Are lax rules slowing down airline ticket refunds?

By | November 3rd, 2012

Kathleen and Eugene Bianucci paid $5,770 for a pair of round-trip tickets between San Francisco and Dublin this year on Virgin Atlantic Airways. A few days before their trip, Kathleen, a fitness instructor from San Bruno, Calif., broke her leg and had to be hospitalized for a week. Her doctor grounded her for six months, and when she told the airline about the accident, a representative promised her a full refund.

You can probably guess what happened next. Virgin, which had extracted the five grand from her credit card in just a few seconds, balked at returning the money. It asked her to fax hospitalization records, but when she sent them, it responded with a form e-mail saying the information was “not sufficient” and asking her to send the same documents again.

“I felt as if the airline was trying to deny the refund,” she says. “They would not tell me specifically what they wanted, and everything I sent them was not sufficient, according to them.”

Before she contacted me for help, Bianucci had done everything she could to get her money back. She’d re-sent her hospital records several times and tried to contact the airline by phone. But Virgin would communicate with her only by fax or e-mail. “It’s a real nightmare,” she says.

Passengers have complained about the slow pace of airline ticket refunds ever since there have been airline tickets to complain about. Like other businesses, air carriers are reluctant to part with the revenues they collect from customers, even when they are supposed to.

The Transportation Department, which regulates airlines operating in the United States, requires air carriers to reimburse your credit card company within seven business days after receiving a complete refund application. But the government allows some wiggle room, noting that the rule doesn’t apply to all payment methods and warning air travelers that the credit “may take a month or two to appear on your statement.”

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That kind of wishy-washiness is all the license an airline needs to delay or deny a refund, passengers claim. Indeed, over the long term, the industry-wide practice of protracted refunds – of customers being sent countless form letters and having to communicate with a fax machine – is enough to make some air travelers walk away from the process, essentially leaving their money on the table.

Virgin Atlantic says that in Bianucci’s case, the delay wasn’t deliberate. After I contacted the airline on her behalf, it reviewed its records and said that her refund was on hold pending a document verifying her medical condition and subsequent hospitalization. It apologized for the delay and said that it had located one of the faxes she had sent. “All is resolved now,” said Nadia Basil, an airline spokeswoman.

What’s behind the sluggishness? There are three leading causes, and they have nothing to do with dark airline conspiracies to pocket the money for unused tickets.

The first cause is something called a ticket tariff. It spells out the specific rules governing the ticket, including under what circumstances a fare would be refunded. Strictly speaking, every airline ticket is refundable. For example, if an airline cancels a flight, it owes you a refund whether you’re flying in first class or in the back of the plane, and whether you paid with cash or with frequent-flier miles. Ticket tariffs often are long, complex documents rendered completely in capital letters and subject to various interpretations. (It isn’t unusual to find a tariff with confusing or contradictory language.) Before issuing a refund, an agent must first determine whether the tariff allows it, which is not always easy.

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The second cause of delays is the staffing and systems required for a speedy refund. Airlines, like other businesses, have plenty of incentive to invest in technology that takes money from customers’ credit cards but fewer reasons to devote resources to systems that quickly refund money. For example, until this summer, United Airlines had no automated system in place to refund certain seat upgrades. The only way to get your money back for an Economy Plus upgrade fee would have been to ask for it. Those refunds were handled manually, one by one.

And third, as the Transportation Department suggests, even when an airline posts a refund, it can take one to two billing cycles before that money shows up in a credit card account. Although that isn’t an airline-specific problem, it can be interpreted as foot-dragging on the part of an airline, just as the government’s advice can be seen as a license to delay a refund.

I’ve had numerous conversations with DOT representatives over the years about the pace of refunds, and its rules haven’t always been clear. For example, the seven-day rule on refunds is only for credit card refunds, and in the past it was thought to apply only to fully refundable tickets. I asked a DOT representative whether that’s still true, and he said it isn’t. “The rule on prompt refunds would also apply to non-refundable tickets where a refund was due, such as for a significant flight delay,” says DOT spokesman Bill Mosley. A regulation that went into effect in July 2011 addresses purchases made by cash and check, requiring airlines to return a customer’s money “within 20 days after receiving a complete refund request for cash and check purchases.”

