Airlines must refund passengers for canceled flights, not just give credit, feds say

Coronavirus
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Federal officials on Friday ordered airlines to reimburse customers for canceled flights, saying a growing number of passengers are complaining amid the coronavirus pandemic that airlines are providing travel credits rather than refunds.

The US Department of Transportation did not say how many claims it has substantiated, but it did direct carriers in an enforcement notice “that passengers should be refunded promptly when their scheduled flights are cancelled or significantly delayed.”

The government said it would “exercise its prosecutorial discretion” and allow airlines time to contact customers, update policies and properly train staff.

“The Department is receiving an increasing number of complaints and inquiries from ticketed passengers, including many with non-refundable tickets, who describe having been denied refunds for flights that were cancelled or significantly delayed,” the notice read.

Customers are allowed to receive a refund when airlines cancel or significantly delay flights. The requirements also apply when government restrictions prohibit flying, the notice said.

The rules do not apply to customers who decide on their own against flying because, for example, of concern over the coronavirus.

Airlines canceled significant portions of their schedules as demand plummeted. By late February, customers were canceling more flights than they were booking, according to the industry group Airlines for America.

Now, industry metrics show carriers are flying about half their schedules and only about 1 in 10 seats are filled.

The mass cancellations mean airlines owe customers a substantial amount. Worldwide, airlines owe their customers $35 billion in refunds and credits this financial quarter, according to the International Air Transport Association. Different regions have different refund and credit requirements.

The Transportation Department notice said many passengers complained of receiving credit toward future flights that cannot be used because of the deep schedule cuts, which extend into the fall.

“As a result, passengers are left with cancelled or significantly delayed flights and vouchers and credits for future travel that are not readily usable,” the notice said.

Many airline vouchers expire after a year. Delta announced earlier on Friday it would accept coronavirus-related flight credits for about two years, until the end of May 2022.

A different US agency, the Federal Trade Commission, has received more than 1,600 travel- and vacation-related complaints so far linked to the coronavirus, according to FTC data reviewed by CNN. Those complaints, including from people seeking their money back on nonrefundable travel, claim losses of $2.7 million.

DOT noted that carriers provided refunds, as required, after incidents including the September 11, 2001, terror attacks.

“Although the COVID-19 public health emergency has had an unprecedented impact on air travel, the airlines’ obligation to refund passengers for cancelled or significantly delayed flights remains unchanged,” the agency said.

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