American Airlines adopts consumer-friendly 24-hour refund policy


One of the biggest airline “gotchas” is no more.

Effective today, American Airlines will start offering refunds for most tickets canceled within a day in order to comply with the Transportation Department’s 24-hour rule.

“We’re making the switch to minimize the customer confusion that arose sometimes because our policy was different from those of other airlines,” an airline representative told me late yesterday.

Before now, you might recall, the world’s largest airline offered the option of a 24-hour “hold.” But customers complained that the option was not clearly disclosed and they believed they’d purchased tickets that could be refunded.

The rule applies to newly purchased tickets, according to American. Award tickets will not be affected, and the change will not be immediately visible on AA.com, which will continue to offer the “hold” option “for the time being,” an airline spokesman told me.

What prompted American to make such a sudden course correction? Certainly, the company had heard from many customers who were disappointed that they couldn’t get their money back for tickets, despite the presence of a DOT “24-hour” rule that suggests their fares should have been refundable.

Many of these customers have written to us recently, complaining loudly about what they say is a deceptive “hold” option. We’ve had everyone from infrequent fliers to loyal AAdvantage members claim they were duped by the rule.

One unpleasant byproduct of the discussion: Defenders of American’s old policy, who suggested anyone who didn’t read the booking screen carefully deserved to get stuck with a non-refundable ticket. If anything, these voices gave American pause as it considered whether or not to do the right thing, offering a significant roadblock to progress.

Related story:   Why won’t American refund my flight?

But in the end American did the right thing — and then some. The “hold” fans will be happy to know that they can still place dibs on a ticket, as long as they’re willing to pay for it.


“We offer paid hold on many routes now,” the American rep told me. “Our long-term strategy for hold options, including paid hold, is a work in progress.”

While American was moved by its many complaints, it may have also been prodded by possible government intervention. The latest version of the Federal Aviation Administration reauthorization bill is said to contain language that would have closed what insiders call the “American loophole” on the 24-hour rule. The policy change effectively eliminates the need to regulate this policy out of existence, at least for domestic airlines. (Other carriers, notably Turkish Airlines, also have a “hold” option, so a DOT rulemaking may still be necessary.)

Interestingly, the policy change doesn’t apply retroactively to older tickets, which suggests American isn’t as sorry as it claims to be. Late yesterday, I heard from Anna Eppink, whose case may have been the tipping point that killed the “hold” trap.

She says American ignored her written request for a ticket refund for weeks. Finally, she the airline agreed to credit her with a few “bonus” miles.

“They still would not refund my purchase,” she says.

The only real question is: How much money did American make from passengers who believed they had the option of canceling, but ended up booking a non-refundable ticket?

Millions? Tens of million? Hundreds of millions?

Related story:   I was injured and berated by a flight attendant. Now I'm being ignored.

It’s impossible to know. But here’s a fact: American has never been this profitable. It can certainly afford a little goodwill.

As an aside, the pro-airline readers almost had me convinced the answer was zero. Then I heard from a former American employee who got suckered by the “hold” policy. Then I heard from one of my editors at a large newspaper who also fell for it. After that, I believed the answer was not zero.

Speaking of believing, some of you might suspect this is an April Fool’s joke, even though technically I caught wind of this story on March 31. But still. The date on this story is April 1.

“A fair question,” said my American contact. “No, I promise you, we are not kidding. This is a real policy change.”

American's new policy is:

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Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or check out his adventures on his family adventure travel site. Contact him at chris@elliott.org.

  • AAGK

    Chris, you should have called this article, “I told you so!” :) I liked the hold, but a uniform policy everyone understands is better. Now on to the thousands stuck in this retroactive category………AA should just start issuing those refunds now.

  • Pegtoo

    Seriously thought it was an April Fools joke.

  • Ben

    Good work, Chris! Publicity/pressure from sites like yours gives consumers a little bit of sway in the market and helps brings about results like this.