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But those historical gray areas might explain why, in the past, passengers have waited six months or more for ticket refunds. There’s no reason for an airline to move faster, and they’re breaking no rules by hanging on to their customers’ money.

Airlines should refund all passengers with equal speed, says aviation consultant Michael Miller. But in case they don’t, he suggests that air travelers take a few precautionary steps when they want a refund. They include contacting the airline quickly to ask for a refund and saving every e-mail to prove that you’ve complied with the carrier’s requests.

So what’s the solution? Maybe DOT’s ticket refund rules need to be more uniform, stipulating that all refunds should be issued within seven business days, regardless of the method of payment, and should include fares and fees charged to a passenger for optional services that couldn’t be used because of an oversale or cancellation. And your rights to a refund should be clearly disclosed on every ticket.

If that had been in place, incidents such as the four-month delay of Bianucci’s refund – and all the inconvenience that went along with it – might be far less common.

surveys & polls

  • Cybrsk8r

    Virgin was trying the old “if we drag this out long enough, they might just go away” routine. Although it’s unlikely that someone would walk away from almost 6 grand, as you said, the airline has nothing to lose by trying. Curious how every time Chris gets involved in a case like this, the airline magically finds the paperwork it said it never got.

  • sirwired

    Funny how every single copy of the faxed records (how much documentation could possibly be required for a broken leg?) was “lost” until you got involved, after which a miracle occurred and one of the copies magically appeared.

    A refund was not due under contract, but once it was promised it should have been issued promptly.

    And the line about “a cycle or two to appear on account” doesn’t refer to the account balance; the credit shows up there as soon as the transaction posts (the same day or the day after.) In the olden days of charge slips that might be a few days, but with electronic systems, transactions post within 48 hours of the transaction.

    What takes a cycle or two is the amount of time it takes to show up on a formal statement. (As in, it might appear on the following statement if your refund is issued just after a statement cutoff date.)

    I hope a DOT complaint was filed for this case; as I’ve mentioned before here, the DOT receives surprisingly few “hard” complaints. (Hard complaints being those related to blatant contract or rule violations.) Hard complaints are treated seriously, usually receiving VERY prompt attention from the airline, as it doesn’t take too many of that type of complaint to bring down the Hammer of Embarassment from the DOT. A complaint filed with a copy of the appropriate Fax Confirmation sheets would almost certainly have resulted in a quick fix to the problem.

  • SoBeSparky

    Poll questions is sorta like, “Should you stop beating your wife?” Who are the 3% (or whatever small percentage at this point) who say “no?” Maybe computer bots.

  • NakinaAce

    All of this begs the question about why we still have the complex tarif rules which surely is just an antiquated hangover from the days of regulation. Nothing, so far as I know requires these airlines to have these over complex tarifs? Do you know, Elliott?

  • Raven_Altosk

    Ah, the mysterious “lost” documentation. I think there should be heavy penalties on airlines for “losing” paperwork until a consumer advocate gets involved. $1000 per day sounds good to me. That might teach them to be a bit more diligent in their attempt to screw their customers.

    Yup. I’m cranky this morning. Deal with it, bros.

  • Alan Gore

    $5770 for SF to Dublin> This must be a refundable fare, so there’s no excuse for a hangup.

  • MarkKelling

    Nope. For Virgin Atlantic, that is one economy refundable round trip on that route.

  • George

    I found it necessary to request a ticket refund from Southwest earlier this year, and did it on their web site. The refund was out thru to my credit card in a few hours;
    Very painless. Why can’t other airlines do the same?

  • Fly Fisherman

    I bet the airlines would speed up the refund process if they were required to pay interest after seven days.

  • John R.Strohm

    Registered Mail.

    It annoys the holy crap out of the Post Awful, because they can’t just throw it in the trash and get away with it. It annoys the holy crap out of the recipient, because he CAN’T ignore it. Sending someone Registered Mail is a strong indication that they are about to be the guest of honor in a legal proceeding, and it is no fun at all to say “We never received XXX” and be asked “Really? We show you receiving Registered Mail item number NNNNNNNNNN on such-and-such date, signed for by so-and-so. What’s the story?”

    I stopped a (fraudulent) collections attempt dead in its tracks a few years ago, by sending them the appropriate documents by Registered Mail. (The hospital had ROYALLY screwed up the billing, and even admitted on the phone that they’d screwed it up. That didn’t stop them from sending a collections agency after me.)

