By: Sarah Johnson
On May 13, a group of five senators, Ed Markey, Dick Blumenthal, Kamala Harris, Chris Murphy, Elizabeth Warren proposed the Cash Refunds for Coronavirus Cancellations Act of 2020. This bill aims to address the huge issue many Americans, and people from all over the world, have encountered because the coronavirus pandemic has forced the cancellation of all types of events ranging from conferences, to weddings, to festivals, to virtually all business travel.
Why was this legislation proposed?
People are upset they have hundreds, if not thousands, of dollars tied up in “vouchers” to airlines because events, that may never be rescheduled, were canceled. Most of these vouchers expire in one calendar year, and who knows what type of world we will be living in then.
The U.S. Department of Transportation has been fielding complaints from airline customers, to the tune of more than 25,000 complaints and inquiries since the start of this pandemic, many of which were related to receiving refunds from the airlines. After receiving this influx, the DOT decided to issue a warning to airlines.
Their first warning came on April 3rd and stated “airlines have an obligation to provide a refund to a ticketed passenger when the carrier cancels or significantly changes the passenger’s flight, and the passenger chooses not to accept an alternative offered by the carrier.” In their most recent warning, issued on May 12th, they explain that “However, neither the term ‘significant change’ nor ‘cancellation’ is defined in regulation or statute. Based on the Aviation Enforcement Office’s review of the refund policies and practices of U.S. and foreign air carriers, airlines define ‘significant change’ and ‘cancellation’ differently when fulfilling their obligation to provide refunds.”
They go on to say that because these terms are not defined across the board, airlines can themselves choose how to define them, but, after they are defined the Aviation Enforcement Office “expects carriers to honor those reasonable interpretations in implementing their refund obligations and will focus its enforcement actions on instances where a carrier has disregarded the requirement to offer refunds, failed to honor its refund policies, or where it is determined that the carrier’s refund policies or practices are otherwise ‘unfair or deceptive’.”
The US Public Interest Research Group, Consumer Reports, delivered nearly 250,000 petition signatures to the airlines, and legislators, calling on them to give full, monetary refunds if and when passengers have to cancel their flights because of COVID-19. Anna Laitin, Director of Financial Fairness at Consumer Reports, spoke about their petition and the situation,
The airlines are arguing that one, they don’t have to, and two, they themselves are low on cash. They got $50 billion from the federal government, but no one’s flying right now. They have no money coming in. We can see their argument but at the same time, people’s hard-earned money that they need should not be the thing that’s holding up the airlines right now.
Last week, while being questioned about passenger safety, refund policies, and their use of the money Congress allocated to keep employees on the payroll, the head of Airlines for America said that if airlines were forced to issue cash refunds to everyone, they would go bankrupt. He went on to say that airlines are losing between $350 million and $400 million “every single day of the week” and when life gets back to some semblance of normal, “the industry will emerge a shadow of what it was on March 1 of this year.” Just days before the hearing, on May 4th, Frontier Airlines made an announcement it would guarantee an empty middle seat for a fee starting at $39 per passenger per flight. After outcry from the public and Senators, the CEO said the airline will rescind the extra fee and implement the open middle seat as policy.
What will this legislation do?
The Cash Refunds for Coronavirus Cancellations Act of 2020 aims to require airlines to provide cash refunds for any canceled ticket made by the airline or proactively by the customer. The bill’s sponsor, Ed Markey, had this to say at a press conference about the bill
At a time when families are struggling to pay for food, for housing, for prescriptions, it’s absolutely unconscionable that the airlines won’t return this money to consumers, especially after they received a multi-billion bailout from the Congress using American taxpayers’ dollars.
The bill will address this issue by putting forth the following items:
- Require covered carries (aka major airlines) and ticket agents to offer cash refunds for all canceled tickets during the coronavirus pandemic. The bill states they must do this regardless of whether the airline canceled the flight or the passenger canceled their individual ticket.
- The airlines and third-party ticket sellers will be permitted to still offer travel vouchers as an alternative to cash refunds, but only as long as that voucher is valid indefinitely (most of the currently issued vouchers expire in one calendar year). The voucher offer must also include clear and conspicuous notice of the flier’s right to a cash refund, making it known to them that they are choosing this voucher as an alternative.
- The airlines will be allowed to pay for cash refunds with any emergency money made available by Congress. Not all funds given to them by Congress can be used for this though, grants provided by the CARES Act, which are designated for supporting worker payroll expenses and employee benefits, must still be used for this purpose.
- This new right must be retroactive to any flight on or after March 1, 2020. This means any passengers who previously received a travel voucher and have not used it can ask for a cash refund instead.
- Mandate that cash refunds be available until 180 days after the end of the nationwide COVID-19 emergency declarations.
On May 13th, it was read twice and referred to the Committee on Commerce, Science, and Transportation, which is where it currently sits.
It is interesting to see the new legislation that is being put forth, week by week. As we continue to learn how this pandemic is infiltrating every part of our lives, I believe legislation like this will be more common. I am interested to see how discussion surrounding this bill and how the consumer protection precedent it is trying to set will play out. More to come, I’m sure!
Cover Photo by Suhyeon Choi on Unsplash
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