Next time an airline promises you a refund, you might want to ask, “How much?”
Gayle DeKellis forgot to do so when Aeroméxico downgraded her and her husband from business class to economy on a recent flight from Mexico City to San Francisco.
“We were assured by Aeroméxico staff that we would receive a refund for the difference between the first-class fare and the coach fare,” says DeKellis, a psychologist in Berkeley, Calif.
It didn’t happen. Initially, the airline balked, saying her fare wasn’t eligible for a refund. Then it offered the couple $100 apiece, claiming that it calculated the refund based on fares on the day of their trip — math that worked to the airline’s advantage, because economy-class fares typically rise just before a flight departs.
By DeKellis’s calculations, they were owed $416, the difference between economy class and business class on the day they purchased their tickets.
Airlines have never been quick to issue refunds, but they’ve become particularly reluctant in cases involving extras such as upgrades, luggage fees and seat assignments. Some airlines consider these fees non-refundable, no matter what happens. There are economic reasons for this hesitation, and, as always, other travel companies are following the airline industry’s lead.
Bottom line for customers: Getting your money back doesn’t mean you’ll be getting all of your money back — at least for now.
An Aeroméxico representative said the carrier conducted an “extensive investigation” on DeKellis and her husband’s tickets and that it had acted appropriately. But it agreed to process a refund of an additional $416 to honor the verbal promise made by one of its employees.
In the case of canceled flights, federal regulations require airlines to refund the price of the ticket. But airlines don’t do so automatically. Why not? There’s a good reason: Most passengers on that canceled flight will still want to reach their destination, and the refund will go toward their new booking. So the policy at American Airlines, the world’s largest airline, is that money doesn’t get refunded unless the traveler specifically asks for it.
“If the passenger requests a refund due to a canceled flight, we will process that refund for the portion of the trip not used,” says American Airlines spokesman Ross Feinstein. “But most travelers, when a flight is canceled, call us to look at other options.”
Airlines are even more reluctant to issue refunds for fare differences or for so-called ancillary fees, which are not federally regulated — at least not yet. These fees are an enormous business, with North America’s airlines reaping almost $11 billion in what are called a la carte fees in 2015 — a 24 percent increase over what was collected a year before. Airlines aren’t keen on surrendering this revenue, because if you give up enough of it, there goes your profit.
In other words, they don’t have to give it back, and they don’t want to.
The mechanics of refunds are virtually the same whether it’s a refund for a ticket or a fee, according to James Filsinger, the chief executive of the airline price-tracking website Yapta. There are some differences on the back end that should not affect the passenger. Ancillary charges, for example, are managed with something called an Electronic Miscellaneous Document, which basically means that a refund of those charges can appear in your account at a different time than an airfare refund.
One of the reasons fee refunds take longer is that the computer systems used to handle tickets are old and not up to the task. “They didn’t anticipate the airline practice of extracting more fees for what some would consider basic, inclusive services, such as upgrades, preferred seating or checked baggage,” Filsinger says.
But beyond technological failures, refund foot-dragging has always been a travel industry tradition. Now it seems to be getting worse, and consumers suspect the companies are just playing a waiting game, hoping their customers will eventually give up and go away.
Problem is, this institutional resistance to refunds is spilling over to the rest of the travel industry. The case of Nancy Friedman comes to mind. She rented a condo in Santa Barbara, Calif., in December and paid the homeowner a $1,500 deposit.
Friedman could have paid $59 for insurance, but she’s a careful renter and was sure she wouldn’t damage anything. And she didn’t. But after she checked out, the homeowner simply pocketed the deposit. “The property manager stopped answering the phone when we called,” she says. She waited three months (and I had to get involved) before she received her $1,500 back.
At least Friedman didn’t give up. And customers never should — to do so would just encourage this corporate mischief. Now, with the busy summer travel season around the corner, travelers can’t just take a company at face value when they’re promised a refund. The key questions are: When do I get the money, and how much?
And if possible, you need to get that promise in writing. My case files are filled with people who were made promises that the companies had no intention of keeping.
In the end, it may be up to the government to fix this, at least on the airline side. The latest Federal Aviation Administration reauthorization bill contains a provision that would require airlines to promptly and automatically refund any ancillary fees paid for services that the passenger did not receive on a scheduled flight, on a subsequent replacement itinerary or on a flight canceled by the passenger.
Expect more laws like it, stipulating exactly what an airline must refund. It’s regrettable that regulation is necessary, but to the tens of thousands of customers who are at this moment still waiting for their money back, it’s about time.