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United States Businesses Transportation Technology

US Fines Airlines More Than $7 Million for Not Providing Refunds (nytimes.com) 29

The Transportation Department has fined a half-dozen airlines a total of more than $7 million for failing to provide timely refunds to customers. The department's intervention contributed to the airlines' issuing more than $600 million in refunds, it said. From a report: Frontier Airlines, a budget carrier based in Denver, was fined $2.2 million, more than any other company. It was the only U.S. airline penalized as part of Monday's announcement and has issued $222 million in refunds, according to the department. The refunds were meant to compensate passengers for flights that were canceled, significantly delayed or otherwise altered substantially, the department said. "As people get ready to fly this holiday season, I want customers to know that the D.O.T. has their back," the transportation secretary, Pete Buttigieg, said on a call with reporters. Air India was assessed the second-largest fine, of $1.4 million, and TAP Air Portugal was fined $1.1 million. The remaining three carriers -- Aeromexico, El Al and Avianca -- will each pay less than $1 million. Including the penalties announced on Monday, the department's Office of Aviation Consumer Protection has issued a record $8.1 million in fines in 2022.
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US Fines Airlines More Than $7 Million for Not Providing Refunds

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  • So...a fine of 1% (Score:4, Insightful)

    by bradley13 ( 1118935 ) on Wednesday November 16, 2022 @11:11AM (#63055698) Homepage
    Yeah, that'll teach 'em.
    • And who get's the money?
    • Re:So...a fine of 1% (Score:5, Informative)

      by drinkypoo ( 153816 ) <drink@hyperlogos.org> on Wednesday November 16, 2022 @11:29AM (#63055738) Homepage Journal

      Frontier, the only US airline on the list, paid back $222M in refunds under the threat of larger fines, and paid another $100M to customers harmed by their actions. They are actually only having to pay $1M of the $2.2M fine as a result, so the total they are paying for their malfeasance is $101M, or 45.4%, and the bulk of the money is actually going to consumers. I'd like to see them pay even more, of course (what they did was illegal, underhanded, and intentional; they should pay at least 100% on that IMO) but they are paying a lot more than what you said.

      The real and actual problem, and it is both of those things, is that this action doesn't cover bigger US-based airlines who also are operating such scams.

    • Yeah, that'll teach 'em.

      Yeah, 1% on top of an already large cost they were trying to avoid and will need to pay back anyway. And this is just the US. Many of these airlines are going to face similar charges. E.g. TAP is facing lawsuits for failing to comply with EU refund rules as well.

  • by Beerismydad ( 1677434 ) on Wednesday November 16, 2022 @11:38AM (#63055770)
    Recommended reading for anyone like me who has ever fumed over the airline industry's poor treatment of customers. https://www.cnn.com/2022/11/15... [cnn.com]
  • Refunds? Is that a thing?

    Generally the airline will give you a voucher that is valid for 1 year for a cancelled flight. Then if you try to use it it won't be applicable because of A or B reason.

    Of course, to get the voucher in the first place you have to spend several hours holding and arguing with people on calls (that often cut off so you need to restart).

    In 40 years I've literally never gotten a real cash refund. (Save in the case of 24 hs immediate cancelation policies that some online travel agencies h

    • The law reads that if the airline cancels, they have to give you cash, though they will often lie about this and offer you a voucher with the claim that it's "our policy." If you cancel, you have to accept a voucher good for one year.

      • Re:Refunds? (Score:5, Interesting)

        by anegg ( 1390659 ) on Wednesday November 16, 2022 @01:24PM (#63056056)

        The law reads that if the airline cancels, they have to give you cash, though they will often lie about this and offer you a voucher with the claim that it's "our policy." If you cancel, you have to accept a voucher good for one year.

        Yes, both the US Code and the "Contract of Carriage" I received from Delta when I bought a ticket to Hawaii in early 2020 required the airline to refund my money if the flight for which I purchased a ticket was canceled or had a significant alteration in its scheduled departure. But "dark patterns", evasive maneuvers, and word games quickly commenced late March when it became obvious that my flight scheduled for late April 2020 wasn't going to happen.

        Delta insisted that Delta wasn't responsible for giving me a refund, the ticketing agent was. Since I had bought the ticket through Costco Travel, I called them. Costco travel insisted multiple times in multiple phone calls that I didn't understand the law or the Contract of Carriage, no refund was required or forthcoming, and the best that I could get was a one-year travel voucher. I stuck to my guns with Costco Travel, and finally got to talk to a manager who pointed out that my flight wasn't actually "canceled" yet, it was just no longer "scheduled". I told the manager "fine... I'll call back the day before the flight when it is actually canceled and you can give me my refund then." We ended the phone call, but he called me back about five minutes later and said that I was right, I should get a refund, and I got my refund.

