introduced but died in the House of Representatives, would have allowed passengers who had already received an alternative form of compensation for cancelations during the pandemic emergency to request a cash refund to replace the alternative compensation.
A similar bill has not been introduced in this Congress. It should be. Pairing such legislation with more taxpayer support for airlines makes sense.