How airlines plan to keep $13 billion of your money

Unused ticket credits will expire soon, and there's almost nothing you can do about it

It was a gift that seemed too good to be true. During the early days of the pandemic, the airline industry offered passengers who wanted to cancel their flights a generous ticket credit, valid for up to 24 months. It also revoked many of its hated ticket change fees.

And guess what? It was too good to be true.

Today, airlines are holding tens of billions of dollars in soon-to-expire ticket credits. Consumer advocates are pushing for new rules that would force airlines to issue quick refunds during a future disaster. But they may be asking for the wrong thing.

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Billions in unused ticket credits

At the start of the pandemic, many airlines removed their ticket change fees and extended their ticket credit validity by up to two years. It seemed like a magnanimous offer at the time, and a fair compromise between passengers who asked for full refunds and airlines that wanted to keep their money. 

Passengers hold up to $24 billion in unused ticket credits in a normal year, according to estimates from Cornerstone Information Systems. Of that, about 5 to 10 percent usually expires.

But new research by travel management company TripActions estimates that cancellations more than tripled at the height of the pandemic. Instead of issuing bulk refunds to customers, most airlines offered credits for travel. By the end of January, an unprecedented 55 percent of unused ticket credits were set to expire this year.

Airlines don't disclose how much ticket credit their customers are holding or how much of it goes unredeemed every year. 

So let me take this down to the personal level. Every day at my consumer advocacy organization, we answer questions from hundreds of travelers. Many of them want to know about their ticket credits, which are either about to expire or are unusable because of the passengers' health or risk factors. Based on conversations with these passengers, I'm convinced there are hundreds of thousands of unused tickets out there.

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Is this the solution?

Perhaps not coincidentally, consumer advocates last week began pushing the government to enact tough new regulations on passenger flight refunds.

Consumer Reports issued a call for rules that would compel airlines to issue refunds for tickets during extenuating circumstances such as a global pandemic. The U.S. Department of Transportation, it added, "must vigorously enforce these refund regulations with U.S. airlines, foreign airlines, and other ticket sellers, including resolving outstanding claims that have not been settled, in some cases since March 2020."

Unfortunately, such a rule would contradict the terms of most airline ticket purchases, outlined in a document called a contract of carriage. All air travelers must agree to these terms when they book a ticket. Under the terms, you can only get a full refund if your airline cancels the flight or makes a significant schedule change. 

If you cancel because you're afraid of catching COVID-19, you have to accept a credit.

The Consumer Reports rule would be in force during the next pandemic or any other catastrophic event where passengers have to cancel for their own safety. But it wouldn't apply retroactively to the billions of dollars in unused and unusable ticket credits. 

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Aren't we already helping airlines enough?

The airline industry has already received two rounds of government help: a $19 billion bailout last spring and another $15 billion in late 2020

Consumer advocates had hoped to secure a few minor concessions, such as a promise of minimum legroom in economy class or a commitment for airlines to be more financially responsible to avoiding the need for a future bailout. 

They received nothing.

If passengers' airline vouchers expire before the end of the year without being used, the airline industry could pocket another $13 billion from expired ticket credits. 

Now that's a bailout.

Considering that airlines are asking for a record third round of help from the government under the Biden administration's proposed $1.9 trillion coronavirus relief package, you might forgive the average traveler for being a little irked.

Here’s what we really need

We need accountability and thoughtful government regulation. 

By accountability, I mean that the government shouldn't offer additional aid to airlines without an agreement that they will extend the ticket credits. And if someone can't fly for health reasons, airlines should agree to a full refund. 

And by thoughtful government regulation, I mean that the Department of Transportation should consider a new, common-sense rule that would mandate timely ticket refunds during extraordinary circumstances. This would include pandemics, State Department travel advisories, and severe natural disasters. And, for goodness sake, the government should require a full refund when a passenger is too sick to travel. (Believe it or not, there's no such rule.)

Airlines shouldn't be allowed to keep your money. But at the rate things are going, most ticket credits will expire at the end of this year, unused. Add the two rounds of government aid to these unused credits, and the airline industry's total take starts to rival the auto industry's $85 billion bailout, which was the largest of its kind. 

Passengers deserve better. 

Here are my tips for getting a ticket credit extension

  • Ask the airline. I've heard from several readers who say they've received an extension of up to a year just for asking.

  • Don't wait. Once a ticket credit expires, it's gone. Call your airline well in advance if you think you won't be able to use your voucher.

Your turn. Do you think the government should offer more aid to the airline industry? If so, should it palace any conditions on a third bailout? The comments are open. Please be kind to each other.

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