  • John Galbraith

    Interesting – there are many people who do not like the new policy. They prefer the fact they could hold the flight and see if their plans were confirmed. Now they will have to book and then cancel. I think if you know about the policy the hold was better.

  • Mel65

    I agree. I liked being able to hold a flight that was a “good deal” for 24 hours while I considered other options or verified travel plans with companions. Now Chris is going to get a rash of complaints from people who cancelled a flight to book another one and their refund wasn’t processed immediately so they had no funds to purchase the new flight!

  • Michael__K

    Clap. Clap. Clap.

    Chris, this will mean one or two fewer emails a week, right?

    FYI– Other airlines besides Turkish which still allow 24-hour holds only (that I know of) include Air Berlin, XL Airways and Qatar Airways. And on Qatar the hold policy is only for their flights FROM the US. For Qatar flights TO the US you must purchase the ticket and then cancel for a refund. As if it wasn’t confusing enough to stick to one policy per airline.

  • Lindabator

    So now you tie up your money, rather than hold a courtesy booking. Nice going.

  • Lindabator

    How is PAYING for a hold better than a courtesy one? They just get to hold your money like the others now. Sad.

  • MarkKelling

    If American really wanted to do good for their customers they would have kept the hold plan as it was and added the refund option. That would have worked for everyone. But, no, they decided it was best (i.e. more profitable for them) to start charging for any kind of hold.

    “We’re making the switch to minimize the customer confusion that arose sometimes because our policy was different from those of other airlines,” So they realized there were enough customers who were confused by the hold policy that they feel they are losing money and repeat customers from it. There is no other reason for them to change.

    Other airlines have been offering 7 day and longer holds for a small fee (average $10). This apparently works for some customers on those airlines who have trouble making up their minds.

    The only thing to watch for is how long it will take AA to actually process the refund. If they can do it like other airlines I have used (UA and Southwest mainly) and get the refund onto your credit card within 24 hours of the request, then great. If they drag their feet and hold on to your money for hte 7 business days allowed, then not so good.

  • Ben

    American’s policy differing from all of the other major airlines caused quite a bit of confusion for consumers, as you might recall from previous stories on this site, with many people booking tickets not realizing that they couldn’t cancel within 24 hours. Now it is more inline and straightforward for travelers.

    It might be a little disappointing to those consumers who did take advantage of the free hold option since now they need to remember to cancel instead of just letting the hold lapse, but overall it’s a net benefit for the traveling public.

    Who cares that they get to charge your credit card a day sooner? That really won’t have an impact on the vast majority of travelers.

  • cscasi

    Probably only those using a credit card whose limit is close to being maxed out and even if they cancel within twenty-four hours the hold can remain on the purchaser’s card for several days; meaning that they cannot use it to purchase other things if the card is close to maxed out!

  • Tricia K

    I haven’t flown on American for a long time, but after this subject came up more than a few times, I checked it out for myself. I proceeded as if I were making a reservation and got to the payment page, and if I was actually buying a ticket, would never have known the hold was in place of the 24 hour refund. Before anyone criticizes my ability to read, I have a BA from Ohio Wesleyan University in journalism (graduated with honors), I book a lot of my own travel and I read the fine print very carefully. Whether this is American doing the right thing or being pressured into it, I don’t know. I do know that consumers will now have a level playing field and don’t need a degree in contract law to buy a simple plane ticket. That has to be a good thing.

  • John Galbraith

    That is such a good point Mel65. I think in this case the few people who did not read/check the policy properly will be better off but they are likely to be the ones who don’t travel much. People like yourself will be worse off.

    Chris – I am afraid you got this one wrong – previously you could “book” a ticket for free i.e hold for 24 hours including a number of options at no cost, so rates and times locked in. Now you have to book probably one option because of the cost and then have to cancel and wait for the refund.

