International Transportation Association Argues Against Flight Refunds. Do You Agree?

Yesterday, I wrote about US Department of Transportation’s public statement that said per the law: “cash refunds need to be provided to passengers in the event that flights are cancelled or schedules are changed significantly.”

This has been tough to swallow for the airlines as many of them claim they’d be out of business yesterday if they offered cash refunds (instead of vouchers) to everyone.

IATA’s STANCE ON FLIGHT REFUNDS

Interestingly, soon after I published that blog, The International Air Transportation Association (IATA) tweeted to express deep disappointment at the US DOT’s ruling on flight refunds.

They said “We’re deeply disappointed by @USDOT ruling on issuance of vouchers for flight cancellations due to gov’t travel restrictions. This decision risks 750,000 #airline jobs, each of which supports 13 additional jobs in the wider US economy. bit.ly/3bNR5uU “

If you’re not familiar with the IATA, they are an organization that represents about 290 airlines and essentially speaks on behalf of the industry.

As you can see (above), the tweet argues that this decision “risks 750,000 jobs, each of which supports 13 additional jobs in the wider US economy”

The Tweet also links to a message by Alexandre de Juniac, President of IATA. Here are his arguments in summary:

• The thriving airline industry connects the world with 4.5 billion passenger journeys & transports 60 million tons of freight a year
• 2.7 million people are directly employed by airlines, and 65.5 million jobs are directly supported by the aviation industry
• Travelers are owed $35 billion in refunds, but if airlines processed those refunds, many airlines would be out of business
• Passengers have the right to a refund, as they didn’t get the service they paid for
• Airlines need time, which either needs to come in the form of vouchers rather than refunds, or at least a delay in issuing refunds
• It’s acknowledged that this is far from ideal, but the alternative is even worse, and jobs will disappear if airlines collapse
• “Accepting a voucher or delayed refund today will mean that the airlines will be around for when we have our freedom to travel restored”

POSSIBLE SOLUTIONS

There are a few different positions that I think many people are going to take so let’s walk through it. Some could say:

• “Too bad, that’s their problem. Let them fail.” However, it will still be our problem when the government (and governments around the world) bail the airlines out. Bailouts are paid by your tax dollars.
• If you don’t support any form of bailouts, do you really want a world where there are (possibly) no airlines left in the US (or globally)?
• Give the US airlines government bailouts. We already gave them $60 billion but it may require more. Are you ok them the $60 billion already? Are you ok with giving them more? Perhaps, another $60 billion? Remember, Delta says they alone are losing $60 million per day.
• But then again, why should we be providing airlines with (free) money needed to survive, given that money from future tickets are grants not loans with interest.
• And is it our fault that airlines have already spent the money they accepted for future ticket sales?
• But then again, Airlines that find themselves without cash, could file bankruptcy (Chapter 11) but is that the best route?
• We could let the airlines just “keep” the money from future tickets and customers would just have to be satisfied with the vouchers.
• But then again, there are individuals that will say airlines are greedy, they charge us for bags, charge us 10x the regular price if you want to book a refundable ticket, charge us expensive “change fees,” and have zero mercy when it comes to flight refunds so why should be show them mercy?
• Given the US airlines were all bailed out 10 years ago, what kind of message does this give the airlines. Are they too big to fail? Will we always bail them out? Remember, we bailed out American Airlines 10 years ago, they used 96% of that money and bought their own stocks. In other words, they used the bailout money to make their investors’ pocket bigger. Is that acceptable?

FINAL STAMP

This is a really tough subject to discuss.

Personally, I think it’s wrong when airlines aren’t providing cash refunds when they cancel flights. You cannot sell a service and then not provide the service. By definition, that’s stealing.

However, it is worth considering that the alternative may be a world without airlines. Or, perhaps, there will be a handful of airlines that provide ALL the services but because there is lack of competition, flights would be extremely expensive. Is that what you want?

I’m curious…what are your thoughts? Is there a good solution?