Airlines Still Owe Travelers More Than $20 Billion in Cash Refunds

In 2020, the US Department of Transportation received almost 90,000 complaints concerning cash refunds on canceled flights. That’s a jump of more than 5,000% from less than 1,600 complaints in 2019. According to experts, airlines owe travelers more than $20 billion in refunds.

Bill McGee, an aviation adviser at Consumer Reports Advocacy, said that “There has never been a year like last year for complaints about refunds”. He added that airlines “made some conscious decisions not to do the right thing and give refunds”. McGee said that airlines refused to issue refunds “even when they were required to by law”.

McGee explained that complaints surrounding refunds are “clearly a widespread, chronic problem, and it continues to this day”.

Airlines Preserving Capital Than Issuing Cash Refunds?

With airlines losing money, companies opted to preserve capital and not issue cash refunds for canceled flights.

Robert Mann, who worked as an airline executive and is now an airline analyst, explained that “If they can keep you from demanding a cash refund and hold onto all that working capital, that was the objective during most of 2020 and even into 2021 in some cases”.

According to the consumer advocacy group US PIRG, the DOT received 22,000 complaints in May 2020. 21,000 were about refunds.

Zach Griff who is an analyst for The Points Guy website said that “In March, April, and May of 2020, airlines were in a really precarious position”. He added that “It’s against DOT policy, but it’s still something we’ve seen over time”.

Consumer-Related Complaints Continue in 2021

In 2021, the number of consumer-related complaints remained high. The agency recorded more than 22,000 complaints for this year. Plus, in the last 18 months, 84% involved refunds.

US Transport Secretary Pete Buttigieg led an investigation into 20 airlines for allegedly failing to refund their consumers. 18 of which are still pending.

In late September, DOT reported “thousands of passengers who had initially been denied refunds have received or are receiving the required refunds”. Also, the agency reported around 9 airlines that made changes to their policy to clarify that consumers are entitled to a refund for canceled flights.

For McGee, “We the taxpayers gave the airlines $58 billion”. He added that “The airlines did as well as any industry in terms of taxpayer bailout, yet they continue to hold onto our money”.