
Airlines want to cancel rule requiring them to refund fares for canceled flights - hhs
https://www.npr.org/sections/coronavirus-live-updates/2020/04/07/829091394/airlines-want-to-cancel-rule-requiring-them-to-refund-fares-for-canceled-flights
======
rafiki6
Is it really that bad if some airlines fail? That whole industry really needs
to be restarted IMO. Their assets would be purchased at a major discount by
others who would likely create new airlines, or you might potentially see the
healthiest ones consolidate the market (which wouldn't be the best outcome).
Also, why isn't there consideration for nationalization of one of these failed
airlines rather than giving them tax payer money even as a loan?

~~~
the_reformation
This essentially happened after 9/11\. We saw broad consolidation into the Big
Three. The argument was that the restructuring meant we'd finally have an air
industry with structurally bigger margins. This was sorta true- during a bull
market.

Ultimately, I think large scale personal air travel (or mass transit in
general) isn't feasible in all economic climates. By definition, it's high
upfront costs and low margins. The only airlines who seem to always make it
work are regional and shuttles between high-income cities (Alaska, JetBlue.)
As for why don't we just nationalize them, I'd say we de facto have already.
Airlines know bankruptcy-level downside is covered by the government.

It's not all bad though; there's an argument to be made that this system is
pareto efficient. During bull times, you want private operators pushing for
network expansions and price efficiencies, even if that means levering up. But
these are a de facto utility, so having the government pinch their nose and
cover the downside in a bear market is an efficient use of dollars. You could
try and put in regulation to force them to reserve X months (years isn't
realistic) of operation costs, but you can't get around the basic unit
economics of the problem: planes are expensive, even if they're grounded and
don't make money if they can't fly.

~~~
a3n
> But these are a de facto utility, so having the government pinch their nose
> and cover the downside in a bear market is an efficient use of dollars.

 _If_ that's the case, then it wold be more efficient to remove the "de facto"
and operate as the reality.

~~~
outlace
I think its still better to have some competition between a few private
airlines (even if de facto subsidized by gov't) as opposed to one behemoth
national airline that faces no competition and therefore has no incentive to
innovate.

~~~
jessaustin
You haven't flown on any of the Asian national carriers, have you? They are
all better than any American carrier. They are all better value than any
American carriers other than the "discount" brands like Southwest. USA
domestic air travel would improve dramatically if they were allowed to compete
here.

[https://www.singaporeair.com/](https://www.singaporeair.com/)
[https://www.qatarairways.com/](https://www.qatarairways.com/)
[https://www.koreanair.com/](https://www.koreanair.com/)
[https://www.jal.com/](https://www.jal.com/)
[https://www.malaysiaairlines.com/](https://www.malaysiaairlines.com/)

------
nilram
Over the last decade, airlines spent 96% of their free cash flow buying back
stock[1]. This improves the stock value for investors (and executives). Rather
than requesting bailouts and rule changes, imo they should be selling that
stock to raise capital.

[1] [https://www.bloomberg.com/news/articles/2020-03-16/u-s-
airli...](https://www.bloomberg.com/news/articles/2020-03-16/u-s-airlines-
spent-96-of-free-cash-flow-on-buybacks-chart)

~~~
wtvanhest
I think people don't really understand buybacks. The nuances of dividend vs
share buybacks can be debated, but at the end of the day, each are just ways
to return capital to shareholders like pension funds, 401ks etc. They didn't
'spend it' then returned it to investors which is what companies should do
unless they have a different way to invest it for better returns.

~~~
majormajor
There's a third option: building up cash reserves for the inevitable down
times. This is one of those "privatized profits, socialized risk" situations.
It's not attractive to save money when you know you can get bailed out or go
through bankruptcy without too much pain.

~~~
SpicyLemonZest
What amount of cash reserves would have allowed them to survive their business
becoming illegal?

~~~
chewbacha
About 50 billion which is what American was asking for. Considering they have
posted between $3-15 billion [0] in quarterly profits over the past 10 years,
it seems reasonable that they could have saved a rainy day fund _and_ bought
back stocks.

