Hawaiian Airlines becomes latest US carrier to backtrack on strict refund policy

When the coronavirus came stateside, all major airlines started canceling and significantly paring down their schedules. To conserve cash and avoid giving refunds for canceled flights, some carriers got creative and offered future travel vouchers with bonuses to incentivize travelers to forgo a refund.

Other airlines weren't as generous. Instead, they just changed the refund rules — making it much harder for passengers to get their money back for canceled flights.

Since I took over the change and cancellation beat for TPG, I've long written that the U.S. Department of Transporation (DOT) requires airlines to give refunds for canceled flights, regardless of the reason. In early April, Hawaiian and United defied these rules by redefining the meaning of canceled flights.

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In order to be eligible for a refund under the revised policies, your flight would need to be canceled and the replacement flight would need to depart or arrive six hours after the originally scheduled itinerary. This led to significant backlash, and the DOT even took notice by issuing a stern warning to airlines about these unlawful practices.

On June 6, United relented and began to once again issue refunds for flights that were canceled and couldn't be reaccommodated within two hours.

Related: 2 US airlines are defying refund rules for canceled flights

And now it's Hawaiian's turn. As of June 29, the flag carrier of Hawaii will once again issue refunds for canceled flights that can't be rebooked within two hours of the originally scheduled departure or arrival time. Per an update to Hawaiian's Contract of Carriage (and dedicated schedule change policy site):

A cancellation caused by Hawaiian means (i) that a particular flight number for which you have a ticketed reservation is removed from our schedule or will not operate on one or more dates and (ii) we are unable to confirm you on an alternate flight(s) scheduled to depart within two hours before or after your originally scheduled departure time and arrive within two hours before or after your originally scheduled arrival time.

This is great news for passengers who've struggled to get their money back from Hawaiian for canceled flights. Even better? This policy applies retroactively, as confirmed by a Hawaiian spokesperson. This means that if you were forced to take a travel credit instead of a refund, you can now call up the carrier and ask for a refund instead under the revised policy.

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Though the threshold change from six to two hours is certainly a big improvement, it's far from the most customer-friendly policy out there. Hawaiian still won't issue refunds if your flight is rescheduled within the two-hour limit, even if you're rerouted to a co-terminal airport in the Bay Area (SFO, OAK and SJC) and Los Angeles Basin (LAX and LGB).

Additionally, if you're not entitled to a refund, you'll end up with a very restrictive travel credit. It can only be used by the originally ticketed passenger all in one transaction.

That means if you rebook a flight that's cheaper than your original, you forfeit the difference — even though it was Hawaiian that originally canceled or rescheduled your flight.

Related: Why you should think twice before accepting an airline voucher

Nonetheless, as Hawaii begins the reopening process, this improvement will likely help restore (some) confidence in booking with the flag carrier. Beginning Saturday, August 1, visitors who have a valid negative COVID-19 polymerase chain reaction (PCR) test prior to arriving at Hawaii's airports will not be subject to the state's mandatory 14-day quarantine. It's not yet clear exactly the timeframe of how far in advance can the test be taken, but it's definitely good news for those looking for a late-summer vacation.