Airlines were hesitant to give refunds: now they’re getting sued

Apr 8, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

United Airlines has been sued by a passenger for not refunding a ticket for a flight that was canceled during the coronavirus outbreak.

Passenger Jacob Rudolph alleged that United refused his request for a refund for flights he purchased from the airline that the carrier ultimately canceled.

Rudolph – a Minnesota police officer, according to the New York Post – purchased three tickets at a cost of about $1,500 for his family to fly from Minneapolis/St. Paul to Hilton Head, South Carolina, on April 4 for a vacation. The flights were canceled, and Rudolph said United agents offered him only a voucher – not a refund.

“United has engaged in unfair and deceptive conduct through its policy to issue refunds, limiting and forcing customers into a rebooked flight or travel voucher instead of returning their money,” Rudolph said in the suit, filed Monday in Chicago.

Sign up for the free daily TPG newsletter for more airline news

Rudolph is seeking class-action status for his complaint, a move that underscores what a hot-button issue that the issue of refunds for canceled flights has become during the past month.

Air traffic has plummeted to levels that would have been hard to imagine just a few weeks ago. On Wednesday, the Transportation Security Administration screened fewer than 100,000 travelers – less than 5% of that total it screened during the same period a year ago.

For airlines, the implications of that steep drop-off have been dire. Not only have new bookings become virtually nonexistent, but cancellations have soared as travelers stay home amid calls for people to stay home and help “flatten the curve.”

More:The best credit cards that offer trip cancellation and interruption coverage

The sudden disappearance of revenue from new tickets coupled with a spike in requests to pay refunds for cancelled flights created a cash crunch for airlines — one that developed with alarming speed.

It also helped create the environment that ultimately set the stage for Rudolph’s suit against United.

Several airlines – both in the U.S. and aboard – tried to discourage travelers from refunds, asking them instead to accept credit for unused travel that could be applied toward future flights. Some carriers made it difficult to find refund information, making customers jump through additional hoops to make a request. And a smaller group simply said refunds would not be issued during the crisis.

More: Do frequent flyer miles survive airline bankruptcies? It depends

With most airlines canceling the majority of their schedules during the pandemic, not offering refunds put some carriers at odds with rules in the U.S. and EU that require refunds for flights canceled by the airline.

United was one of the U.S. airlines that made it difficult to request a cancellation refund. It said it would only offer a voucher that could be applied to future travel. If a customer hadn’t used it in a year, the voucher would expire and the customer could then request a refund.

JetBlue also rolled out a temporary policy against issuing refunds, even for flights it canceled. Foreign airlines such as Air France, KLM and Emirates also pushed about against cancellation refunds.

More: How long will US airlines’ cash last? Between 4 months and a year, analyst says

Complaints from customers began to spike, and eventually regulators stepped in.

In the U.S., the Department of Transportation issued a public rebuke to airlines. It issued a statement on Friday, April 3, that not-so-gently reminded airlines of their  legal and “longstanding obligation to provide a prompt refund” for flights canceled by carriers. The agency continued that those who didn’t comply would face “enforcement action.”

The International Air Transport Association – world’s largest trade group representing the airline industry – soon responded that it was “deeply disappointed” by the DOT’s decision.

“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,” IATA chief Alexandre de Juniac said in a blog post the same day of the DOT’s statement.

“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,” he said.

But the DOT’s marching orders were clear. As a result, a number of airlines that hoped that the current extraordinary circumstances would give them some wiggle room are likely quickly figuring out how to come into compliance.

Now, at least one airline is facing additional pressure from customers like Rudolph, who are taking them to court over the issue.

More:United Airlines CEO warns of a smaller carrier post-coronavirus

As for United, spokeswoman Leslie Scott told TPG on Wednesday that the company could not comment on the suit since it had not yet been served with the complaint.

But she said United has been doing its best to help customers.

“Since the start of the COVID-19 health event we have implemented new policies to give our customers flexibility during these extraordinary times by allowing them to change their travel plans without a fee,” she said in a Wednesday statement. “We are proud of the role our company and our employees play during this crisis and continue to operate to nearly every domestic destination as well as six international markets across the globe including our partner hubs.”

Featured photo by Niall Carson/PA Images via Getty Images.

Chase Sapphire Preferred® Card

WELCOME OFFER: 60,000 Points

TPG'S BONUS VALUATION*: $1,200

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.
Intro APR on Purchases
N/A
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.