[0] [https://www.macrotrends.net/stocks/charts/AAL/american-
airli...](https://www.macrotrends.net/stocks/charts/AAL/american-airlines-
group/gross-margin)

~~~
soared
You want them to save half their money? That makes no sense

~~~
claudeganon
The current reality would require them to have those reserves as opposed to
being bailed out, so by all meaningful definitions, it does, in fact, make
sense.

~~~
smabie
No, I don't think it does. Just because an event of very small probability
happens does not mean it is rational to waste half your cash preparing for it.
What determines the right actions in regards to mitigating risk has little to
do with the realized events; instead, it's better to look at the probability
of said event. Not saying they shouldn't have saved some cash for a pandemic,
but the fact that it's happened isn't an argument for them to have done so.

------
arkadiyt
There are certain industries like airline (but also healthcare, telecom, etc)
that just make a living out of screwing over consumers in any way possible.

It is so exhausting to deal with - I don't have the energy to dispute every
single time a company pulls one of these stunts to fight for myself to get the
baseline level of not being treated like trash. This is exactly what consumer
protection agencies and regulations and other laws are meant to protect
against, but these institutions are failing us daily.

~~~
halfdan
These are all essential services that the government should be providing from
taxpayer money. Instead many countries have chosen to privatise large parts of
their infrastructure and essential services - the market does not regulate
itself here, it is one that needs to be controlled or simply run by the
government.

~~~
malandrew
If you're in California, what are your thoughts on how the California DMV is
run? Would you want your air travel experience to be similar?

~~~
ajna91
Why not compare it to the post office, or NASA?

~~~
smabie
The post office isn't really similar to the DMV or NASA. While it's not a
private entity, it's supposed to be run like a corporation, in some ways
similar to Amtrak. USPS is okay I guess, but Amtrak sure does suck.

------
HashThis
We paid for that product. If they can't deliver the service, we are owed our
money back. This would be fraud. Congress sells out the american people to
corporations on these things. If revolution happens in the USA, it will be
because congress and corporations pull this kind of corruption.

~~~
usaar333
There's all sorts of Force Majeure rules in life and contracts. e.g. I still
have to pay for my kid's preschool she can't use. (Edit: Prepaid, not getting
a refund)

I'm not sympathetic to the airlines at all and think they should refund, but I
don't think it is universally true that "can't deliver service = owed money
back" in this pandemic.

~~~
tantalor
Well, no, Force Majeure would give you an option to back out of your agreement
with the preschool, including tuition.

My understanding is Force Majeure rescinds the contract for Act of God
(natural disaster) or Government (human-caused disaster). No contract means
deposits and pre-payments would also revert.

/ianal

~~~
eloff
Unless you prepaid. I got forced into taking an apartment rental I wanted to
back out of when I got laid off because I made the mistake of paying promptly.
I might have had a chance to fight it otherwise.

~~~
tantalor
Not necessarily...

 _the common law concept of restitution requires that the parties be returned
to their original, pre-contracting positions. In reality, this means that the
parties must return any prepaid monies or deposits_

[https://www.agg.com/news-insights/publications/your-event-
is...](https://www.agg.com/news-insights/publications/your-event-is-cancelled-
because-of-covid-19-breach-of-contract-or-excused-performance/)

~~~
usaar333
I think you are copying the section of when there is no force majeur section.

See this legal article covering schools
"[https://www.fisherphillips.com/resources-alerts-
comprehensiv...](https://www.fisherphillips.com/resources-alerts-
comprehensive-covid-19-strategy-plan-for-independent") \-- they aren't legally
obligated to refund if they have a force majeur provision in their contract.

------
United857
If the airlines really need the money to survive then they should treat it as
a loan and when it's over refund the customers plus interest.

------
monksy
We should make them refund above how much they charged as a fee to them.

It's kind of funny when the shoe is on the other foot. They're upset when
they're required to follow the law. They want to sell nothing but refundable
tickets which they can oversell, but the minute they can't meet their
obligation they're crying to the government.

------
Shivetya
Simple rule. No assistance unless they offer refunds. No assistance unless
they stop any stock buy back programs, end all executive bonuses, and they
must pay back and assistance before resuming either.

Sorry airlines, but the company I work for which is quite large has funds to
sustain interruptions because you just don't do business otherwise. scrap
bonuses, merit increases, all unnecessary expenses, and they borrow, and if
you cannot then you were not preparing yourself for much of anything except
good times.

~~~
bluedino
Who's going to work for airlines without bonuses etc?

