Senators press airlines to issue refunds instead of credits

A group of Democratic senators is urging airlines to issue refunds instead of credits to flyers, after the federal government bailed out the industry as a part of the CARES Act. Air travel is at record lows, as stay-at-home orders and fears over the coronavirus pandemic keep Americans grounded. Senators Ed Markey of Massachusetts, Elizabeth Warren of Massachusetts, Richard Blumenthal of Connecticut, and Kamala Harris investigated the consumer refund policies of the airline industry, releasing their findings on Friday. 

Because of the COVID-19 pandemic, airlines are cancelling between 60% to 80% of their flights. Although every airline is offering cash refunds when the company itself cancels a flight, as required by the Transportation Department, senators found that only two airlines – Allegiant and Spirit – are offering refunds to passengers who voluntarily and proactively cancel their own tickets during the coronavirus crisis. The senators also determined that only one airline, Hawaiian, was consistently issuing refunds when passengers proactively canceled their tickets and then the airline canceled their flight. 

None of the biggest carriers with the highest revenue — including United, American, Delta, and Southwest — offer similar refunds.

These policies force consumers to choose between accepting an airline credit immediately or waiting, in hopes that the airline eventually cancels the entire flight, so they can get their cash back.

Senators estimate airlines could be holding onto $10 billion in customer tickets, and said travel vouchers do little good when families need that money for food, shelter and medical care. 

“If these companies released that money back to the public, it would provide a significant stimulus for struggling families,” the senators said in a joint statement. “That’s why we once again urge the airlines to end their anti-consumer policies and offer real refunds during this emergency.”

Most airlines declined to share their overall figures on vouchers and reimbursements. But JetBlue indicated that it issued over $20 million per day of travel credits to consumers in the first few weeks of March, the senators found.

“In light of this pressing need, and the unprecedented multi-billion-dollar bailout that the airline industry just received from Congress, we are absolutely outraged that so few airlines are willing to offer real cash refunds to consumers who must cancel their tickets,” the senators said. 

The CARES Act provided the following assistance for airlines: 

• $25 billion in grants for passenger airlines, to be used solely to pay workers through September;
• $4 billion in grants for cargo airlines solely to be used to pay workers through September; 
• $25 billion in loans or loan guarantees for passenger airlines;
• $4 billion in loans or loan guarantees for cargo airlines;
• $3 billion to pay airline and airport contractors