        From conversations I had with other people in similar situations, this approach to refusing refunds was widespread. Certain airlines like Southwest had much better non-refund options. Some had longer travel voucher lifetimes (what good is a one year travel voucher at the beginning of a worldwide pandemic that by all estimates was going to take multiple years to quell?). Some had unlimited travel credit. But most had crappy travel voucher offers at best. And they were all ignoring the US Code that clearly states that in this circumstance (the airline can't provide the very thing you have paid for, a ticket to travel from Point A to Point B on a specific date and time) the airline has to return the money that you paid. In Delta's case, the "fine print" (Contract of Carriage) that they sent to me after my ticket purchase actually said exactly the same thing (probably because US Code requires it).

        Fining Frontier is just the tip of the iceberg, or it should be, at least. With few exceptions (maybe Southwest) the US airlines engaged in extreme subterfuge to avoid providing refunds required by law, in many cases getting passengers to accept a vastly inferior compensation in the form of a limited-lifetime travel voucher. I think that some steps have been taken towards making the involuntary refund process more transparent, but ultimately it should be as easy as booking the flight in the first place. If the airline can't provide the carriage for which you paid, then they have to give you your money back. Simple. Straightforward. Any attempts at evasion or lying about the requirements should result in triple damages.

        • Don't forget that multiple US airlines operated massive share buybacks instead of reserving cash in the great years before covid, then accepted US money on the basis that they'd keep their staff, and laid off/furloughed a pile of them. Bad actors all round, condoned by Gov.

    • It all depends but I learned that there is (or was) a policy that if you are booted off a flight due to the airline overbooking the flight you are legally entitled to a new flight and a cash payment of 3x your ticket price.

      It happened to me once when US Air was a thing. 3 of us got denied entrance to the plane due to an overbooking. The manager on staff came out personally, explained the situation and came back with new boarding passes and cut us checks on the spot. Ended up netting over $800, lucky for

    • Refunds? Is that a thing?

      Not sure about the USA but certainly in places where there's a law that covers this the airlines absolutely need to refund the flight, or offer a complete refund if they rebook you and you don't want to accept the new flight time.

  • Glad to hear that TAP got their share, even if small. They denied me for a compensation claim after a long delay that was their fault, I was very upset then as there is little thing you can do against them as an individual. They have a terrible customer service, very hard to reach and slow to respond.
  • My advice, don't waste your time fighting an airline, complain to the DOT.

    https://www.transportation.gov... [transportation.gov]

  • As corporations continue to want to have rights like individuals, they should be held to the same standard as individuals. Had a half a dozen people delayed returning $600M that was effectively taken fraudulently, would they be seeing jail time, or just a 1% fine?

    • As corporations continue to want to have rights like individuals, they should be held to the same standard as individuals.

      Completely pointless statement. There are already laws which apply to corporations. Being classed as individuals or not is irrelevant to the discussion.

      Had a half a dozen people delayed returning $600M that was effectively taken fraudulently, would they be seeing jail time, or just a 1% fine?

      I guarantee you, no one delaying the return of $600m simply sees jail time. What you're describing will often be settled as a contractual dispute for individuals and at most will see fines which is about the only thing that ever gets dished out under contract law. You throw the term fraud around too loosely. There's some specific and higher legal bars that n

  • Since the airlines raise their rates to pay for overhead, the non-refund requesting passengers end up picking up the tab.

    Better solution: rate the airline on the webs and let people steer clear of the bad ones.
    • Fines aren't like taxes or gate fees which are part of doing business and apply to everyone.

      Fines are avoidable if you didn't violate regulations. Also keep in mind that by keeping the cash on hand all this time, they had a leg up on the competition... a $222 mil leg. So there should be a competitive recompense given to their competitors.

      • The airline can avoid the fines, but not the consumers paying increased rates to pay the airlines fines.
  • $7M is like four days of flights, or 1/100 of the money they were sitting on. Talk about a peepee slap!
  • Unfortunately, I have already heard a lot of sad stories where the airline is to blame. Although I try to fly with different airlines and only business class, unfortunately everything happens and the flight does not always go without incident. I am glad that I found where it is profitable to buy Business Class Flights to Slovenia [voyagu.com] I fly here very often on a business trip and I would not want to overpay out of the blue for the comfort that you may not even get.

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