~~~
op00to
Almost all workers in America have rarely if ever seen a “bonus”. They airline
execs will get over it.

~~~
smabie
Almost all? I would guess that almost _everyone_ (who works) has gotten a
bonus at least once, many every year.

~~~
effingwewt
This is beyond out of touch. Most people truly have never seen a bonus, or if
they have it was a $20 McDonald's gift card. Until working in tech I never
received a bonus, even as a 'necessary' HVAC service technician making decent
money.

Either way it's hard to reconcile C level bonuses with a free turkey every
Thanksgiving.

Truly we need to scrap all their bonuses a d parachutes. The entire C level
compensation model seems made for Moral Hazard.

------
thaumasiotes
Is this an actual airline-specific regulation? I would expect the ordinary law
of contracts to already provide that, when one party unilaterally cancels a
contract, they don't get to keep the consideration from the other party.

~~~
JamesBarney
Usually it would depend on what the contract says.

For instance my gym went out of business, but hidden in the contract it was
written they could transfer my membership to any other gym within 10 miles of
the gym. And I was forced to pay a cancellation fee of several month to get
out of it.

~~~
WalterBright
Contracts that "hide" things in them tend to get invalidated by the court if
you refuse to pay. Courts take a dim view of attempts to trick consumers.

If you didn't read the contract before you signed it, though, next time you
should.

When I bought a house, they gave me a stack of paper about half an inch high
to read, including a document for me to sign that said "I have read and
understand the documents." So I sat there with the agent and read every word
of it. She was clearly quite irritated with me "wasting her time" by reading
it, but too bad for her.

A couple issues I was particularly interested in was what happens if I default
on the mortgage, and what happens if I prepay the loan.

BTW, I recommend reading the fitness club contracts first. They are
negotiable, but if you don't read them you won't know what to negotiate, and
will be paying the "sucker price".

~~~
reaperducer
_Contracts that "hide" things in them tend to get invalidated by the court if
you refuse to pay._

Which court is that? The one that finally hears your case three years after
the gym has reported the debt to the credit bureaus and ruined your credit?

~~~
samatman
Small claims court doesn't take three years, doesn't allow counsel, comes to
decisions quickly, and best of all: Small claims judgements are accepted as
dispute resolution by all credit reporting agencies.

~~~
throwawayjava
Seriously, use your small claims court!

I've used small claims 4 times now. Each time, I spent less time with the
court than I did with customer service prior to the court.

Lesson learned. I ask customer service once, in plain english, on a recorded
line. If they don't resolve it at that opportunity, I just go to small claims.

------
wdb
I don't agree with bailouts or rule changes for airlines. Why should they get
rule changes, while I am a simple citizen can't get jobseekers allowance (too
much savings) or break on paying rent during this time?

------
selimthegrim
The world's smallest violin is playing for Spirit Airlines right now.

~~~
cultus
Flew them once. If I never do it again it'll be too soon.

~~~
HarryHirsch
They've got an all-Airbus fleet. They will be an excellent choice to avoid
flying 737-MAX.

~~~
reaperducer
Spirit puts the "bus" in Airbus.

Not really related, but it turns out that calling your American Airlines pilot
neighbor a "sky bus driver" is a good way to get kicked out of his Christmas
party, even if you were mildly drunk and maybe half kidding.

------
ping_pong
That's a great way to put themselves out of business. If they don't want to
play a fair game, you can well be assured that people will stop using their
products as much as they could be.

~~~
moate
If only that were the case.

Airlines and Broadband companies are constantly getting terrible reviews
because they offer such terrible quality customer service. But what the fuck
are you gonna do, rig up your own ISP or charter a boat across the Atlantic?
No, you're going to get reamed in the ass and keep living in the 21st century.

These industries "fail" because they're designed to fail! Nobody wants to
admit it, but you need a public option on this shit or else people will just
keep being forced to publicly subsidize a select group of private enterprises
over and over when shit goes tits up.

~~~
a3n
> But what the fuck are you gonna do, rig up your own ISP or charter a boat
> across the Atlantic? No, you're going to get reamed in the ass and keep
> living in the 21st century.

