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Covid19 has disrupted the global economy. The travel industry is reeling. In previous posts, I’ve highlighted how airlines often kick customers to the curb when the going is good. However, they ask for taxpayer funded assistance when things go south. We’re seeing ourselves in similar waters now. The US Department of Transportation (DoT) recently mandated that airlines issue refunds instead of giving customers vouchers for future trips. The rule applied to all flights by US and international airlines that operated to, within or from the US. However, airline lobbying groups aren’t pleased and want the rule to be overturned.

Airlines not issuing Refunds

Thanks to Covid19, travel has come to a grinding halt. Airplanes are now stationed at major airports. Lounges and TSA lanes are running empty. After many weeks, many customers are still trying to get refunds from airlines for trips canceled due to Covid19. Many customers are now citing the DoT ruling in order to ensure that they get a refund.

Here’s what the DoT officially stated, as reported by Travel & Leisure:

Although the COVID-19 public health emergency has had an unprecedented impact on air travel, the airlines’ obligation to refund passengers for cancelled or significantly delayed flights remains unchanged.

Cash Crunch

Due to multiple cancellations, airlines and already running short on cash. They’re losing millions daily due to schedule disruptions as well as government restrictions on travel. Airline lobby groups argue that issuing a refund further worsens airlines’ cash issues. NPR reports how the head of IATA framed the issue:

The key element for us is to avoid running out of cash so refunding the canceled ticket for us is almost unbearable financially speaking.

In some quarters, we’ve also seen arguments where lobbying groups have said that a loss in cash would hurt the jobs in the airline industry.

The Pundit’s Mantra

I don’t quite buy their argument. Firstly, I’ve questioned how businesses that we so profitable got here in the first place. Secondly, airline CEOs have been setting new records with their compensation, with AA’s CEO earning over 190 times the average AA worker. If airlines truly cared about workers and their jobs, the pay structure would’ve been more equitable and fairer.

Also, as per IATA’s argument, if the average airline worker is hurting, then so is any average worker around the world. People are losing jobs and have to sit at home. While the travel industry is amongst the worst hit, workers in many industries have been grounded or rendered jobless.

I wrote a few days back about how airlines have the opportunity to hit the reset button. For far too long, airline CEOs and their groups have been talking the talk, but not walking the walk. If airlines are running short on cash, then so is the average person who booked a ticket and wants a refund.

What do you think about this request by the airlines? What’s your opinion about the DoT ruling? Tell us in the comments section.


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