  • FQTVLR

    I think this will make things more clear for many consumers. BUT American was actually in compliance with the Transportation Department guidelines which offered either the 24 hour hold with a fare guarantee OR the option to cancel a paid ticket within 24 hours. The fact that they were the only airline using the hold rather than the cancellation option made it confusing for consumers. But the link you shared very clearly shows that the hold option was in compliance.

  • Tricia K

    My problem with it was that they didn’t clearly explain the difference, as in, “If you select pay now, you will not be entitled to a refund in the 24 hour rule. Instead, click hold” and require an action on the part of the customer to
    acknowledge it. Obviously some people did like not having to commit credit funds while waiting for their plans to solidify and I understand that. The other problem, for people not familiar with it, was that AA was the only airline in the US offering this option, making it confusing for some.

  • Alan Gore

    Good on AA for making the refund policy consistent with other carriers, but for people who like the idea of being able to put dibs on a reservation while they make other bookings that can’t be changed, how much is the new hold fee going to be? I’m betting that it will be scaled from the travel insurance premium.

  • Mel65

    I have to say, I’m more than a little disheartened at times to keep reading how easily “confused” consumers are and how much hand holding Chris seems to think they deserve for every transaction they enter into. Old enough to have a credit card. Old enough to travel the world. Baffled by the ticketing process.

  • Mel65

    I would bet this will eventually generate MORE emails, as people realize that their refunds will not be processed immediately. Anytime the airlines have to refund money, they seem to take their sweet time about it and customers are going to come unglued when they’ve got $3000 tied up in a cancelled transaction that they can’t use to immediately make another ticket purchase. I was a fan of the hold option. it boggles my mind that people would rather BUY and REFUND something than just HOLD it… but oh well.

  • Michael__K

    They have 7 days to complete the refund by law and the DOT has fined carriers when they have received a deluge of complaints about an airline taking their sweet time to refund passengers.

    I agree that the Hold has its advantages, but the confusion over allowing two competing implementations (especially with one being ubiquitous and the other fairly rare) was a greater evil IMO.

    The Hold option also opens the door for mischief, and I wonder if that had any bearing on AA’s decision. (I.e., you could hold tickets for Snow White & the Seven Dwarfs if you wanted to… on as many flights as you wanted to, barring counter-measures to prevent this… and any realistic counter-measures could probably be circumvented…)

  • taxed2themax

    I agree., however I continue to say that a lot of these cases are, for me, two-way streets… by that I mean the business needs to be clear and disclose all the relevant facts before the buy decision… I also think the customer owns part too.. that is to understand, or ask about what it is they’re buying and any terms/conditions they may not understand; and to do so before they choose to buy.

    I am not against advertising, that’s a simple fact of life and one that most everyone participates in to varying degrees – so I don’t think there’s a whole lot of merit in some claims that a business said X, but only delivered Y.. I do think this so-called bait-and-switch does occur.. but I tend to believe that a more common case is a buyer didn’t look at all the facts – just looked at the ad.

    But I do agree that I tend see more and more cases like this — confusion — and wonder how this occurs.. and who, if any one directly, is to “blame” for it.

  • Joan DePalma

    I am shocked to learn about AA changing its “Hold” policy to a 24 cancellation one. I did not receive any notification from AA! Also, I think the Hold policy was much more courteous and consumer-friendly than a 24 hour cancellation policy. If some people were not able to understand the “hold” policy, then I question their ability to read!! If one is on the road, tied up with chores, etc., it is more difficult to cancel a 24 hour policy than either going to a computer or making a phone call. Also, one has to know “exactly” when the 24 hours expires whereas the 24 hold could actually be more than 24 hours as the “hold” expired midnight of the following day. Poor choice AA. I am truly disappointed.

  • Joan DePalma

    The credit card wasn’t charged on the 24 hold policy until you actually purchased the ticket!

  • Joan DePalma

    I agree. See above

  • Joan DePalma

    Why not do both–have a Hold policy and a 24 hour cancellation policy?

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