Or we can globally live within our means. It is apparently _barely_
sustainable for people to be able to fly anywhere on a whim and a salary. If
the globe being able to do this means that airlines must operate at constant
arm's reach of bankruptcy and bailout, then we're living beyond our global
means and society is ill-structured.

------
csomar
I have five flights booked through Lufthansa (2 turned out to be United) for a
US flight which is kinda expensive. It's a non-refundable, so fair is fair.
The thing that did upset me the most is that their website mentions that I can
rebook now. I do call their, rather, horrible consumer service. They suggest
that I should go to their office so that I can change the booking. That's,
obviously, not possible because of the confinement order.

Now I rechecked their website and it seems that I _might_ be able to get a
voucher for my ticket value that will be valid until 31 August. They must be
joking as I don't think flights will be open (in any meaningful capacity)
until 2021 or late 2020.

My sister had Turkish tickets (non-refundable) and she was able to get miles
for them.

~~~
mrep
I would wait. I had 3 flights for this week and 2 got cancelled and 1 got
changed. I got refunds on all of them _but_ I had to wait until about a week
before the flight for them to tell me about the cancellations and the flight
time change refund info came about a week before too. They are unsurprisingly
pushing the vouchers until the last minute.

------
xivzgrev
If you are unable to provide a service people paid for, then you give them
their money back. It's pretty simple.

You can give people an option to leave as credit (e.g., we'll give you $400 of
credit instead of a $300 refund) but it should be just that - an option.

------
ar_lan
I'm STILL waiting for United (or Expedia) to send me a refund after 2 weeks. I
had a cancelled international flight and neither is sending me my refund.

I don't think many of us have just thousands of dollars to just not get back.

------
diebeforei485
I think this is okay, provided they issue a cash-value voucher that does not
expire (or expires at least 2 years out). There shouldn't be any nonsense
about things being locked to the same region or destination because people may
no longer be interested in going to the same place in the future, plus for
international trips they may not be eligible for a visa in the future if the
purpose of the trip no longer exists.

To be even better, it should not be locked to the same person either. If I
have no use to fly (example) Hawaiian Airlines, I should be able to sell that
voucher to others.

------
Rafuino
I have three flights booked through July with United, and I'm likely going to
have to cancel all three of them without a refund. Another rub is that they've
changed the flight schedules on all my flights 4x now since February, and
there is no option to view the original schedule of my flights. I believe a
few of my trips have been ruined by these schedule changes (e.g. won't be able
to make it for dinner with friends, or now can't get back before an ungodly
hour in the early AM), but I can't confirm the original schedules...

~~~
mrep
If they changed it by like 2 hours or more, you are entitled to a refund. Call
them. I had a flight scheduled for tomorrow that got changed and I called and
got a refund for it (I'm not even in the state so i lucked out there as I was
planning on cancelling it myself).

You can also wait and see if they cancel it. I had 2 more flights this week
and they both got cancelled recently and I'm getting refunds. They are
probably just waiting until a week before like it was for me in the hopes that
people cancel themselves for the BS travel vouchers.

~~~
Rafuino
FYI, United told me it's 6 hours or more per flight. They changed mine by 4.5
hours, so no dice on a refund.

------
olliej
Why don't they have savings to get them through unexpected financial problems?
Oh right: [https://www.bloomberg.com/news/articles/2020-03-16/u-s-
airli...](https://www.bloomberg.com/news/articles/2020-03-16/u-s-airlines-
spent-96-of-free-cash-flow-on-buybacks-chart)

We can't be held responsible for their own financial mismanagement - likewise
they should not be eligible for any bailout funds - or they can sell their
stock on the market to raise funds.

~~~
cultus
We've decided as a society that it is acceptable to have massive oligopolistic
too-big-to-fail corporations in control of critical sectors. We have no choice
but to bail them out.

~~~
triceratops
> We have no choice but to bail them out.

Why not though? If they go under, someone will step in to buy the assets and
hire the employees back. It's not like air travel will go away forever.

~~~
throwawayjava
But it might go away for a year or two, which is enough time to do an
incredible amount of economic damage -- far more than what we save by not
bailing them out.

They don't need to be indispensable. they just need to be critical enough that
not bailing them out is much more expensive than bailing them out.

The solution is to prevent this scenario from ever happening in the first
place, by either requiring sufficient competition, or requiring sufficient
capital reserves (see: banking and reinsurance), or just nationalizing the
thing.

