Airlines join cruise lines in offering incentives for not canceling tickets

Mar 25, 2020

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Airlines around the world have been hit hard by the coronavirus outbreak, with many making significant capacity reductions and some suspending operations altogether. Airlines are currently in fight-or-flight mode and doing whatever they can to conserve cash and limit refunds.

While some airlines like United are making it harder to get a refund for flights canceled due to schedule changes, some are taking more customer-friendly approaches and offering incentives to get passengers to hold on to their tickets and accept travel credits instead of refunds.

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For instance, One Mile at a Time reports that American Airlines is offering at least some passengers a 20% bonus when they opt for a future travel credit with the airline instead of a cash refund for the flight. According to the airline’s website, when a flight is canceled, passengers will either be rebooked on an alternative flight or offered a full refund. An American Airlines spokesperson was unable to confirm or deny the reports of this incentive, but did tell us that the airline works with impacted customers on a case-by-case basis and will provide options that make the most sense for them, whether that be an alternative flight, travel credit or full refund.

Related: Waivers and schedule changes in effect at U.S. airlines due to coronavirus.

While not quite as generous, on March 24, Qatar Airways announced an official policy that incentivizes customers for taking a travel credit instead of refund. Customers who choose a travel credit will receive the full unutilized value of their ticket plus an additional 10% of the fare cost. As Qatar explains:

Qatar Airways has amended its ‘Travel with Confidence’ and flight disruption policies to give customers even more flexibility. Customers who choose to receive a travel voucher for future use will receive the full unutilized value of their ticket plus an additional 10% of the fare cost as an added value offer. Customers also have the option for a refund back to the form of payment they used when purchasing their tickets – the administration of this refund will take up to 30 days to process. Vouchers for future travel continue to be the most expedient way of helping customers while we manage the backlog.

While not a new policy, the Hungarian-based low-cost airline Wizz Air also offers a 20% bonus when you opt for a travel credit instead of refund for a canceled flight. The credits are provided automatically when flights are canceled online.

Related: Can I claim EU261 compensation if my flight was delayed or canceled because of coronavirus?

Frontier Airlines previously offered a limited-time waiver policy that incentivized passengers with an extra $50 credit if they voluntarily canceled an itinerary for travel between March 22 and June 17. However, that bonus was only available for cancelations made by March 23 and there’s no telling if the airline will offer that bonus again.

In offering incentives to passengers to get them to accept travel credits instead of cash refunds, airlines are copying a strategy that has become widespread in the cruise industry.

Most major cruise lines in recent weeks have begun offering passengers on canceled sailings a bonus credit of 15% to 25% if they choose a credit instead of a cash refund.

On Royal Caribbean, for instance, passengers on canceled trips can choose between a full refund or a future cruise credit in the amount of 125% of the fare paid for the canceled trip. The credit can be applied to any voyage through Dec. 31, 2021.

Royal Caribbean has canceled all departures worldwide through April 10, as have all other major cruise lines. Some lines have canceled sailings even further out.

Related: Cruise line ‘draws’ 16-mile-wide smile at sea as departing gift for passengers

Other cruise lines offering a 25% bonus credit to passengers who forgo a cash refund include Celebrity Cruises, Crystal Cruises, Norwegian Cruise Line, Oceania Cruises, Seabourn, Silversea, Viking, Windstar and Regent Seven Seas Cruises. River line AmaWaterways is offering a 15% bonus. Greek Islands cruise specialist Celestyal Cruises is giving out a 20% bonus.

At least one cruise line is going even further. Start-up line Virgin Voyages, which postponed the inaugural sailing of its first ship, Scarlet Lady, from March to August due to the coronavirus outbreak, is offering passengers on canceled trips a travel credit in the amount of 200% of what they paid to apply to a future sailing. That’s in lieu of taking a cash refund.

Those who do ask for a refund from Virgin Voyages still will get a 25% credit that can be used toward a future cruise in addition to all their money back.

Bottom line

It’s nice to see that at least some airlines are providing an incentive for taking a travel credit instead of refund. However, keep in mind that if you do take an airline up one one of these offers and your new flight gets canceled, the airline will not provide a cash refund down the line. It’s also important to take note of when your travel credit will expire as ticket credits are often only valid for a year from the date that the ticket was originally issued.

For more on the coronavirus outbreak, see:

Additional reporting by Gene Sloan.

Featured image by Patrick T. Fallon/Bloomberg via Getty Images.

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