Coronavirus refund policies are up in the air. While some airlines, cruise lines and hotels have offered customers their money back amid a wave of coronavirus cancellations, others haven’t.
- Airlines that are openly defying the government’s refund rules.
- Tour operators pocketing hefty cancellation fees.
- Cruise lines demanding three months or more to refund the price of a ticket.
The travel industry is desperate. If companies make every refund, it could put them out of business. Tightening refund policies might stem the losses — or postpone the inevitable.
What are the typical coronavirus refund policies?
Here are typical industry policies:
- Most airlines are offering a full refund when they cancel a flight, but they’re pressuring customers to accept a ticket credit.
- Cruise lines are still giving refunds for canceled cruises. They’re also encouraging customers to accept a credit by offering extra incentives, such as raising the value of their vouchers.
- Hotels chains have loosened their cancellation policies, allowing refunds for noncancelable rooms until late spring.
But there are outliers.
United Airlines’ coronavirus refund policies defy government
Take United Airlines’ refund policies. In early March, United quietly revised its refund rules, effectively forcing most passengers affected by its schedule changes to accept a ticket credit instead of a quick refund. It later amended its new policy in response to public pressure, allowing refunds when travel is disrupted by more than six hours.
Then United revised its policy again, this time just for international flights. When there’s a flight cancellation, the airline is offering a voucher for the full value of the ticket. If you don’t use the voucher, you can get a refund after a year.
Leslie Wiercinski found out about United’s policy when she tried to get a refund for a canceled flight from Washington, D.C., to the Cayman Islands. Wiercinski, a retired social worker from Brookeville, Md., asked for a refund, but a United representative told her that she could only receive a voucher for future travel.
“But the Department of Transportation says I should get a full refund,” she says. Her travel agent contacted United and cited the Transportation Department’s ticket refund rules. Only then did United fully refund her ticket.
United would not comment on recent policy changes. I asked the Transportation Department about the new refund policies, which have since spread to other carriers. A representative said the department is investigating refund issues but reiterated that when an airline cancels a flight, a full refund is due.
Tour operator charges steep cancellation fee
A Colorado-based tour operator, Voyageurs International, has a refund policy that has drawn many complaints for its coronavirus refund policies.
Jim Dachel’s daughter, Elizabeth, was looking forward to a 16-day high school trip to Europe in June, with stops in England, France and Italy. The tour operator canceled her trip last week, refunding $4,445 after charging a $1,900 cancellation fee. A representative told Dachel that the company needed to cover its expenses and pointed out a clause in the contract that allowed it to charge the fee.
“They refuse to provide an itemized list of what costs were incurred for the students thus far,” says Dachel, a manufacturing representative from Colfax, Wis. “I believe this cancellation fee is about profiteering.”
John Flanders, an attorney for Voyageurs International, says the cancellation fee covers what the tour operator spent to organize the trip. “There’s a lot of investment and a lot of upfront costs,” he says.
After last month’s State Department travel advisory, the company decided to cancel all of its tours. But Flanders says it isn’t trying to profit from the decision. “Right now, we’re just trying to keep this business afloat,” he says.
Cruise line wants “99 days” to refund
Other travel companies are delaying refunds. Kevin Garvey decided to cancel his family’s Oceania cruise, scheduled for September. Under the cruise contract, he had until May 9 to cancel and receive a full refund of his $5,250 deposit.
Three weeks ago, he canceled the vacation and started waiting for his money. It didn’t come. “Oceania just informed me that it’s decided to prioritize refunds,” Garvey, a retired lawyer from Chicago, told me shortly after he got the bad news. “Since our cruise was not scheduled until September, it would take up to 99 days to get the refund.”
Ninety-nine days? I checked with Oceania, and a spokeswoman said refunds were taking up to three months — considerably longer than the industry-standard of 30 days. I gave Garvey the email address of Oceania’s director of passenger services, Dayami Lazo. After he contacted her, the cruise line processed an immediate refund.
Why is this happening?
What’s behind these coronavirus refund policies? Vacations are all being canceled at the same time, placing an enormous strain on the travel industry. Many companies, especially smaller ones, don’t have the cash on hand to give refunds for all the canceled trips at one time.
“The entire system is conserving cash right now,” says Eric Martin, owner of Wilderness Voyageurs, an adventure tour operator based in Ohiopyle, Pa. “So everyone is issuing credits.”
Martin says the new policies are meant to help travel companies survive a run on refunds. “No one is intentionally instituting policies to [harm] their customers,” he adds. “We will need them once this is over.”
There’s a way to deal with these policies. First, review the terms of purchase and any applicable rules. Often, the refund rules are unambiguous, as was the case with Garvey. If you can live with a credit, it’s worth considering. Martin is correct: Many travel companies won’t survive if everyone, all at once, asks for their money back.
How about a credit-card dispute? That’s an option, but be careful with it. If you’re filing a legitimate chargeback against a large company, that’s fine. But if there’s a travel agent involved, you may hurt a small business that’s unable to sustain a big loss. “It may come back to the agency for fulfillment,” says Linda Halstead, a travel specialist in Northern Virginia.
Fortunately, these refund policies shouldn’t be with us for long. Experts predict that when the coronavirus crisis abates, businesses will return to customer-friendlier policies. Assuming the companies survive, of course.