US airlines are issuing travel vouchers which should instead have been cash refunds to customers who are cancelling their tickets owing to the coronavirus outbreak. According to a statement by a group of senators, airlines have issued more than $10 billion worth of travel vouchers to customers for ticket cancellations, while they have been demanding cash refunds.
Hundreds of flights continue to get cancelled every day following the coronavirus outbreak, with customers complaining that they are not getting cash refunds for cancellations. The already cash-strapped airline industry that is looking at the recently approved government aid for a bailout is unable to make cash refunds to thousands of customers, who are cancelling their bookings.
Airlines take a different route
Most US airlines are cancelling around 60% to 80% of their flights. Also, passengers are cancelling tickets on fears of coronavirus. Under the federal laws those passengers cancelling tickets are entitled to get full refunds, said Senators Ed Markey, Elizabeth Warren and Richard Blumenthal. However, despite making requests, most airlines are issuing vouchers instead of giving refunds.
"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," the statement read. Although airline companies haven't shared the exact value of the vouchers or credits issued, per a Reuters report, the combined value is around $10 billion.
Only a few airlines refunding
The democratic senators have asked all major airlines that include Alaska Air Group Inc, Allegiant Air, American Airlines, Delta Air Lines Inc, Frontier Airlines, Hawaiian Airlines, JetBlue Airways Corp, Southwest Airlines Co, Spirit Airlines Inc, Sun Country Airlines, and United Airlines to share their refund policy in the wake of the coronavirus outbreak.
Only two airlines Allegiant and Spirit told lawmakers that they are providing cash refunds to customers who are cancelling their travel because of the coronavirus pandemic. While airlines are still giving cash refunds if they are cancelling the flights, very few are doing so if a customer is proactively choosing to cancel a trip.
JetBlue, which commands 5.5% of the total market share, reportedly issued $20 million per day of travel credit to customers in the first few weeks of March. Earlier this month, the US Department of Transportation (DoT) has issued a notice to airlines to give customers cash refund if flights get cancelled or significantly delayed amid the coronavirus outbreak.
The notice was issued after the DoT continued to receive inquiries and complaints from airline customers asking for refunds. The transportation department also said that it could take an enforcement action if an airline denies refund when it "cancels a flight or significantly delays a flight".
Crisis deepens for airlines
Sun Country, an ultra low-cost carrier said that making cash refunds for all of its non-refundable tickets outside of DoT guideline would "put the company's future at risk." That said, most airlines say that if passengers do not specifically request for a refund, they are issued a travel voucher.
The scenario is same for others too given the crisis airlines have been going through over the past few months. The airline industry has been one of the biggest casualties of the coronavirus pandemic. Every day, hundreds of flights are getting cancelled as governments continue to impose restrictions on travel, with many going for complete lockdowns, following the coronavirus outbreak.
Although the US government recently announced a $28 billion stimulus package to help the ailing airlines to pay their workers and get back on their feet, carriers are devising methods to put a check on the cash outflow, which is stopping them from giving refunds.