  • emanon256

    I called United on October 27th and asked for a refund after they canceled my flight due to Sandy. They told me the refund will take longer than usual due to high volume. I got the credit back on my card on October 31. I was quite impressed.

  • MarkKelling

    And Southwest will even refund taxes on a non-refundable ticket when you don’t fly!

    I wonder also why they seem to be friendlier toward their passengers than any other airline and still make money.

  • EdB

    As for a “lost” fax, I worked on a project that involved writing software to fax documents. The protocol for faxing requires a confirmation from the receiving fax that it did receive it. So when your fax machine says it was sent, IT WAS RECEIVED! Now whether it printed or saved is another issue but that shouldn’t be a problem to the sender. Just like if a registered letter was sent, you have proof it was received. If the receiver then misplaces or loses it, that not the sender’s problem.

    Businesses should be penalized like you said, for “lost” documents. If the government can fine businesses for not archiving certain emails, then business should be fined for losing other documentation like this.

  • EdB

    “The Transportation Department, which regulates airlines operating in the United States, requires air carriers to reimburse your credit card company within seven business days after receiving a **complete** refund application.”

    The key word in this is “complete”. That seven days doesn’t start until the application is complete and since the airline gets to define what is complete, they can just keep saying they haven’t gotten the paperwork or it’s not the correct paperwork. That way, the clock never starts. Until this loophole is closed, I feel nothing will ever change with these refunds.

  • kim6160

    I answered no on a technicality. The rules aren’t lax; enforcement of the rules is lax. We can create lots more rules but if we don’t enforce them, it doesn’t matter.

  • pops

    They “still make money” BECAUSE they are friendlier toward their passengers! I cancelled my AA credit card, put my UAL card (no fee) back in the drawer, and now fly (albeit only 3 or 4 times a year x-country) only SWA!

  • TonyA_says

    Very wrong! Without a PUBLISHED Tariff, airlines can and will charge people INDIVIDUALLY PRICED FARES! That is definitely anti consumer.

  • ExplorationTravMag

    When I saw that fare I about fell over. I thought it surely must have been first class tickets. To see it’s an economy fare really blows me away. Two years ago, my son and I flew to Dublin from Tucson and it was just over $1,000 a ticket on Delta. Nearly $6,000 for one ticket should be criminal but I also have to wonder why the OP was willing to pay that much when there are lower fares on other airlines? I’m all for brand loyalty but not to the tune of $5,000.

  • ExplorationTravMag

    I’m going to go on a tangent first because I simply can’t believe this is a real fare! I’ve flown to Dublin from Tucson and the fare was just over $1,000… Even adding in the distance between SFO and TUS, that fare is about $300. Really? Nearly $6,000? WOW!

    Okay… My opinion on the whole refund thing? I agree with Cybrsk8tr – they were hoping the OP would just get frustrated and go away. Period.

  • lcpossum

    Yep, sort of like gun control. We don’t need more rules, just enforcement of the current rules. Until the rules eliminate the “wiggle room” the airlines are going to wiggle long and hard.

  • emanon256

    Looks to me like its non-refundable premium economy for 2 on that route.

  • S E Tammela

    I voted no just on protest, because the questions are usually so ridiculous that the result is already guaranteed. It’s a bit like saying “This is wrong. Here’s why it’s wrong. You now have proof that it’s wrong. Everyone in the whole world agrees that this is wrong. Poll question: Is this wrong? Yes/No.”

  • S E Tammela

    Maybe it was booked close to the fly date, and for a very busy flight (it becomes far more expensive).

  • Jim Doll

    I love the ‘lost’ it,
    Every Fax I send is actualy a PDF, it gets scanned then conveted to a PDF, then faxed from a FAX server, there fax machince reponses that it receives it. 9 out of 10 times there fax machine is also a FAX server that then takes the incoming fax and converts it into a PDF and then moves it to there documennt managment system to begin the process of handleing it.

  • Nigel Appleby

    Most fax machine (of which I’m aware) print the transmittal slip on a blank piece of paper which only shows that a piece of paper was sent. When I was still working, we had one which included the first part of the first page so we could demonstrate which document was sent. That facility saved the day once or twice. I think it was made by Brother.