------
hedora
Issue a chargeback.

~~~
colejohnson66
Unfortunately, that’s a good way to get banned from a service

~~~
ryandrake
Why would you want to continue doing business with a company that screws you
over to the point where you need to chargeback? By that point, you're burning
the bridge and should be totally OK with it.

------
awaythrower
So the financial equivalent of being beaten and dragged off a plane. Airlines
couldn't be anymore customer-hostile unless they needle behind the ear,
shrink-wrapped people and threw them into piles like rolls of carpet.

------
ck2
This sounds a lot like all the gym memberships that suddenly became impossible
to cancel (seriously).

Since when is keeping money for doing absolutely nothing as promised the
American way?

------
vinni2
I thought most airlines are not giving refund due to coronavirus cancellations
but rather like a voucher or an option to rebook.

~~~
occz
They are trying their very hardest to not follow the law, but they are legally
obligated to provide refunds (at least in the EU).

~~~
mrep
Same in the US. I had 3 flights scheduled for this week and they were offering
me the shitty vouchers if i cancelled myself but lo and behold, a week before
each one they informed me they were cancelled or rescheduled and I can get an
actual cash refund.

------
rapjr9
Hey, let the market decide. If they don't give refunds and their competitors
do, then they go out of business.

------
odysseus
From the article:

> "But instead of honoring their obligation to give refunds, many airlines
> have only been offering vouchers and credits for future travel, which
> customers often must use before the end of the year."

This happened to me with Alaska Air on a nonrefundable fare, but I have to use
the credit 1 year from the date of cancellation, which in my case would be
around March of 2021. My hope is a vaccine will be available by then, or at
least by the time I actually fly in 2021.

I originally purchased the tickets with another credit that expired at the end
of April 2020. If you try to cancel on Alaska's web site, before you press
submit, you have to check a box that says "By cancelling this flight online, I
agree to FORFEIT all credits/vouchers I used to purchase the flight." That's
when I called a representative and explained the situation - and had a great
experience - all credits refunded and extended for another year. Just took one
15 minute call. Happy to fly Alaska again.

------
Cantbekhan
Why don't they just sell some airplanes to covert the refund costs?

~~~
iolo
I imagine there is a lack of buyers in the current economic climate. I doubt
any airline is currently expanding and in need of extra planes.

------
hurricanetc
How about we loan them the money at 16% interest, which is about the average
interest rate for an airline credit card.

And the loans go to the front of the line in any bankruptcy proceedings.

Then I’m okay with allowing them to make their own silly rules.

------
fredthomsen
If the vouchers were good for 10 years I might be ok with it

------
objektif
Is there anybody who is still sympathetic to airlines?

------
jdkee
No bailouts for the airlines.

------
bovermyer
I'm OK with airlines being allowed to never refund fares for cancelled flights
on one condition:

Every time a flight is cancelled, the CEO and every manager below him/her is
required to commit ritual suicide.

------
smoyer
I don't feel bad for them ... they used the previous bailout to buy back their
stock and then spent their profits to buy back more. Maybe they should put
some of those shares back on the market if they need money?

~~~
smabie
I don't think anyone wants them.

~~~
smoyer
That's a very good point ... I wouldn't be long on restaurants at the moment
either. The difference is that I think we'll return to restaurants once
COVID-19 isn't a threat. I think that our "practice" at telecommuting has
fundamentally changed business travel (we need it much less than we thought we
did) and that the current contraction in air travel is unlikely to completely
re-expand. Pleasure travel is different and it remains to be seen how quickly
people will "trust" being in public again.

------
a3n
> "The key element for us is to avoid running out of cash so refunding the
> canceled ticket for us is almost unbearable financially speaking," IATA
> Director General Alexandre De Juniac said.

I think he just said that it's too financially risky for a consumer to book a
flight, lest they be forced to have their ticket converted to an unsecured
loan, "secured" with something that they didn't want (a flight next year) that
may expire anyway. They're selling you a gift card.

I'm surprised that people are still flying in closed up metal tubes during
this pandemic. If anything the airlines should be giving discounts to lure
consumers, and even that is morally questionable.

Flights at this point should be freight or emergency only, for national
medical needs and repatriation.

