US And EU Airlines Must Offer Cash Refunds

Last week both the US and the EU issued statements reiterating that the rules for refunds for flight cancellations still stand, even in the chaotic midst of corona-crisis. Passengers, they say, are entitled to cash, not just credit. 

British Airways airport
US and EU airlines must offer passengers cash refunds for canceled flights. This also applies to the UK. Photo: British Airways

Jammed phone lines causing frustration

For the first few weeks of the crisis, airlines were focused on rebooking passengers traveling in the short term. Now, with months of uncertainty ahead, this has shifted to changing, or canceling, customers’ plans altogether.

Many passengers have felt frustrated by the difficulty in getting through jammed telephone lines and navigating complicated cancellation forms on websites. Chatbot AIs have provided little assistance, and “force majeure” is being invoked by customer service agents. 

Airlines have been quick to offer ticket changes free-of-charge (with fare differences still applicable), or vouchers for the value of the canceled tickets valid for one year. Now, the European Commission and the US Department of Transportation have both put their foot down, stating that airlines are still obliged to offer refunds for canceled flights.

Delta Air Lines flies medical staff for free
The Department of Transportation could make US carriers comply with refund regulations. Photo: Getty Images

The US could be enforcing compliance

If a flight departing from, arriving in, or transiting the US is canceled by the airline, then passengers are entitled to a cash refund. This includes non-refundable fares, bag fees and extras such as seat allocation. This is not subject to change due to the circumstances of coronavirus, the US Department of Transportation said in a statement released on Friday.

“Carriers have a longstanding obligation to provide a prompt refund to a ticketed passenger when the carrier cancels the passenger’s flight or makes a significant change in the flight schedule and the passenger chooses not to accept the alternative offered by the carrier. (…) The focus is not on whether the flight disruptions are within or outside the carrier’s control, but rather on the fact that the cancellation is through no fault of the passenger.”

The department also said that it would exercise its enforcement discretion and provide carriers with an opportunity to become compliant before taking any further action. 

Getty Lufthansa landing
EU carriers must also obey refund rules says Commission. Photo: Getty Images

EU refund rules still stands, says Commission

The EU has a similar obligation for airlines, commonly known as Rule 261. This provides for refunds for any flight canceled by the airline that was supposed to arrive into, travel through, or depart from a European Union country. According to Bloomberg, EU Transport Commissioner Adina Valean said in an emailed statement on Wednesday that:

“Airlines must refund canceled flight tickets. They can of course also offer a voucher but — and this is very important — only if the customer agrees to accept this. If the customer does not want a voucher or other proposed solution, the company must reimburse.” 

US And EU Airlines Must Offer Cash Refunds
KLM Is offering vouchers that will turn into cash if not used in a year. Photo: Chris Loh/Simple Flying

Voucher incentives

Some airlines are offering various incentives for passengers to accept vouchers instead of refunds. Are Lingus offers a 10% bonus of the value of the ticket, including taxes and extra charges, and so is Qatar. Lufthansa Group, including SWISS, is offering an additional $50 on top of the ticket value for anyone accepting credit rather than a refund. 

KLM is offering vouchers that if not used within a year will turn into cash reimbursements. This option is supported by both the Dutch and the German government. A stance they will have to take up with the European Commission. It might well be fine for passengers to essentially give a one-year interest-free loan to KLM or Lufthansa, but it could be very risky with smaller airlines as there could be a potential for bankruptcy. 

Have you been trying to get a refund from your airline due to cancellations at this time? Have you accepted a voucher? Let us know in the comments!