  • Glad you like my totally unfair poll questions. Don’t say you weren’t warned!

  • EdB

    You are correct in that it only shows something was transmitted. The same way that a registered letter only shows a letter was sent, not the contents.

  • NakinaAce

    You are the one that is wrong. What is wrong with individual fares? That is what they do anyway but call it yield management or something and then hide behind these opaque tariffs to keep from doing what any merchant would have to do in the normal course of doing business. A bit like the cruise lines hide behind the passenger rules. They are relics of a bygone era and are completely out of place today.

  • TonyA_says

    Discrimination (by common carriers).

  • Grant Ritchie

    That is funny, funny, FUNNY. Thanks for the belly laugh. :-)

  • NakinaAce

    Of course it is discrimination. What else would you want it to be. I discriminate every day just like you do. Just because you use a word that all lefties imbue with some sacrosanct meaning doesn’t make it intrinsically bad. Didn’t you discriminate today when you decided what to eat for breakfast? Or when you chose your boyfriend or girlfriend? I think you must have a background that makes logic something to be feared. Not picking a fight but how you could just say ‘discrimination’ and think everyone should throw up their hands and give in?

  • TonyA_says

    What don’t you understand about the term – COMMON Carrier?

  • NakinaAce

    It is just what I said a throwback to the old regulated transportation entities. To be a common carrier means you hold yourself out to the public to be responsible to them usually under a license granted by a ministerial body. What don’t you understand about this. It is relic of a bygone day. We have plenty of laws to prevent discrimination on race and that kind of thing. You are really geting a bit tiresome and if I had to guess a big supporter of Hussein Obama and Uncle Joe (Stalin or Biden it makes no difference).

  • TonyA_says

    Why do you think YOUR system is better than what we have today? Is it going to lower prices for most consumers? Is it going to improve service for most consumers?

  • NakinaAce

    Yes and yes and with the added benefit of that some of these weak sisters that remain in business only because they are protected by the regulators would go out of business. Think BA and landing slots at Heathrow. Service would improve and prices would go down without the government involved as it always does.

  • TonyA_says

    We are talking about the USA and U.S. airline(s) tariff. What U.S. airline is PROTECTED by U.S. regulators? Most of them have gone through bankruptcy courts; do you call that REGULATORY protection?

    I do not think that Heathrow airport or BA are institutions worthy of praise.

  • TonyA_says

    I agree. Looks like Prem Econ (Restricted) “S” booking class NONREFUNDABLE fare.

    Also the (applicable) Tariff rule is not complicated.



    Maybe the issue was the Certifiable Hospitalisation.

  • NakinaAce

    My God man. You really are ‘out there’. You must be a travel agent or a government employee or both. I am talking about the protection afforded them by hiding behind these insane and inane tariffs that have no place in modern commerce. No they aren’t regulated the FAA and NTSB and the Department of Commerce and EPA and all those other lovely government agencies that are spending 100’s of millions of dollars to protect the public. Right? End of story for me you either don’t understand, can’t understand or won’t understand.

  • TonyA_says

    That is because THEY cancelled the flight. In most cancellations that are INVOLUNTARY, the refunds are processed quickly, sometimes cash is even handed out in the airport. However when the passenger is the one cancelling, then the tariff rules determine whether refunds are applicable (unless there is a system wide waiver) and the process is manual. This is where things can get quite messy.

  • $16635417

    In order to STOP beating my wife, I would have to START beating my wife. I don’t intend to do that…so I vote “NO”. ;)

  • MarkKelling

    The $6000 is for two tickets, so that is “only” $3000 each. ;-)

    Looking today on that airline, that price is for their Premium Economy, which is similar to what many US based airlines now call business class. I do agree that it does still sound expensive. Especially since that is NOT a refundable ticket.

    You can get a non refundable ticket in regular economy for $1095.00 with them which is closer to what you paid.

  • pauletteb

    You can keep flying SWA. The phony “friendliness” of their employees makes me squirm, so I gladly pay more to avoid them.

  • Lindabator

    And YOU do not understand – the tariffs are written out and regulated by EACH government’s oversight (ours is FAA) to ENSURE no funny business goes on with ticketing – to PREVENT unfair ticketing – as Tony clearly is trying to educate you on.

  • S E Tammela

    I’m glad you’re checking whether we were paying attention in class! :P

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