Airlines liable for $35 billion in refunds next quarter

Airline passengers all around the world will be due $35 billion in ticket refunds next quarter according to the International Air Transport Association. If you combined this number with the fixed costs, the complete total is expected to result in a $61 billion loss.

That is a staggering amount and it is why there has been such pushback from the airlines here in the US for issuing refunds.

IATA is supposedly asking governments to change the rules to allow airlines to make more refunds in the form of things like travel vouchers and travel funds instead of offering cash. These attempts are all aimed at preserving the cash of the airline since cash flow is such a major concern right now.

I am a bit conflicted about this.

On the one hand, as someone in the travel industry right now, I know how vital the cash flow problem is and why preserving cash flow is such a paramount need. I could only imagine what it’s like for industries like airlines.

But at least when it comes to US airlines, these airlines should be receiving a substantial form of aid from the $2 trillion stimulus package. In fact, airlines and airports will be receiving somewhere close to $60 billion worth of aid.

So the cash flow problem should be mitigated, at least partially, for a lot of our airlines.

Then there is the issue of airlines changing the rules once they become the party canceling flights.

If you purchase a nonrefundable flight and then cancel, you are not going to get a refund from an airline except for very limited cases. The airlines will point to the terms and conditions of your ticket and you will just be out of luck when it comes to obtaining a refund.

The current DOT rules state that if an airline is the one who is canceling your flight then you will be entitled to a refund.

The DOT regulations state:

If your flight is cancelled and you choose to cancel your trip as a result, you are entitled to a refund for the unused transportation – even for non-refundable tickets.  You are also entitled to a refund for any bag fee that you paid, and any extras you may have purchased, such as a seat assignment.  

So why is it that the terms and conditions that are not in favor of consumers always get enforced but when things are flipped against the airlines, now there are all of these semantics games being played (cancellations being considered flight changes) and talk about changing laws?

I don’t want to see any of our airlines go under or disappear but it is tiring to see the industry constantly enforce terms that are not helpful to consumers but then all of a sudden start trying to do away with established rules that would help the consumer, especially in light of these unprecedented bail outs airlines are receiving.