Nine million airline passengers.

That's how many people had a complaint about ticket refunds last year, new numbers from the Department of Transportation (DOT) suggest. A staggering 89,518 air travelers wanted their money back from an airline in 2020 — a 5,687 percent increase from the previous year. 

But that figure, which is thought to represent only 1 percent of overall airline grievances, points to nearly 9 million Americans with an airline refund problem. 

🎧 EXTRA: Listen to the podcast version of this commentary.

A cursory look at the DOT figures might lead a casual reader to conclude that the airline industry temporarily forgot how to issue refunds during the pandemic. But a closer review shows that the airlines have adopted a clever two-pronged strategy to survive the pandemic. 

It's a strategy that will leave you holding the bill, whether you fly or not. 

📰 Psst! Are you a paid subscriber yet?

Paid subscribers to Elliott Confidential get exclusive access to documents and internal memos that shed new light on current events. They also help support the journalism in this newsletter. Please consider upgrading your subscription today. Here's how.

Another airline bailout

The $1.9 trillion COVID relief bill passed by the House of Representatives contains another $12 billion for the airline industry. Airlines have already received two rounds of government help: a $19 billion bailout last spring and another $15 billion in late 2020. 

That's $46 billion in a 12-month period, give or take a month. Add to that the $13 billion in unused airline ticket credits that will expire by the end of this year, and airline passengers are already subsidizing the commercial aviation industry to the tune of $59 billion.

A little ironic, considering how few Americans have flown in the last 12 months. Airlines operated only 4.7 million flights in 2020, a little over half the 8 million flights in 2019, according to the DOT. 

Let's put that number into perspective: Add the government bailout to the expiring ticket credits, and it's the equivalent of every American paying the airline industry $168 this year.

Stories you probably missed

• Possible travel restrictions have travelers asking: What if?

• What can you do if you sent money to a stranger by mistake?

• Airline complaints soared to a new high in 2020

Foot-dragging on refunds

But the airline industry isn't just depending on taxpayers for a bailout. Last year, it also deliberately slowed down the pace of refunds — for obvious reasons. Keeping your money meant it had enough cash to continue operating. By the time the federal government caught on to this trick, the industry had already weathered the worst of the storm, thanks to these interest-free microloans from millions of customers.

Some airlines were worse than others. For example, Frontier Airlines recorded almost 50 complaints per 100,000 passengers, according to the government. That's 5,523 grievances, of which most were about refunds. The situation got so bad that 40 state and territory attorneys general last year urged Congress to enact new consumer protections for airline passengers. Among them: authorizing state attorneys general to enforce federal airline consumer protection laws. 

By far the worst offender, in terms of raw numbers, is United Airlines, with 11,274 consumer complaints. 

But any way you look at it, the strategy is crystal clear: If a passenger is due a refund, slow it down. If possible, convert the money into an expiring ticket credit. (In a normal year, 5 to 10 percent of ticket credits go unused and revert back to the airline. In 2021, the number will be closer to 50 percent.)

This dual strategy of delayed refunds and lobbying the government for more bailout money has kept every major airline flying at a time when market forces should have bankrupted one or two of them. 

Leave a comment

Don't become one of the 9 million

You don't have to become one of 9 million aggrieved air travelers this year. The trick? Know your rights to a refund — and don't be afraid to let your airline know.

You have the right to a refund if your flight is canceled. According to DOT regulations, your airline must refund your money within 7 business days if it cancels your flight. It may offer you a replacement flight, but you are under no obligation to accept it.

You have the right to a refund if your flight is rescheduled. If your airline makes a "significant" change to your flight and you decide not to fly, you get a refund. The DOT — not your airline — gets to define "significant." 

If you get downgraded. If you have a confirmed seat in business class and the airline tries to send you to the bleacher seats, guess what? You get a refund if you decide to cancel your trip.

But what if you decided to cancel your flight because it isn't safe to travel? If you initiate the cancellation, you have to accept a nontransferable, expiring ticket credit, and you may have to pay a ticket change fee. This is wrong. 

After all the money the airline industry has taken from American taxpayers, the least they can do is to offer a flexible ticket credit that you can give to a friend or family member. And that credit shouldn't expire — ever.

The airline industry has shown us a highly effective, but morally wrong, survival strategy for hard times. Keep your customers' money and then ask them for more. If only airline passengers had the same options.

✈️ Were you one of the 9 million air travelers with a refund complaint in 2020?  Do you think the airline industry did the right thing by tapping the brakes on refunds, or did it go too far? The comments are open.