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.
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?
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.”