Would the move bankrupt the already-besieged airline industry?
With millions of flights cancelled since March due to the covid-19 pandemic, different airlines have offered different policies for customers. Some are only offering vouchers for a future flight, rather than allowing a full refund option as well.
The problem is, for various reasons, many customers don’t want credit towards a future flight. Perhaps the event for which they were originally flying has been cancelled, or perhaps they’ll still feel unsafe in crowded spaces for the foreseeable future. Accordingly, some customers just want the full refund.
A 2011 regulation from the Obama-era Transportation Department already required airlines to provide refunds if the airline itself cancels an entire flight. But some airlines have been disobeying the existing regulation (or at least dragging their feet), forcing the department to publicly reaffirm the policy in an April official notice.
Consumer complaints to the department skyrocketed from 1,500 per month to 25,000 in March and April. A mid-April investigation by Democratic legislators estimated that airlines could be sitting on billions of dollars worth of consumer money that they have refused to refund.
What the legislation does
The Cash Refunds for Coronavirus Cancellations Act would mandate major airlines or third-party flight ticket sellers offer a full cash refund option. The option would be required for both flights cancelled by the airline and tickets cancelled by the customer themselves after purchase.
The voucher for a future flight could still be offered in addition, though the legislation requires that the voucher should be redeemable indefinitely. This would eliminate existing vouchers that must be used within a certain deadline such as one year.
The legislation would apply retroactively to March 1, until 180 days after expiration of the official national emergency declared by the president.
“Major airlines” who would be covered under the legislation means any company with at least $1.5 billion in annual revenue. That list includes American, Delta, Frontier, JetBlue, Southwest, Spirit, and United.
The Senate version was introduced on May 13 as bill number S. 3727, by Sen. Ed Markey (D-MA). The House version was introduced a week later on May 22 as bill number H.R. 6965, by Rep. Steve Cohen (D-TN9).
What supporters say
Supporters argue the legislation would help cash-strapped people whose flights were cancelled through no fault of their own, and who may never use a future flight voucher.
“At a time when Americans need cash to pay for food, housing and medical care, the airlines have a moral responsibility to return ticket money to consumers,” Rep. Cohen said in a press release, “especially after they received a multi-billion-dollar bailout from the American people.”
“Americans need cash in their pockets to pay for food, housing, and prescriptions, not temporary credits toward future travel,” Sen. Markey said in a separate press release. “In light of this pressing need, and an unprecedented multi-billion dollar bailout, it’s absolutely unconscionable that the airlines won’t give consumers their money back. Airlines already have a moral responsibility to give cash refunds for all cancelled tickets during the coronavirus pandemic. My new legislation will give them a legal responsibility, too.”
What opponents say
Opponents counter that the legislation would harm cash-strapped airlines who are on the edge of insolvency.
“And with the $35 billion owed to travelers for flights that could not or cannot take place, airlines face an imminent depletion of the cash they need, not just to maintain employment, but ensure that they will be around to support the economic revival when the COVID-19 crisis is over,” International Air Transport Association CEO Alexandre de Juniac wrote in a blog post.
“Passengers have the right to get their money. They paid for a service that cannot be delivered. And in normal circumstances, repayment would not be an issue,” de Juniac continued. “But these are not normal circumstances. If airlines refund the $35 billion immediately, that will be the end of many airlines. And with that an enormous number of jobs will also disappear.”
“The simple answer is that airlines need time. We propose vouchers that could be used for future travel or refunded once we are out of this crisis period. This would buy the industry vital time to breathe — surviving the crisis so that they are ready to fly when better days arrive.”
Odds of passage
The House version has attracted 26 cosponsors, all Democrats. It awaits a potential vote in either the House Financial Services or Transportation and Infrastructure Committee.
The Senate version has attracted five cosponsors, all Democrats. It awaits a potential vote in the Senate Commerce, Science, and Transportation Committee. Odds of passage are low in the Republican-controlled chamber.