Should Non-Refundable Airline Tickets Be Refundable

From time to time, a story ‘gains legs’ in the media, telling the sorrowful tale of some person who through terrible tragedy and no fault of their own, is unable to take the flights they had previously booked and paid for.

Such stories are made better if the person in question is elderly, in poor health, short of money, and either a veteran or a mother with (sick) young children, and they become unavoidably compelling if the airline involved is an unpopular airline.

So last week saw a ‘perfect storm’ of a story, involving a Vietnam Vet dying of cancer who was advised not to fly by his doctor, with the airline – Spirit Airlines, also being vilified in the news at the same time for initiating a $100 carry-on bag fee – refusing to refund his $197 non-refundable ticket.

Travel Insider readers were asked in last week’s newsletter if they felt that non-refundable tickets should be just that – as their name implies, non-refundable; or if they thought that sometimes such tickets should be refundable, or if all tickets should always be refundable.

There were three options for them to choose, which were defined/described as :

• No means no.  If a person wants a refund, they should have bought a refundable ticket in the first place.
• Airlines should make case-by-case decisions and rarely but occasionally give refunds in special situations.
• All tickets should always be refundable, no matter what.

Before sharing how readers voted, here is some commentary and industry background to the issue.

People Make Their Own Voluntary Ticket Choices

First, it is common with the sale of perishable items that the sale of the items be non-refundable.  It is not something that only the airlines do.  If you buy tickets to a concert and don’t turn up, you usually can’t get a refund for your tickets.

On the other hand, concert/theater tickets are usually transferable – you can give them (or sell them) to someone else to go in your place, whereas airline tickets are usually non-transferable.

Second, people almost always have choices and options when buying an airline ticket.  They can pay more for a partially or fully refundable/changeable ticket, or they can pay less for a more restricted ticket with greater penalties on changes or refunds.  No-one is ever forced to buy a non-refundable ticket.  Doing this is something everyone voluntarily chooses to do – presumably because they think they can beat the odds, and will end up being able to travel on the dates they have locked themselves into.

Third, people can also choose to buy travel insurance if they wish as an alternate way of covering the costs of changing or cancelling their tickets.  Some insurance companies offering ‘cancel for any reason’ insurance coverage, others have more restrictive reasons attached to their less expensive policies (see our three part article all about travel insurance for more on this).

Lastly, surely no-one is ever tricked into unknowingly buying a non-refundable ticket.  The rules are fairly obviously displayed, and the concept of non-refundable tickets is hardly startling or unexpected or new.

So every traveler has plenty of choices, including buying more expensive and more flexible tickets and/or buying third party travel insurance.

Non-Refundable Tickets Save All Passengers Money

Now for an interesting change of perspective.  The people who buy non-refundable tickets and can’t travel actually help to subsidize those of us who do travel.

Airlines know that a certain percentage of non-refundable tickets will end up not being used, and this is factored into both the number of tickets they sell per flight and also into the fare levels they need to set in order to break even and earn a fair return.

If airlines had to agree to refund all tickets, all the time, the average ticket prices would increase.  This might benefit a flakey traveler who sometimes cancels his travels, currently at great cost to himself, but it would hurt all the rest of us who can make definite plans and stick to them.

Shouldn’t Passengers Be Fairly Expected to Honor Their Contracts

One last point.  Where are the grounds for outrage if a person willingly and knowingly and voluntarily (is that enough adverbs?) buys a non-refundable ticket and subsequently his request for a refund is turned down?  Weren’t those the rules that were agreed to, in advance, by both the airline and the passenger?

Isn’t this analogous to a person placing a bet in a casino, and then asking for his money back when he lost the bet?

So, in case you haven’t gathered, in our opinion non-refundable fares are a good thing for all passengers, and airlines should not be compelled to refund fares that were openly sold as non-refundable.  We see that the mandating of refunds would not only be a grave and unwarranted intrusion of government regulation into the sanctity of contract, but would also increase airfares for all travelers, causing more overall harm than good.

Special Situations?  Special Considerations!

But life is seldom as black and white as we may wish it were.  How about the middle ground – airlines should sometimes make special exceptions to their no-refunds rule, on a case by case basis.

Let me tell you an interesting story to illustrate this point.  Some years ago I called in to the Special Services desk at an airline to ask for a non-refundable ticket to be refunded.  My agency had an ultra-preferred relationship with this airline which meant they would waive the no refund rule and fully refund any ticket we ever issued, no matter what the fare rules were.

What’s that, you say?  You thought a non-refundable ticket was always non-refundable?  Actually, airlines have always been willing to grant ‘waivers and favors’ to their most valuable clients – both high producing loyal travel agencies and key direct commercial accounts, as well as to specific individuals (typically elite level frequent fliers).

Anyway, back to the story.  I was chatting with the friendly agent at the airline while she was working through the paperwork to approve the refund, and mentioned ‘Oh, Mr Smith will be so appreciative of this.  He even came into the agency with a doctor’s note, because he has just had surgery and can’t fly’.

The agent interrupted and said ‘Oh, David, I wish you hadn’t told me that.  We’ve been told that we have a blanket ban on refunding any tickets, ever, for medical reasons, and now that I know this is a refund for medical reasons, I’m stuck with this blanket ban’.

I tried to understand how it was that the airline would refund any ticket any time I asked them to, as long as I gave no reason other than ‘just because’, but if I volunteered that it was due to a bona fide medical problem, they would slam the door in my face and refuse to help.

The explanation :  The airline had suffered so many fraudulent claims based on doctors’ notes that they decided just to turn their backs on any type of medical claim in the future.

A Fraudulent Medical Claim Supported by a Fraudulent Doctor

Let me now give an example of a fraudulent medical claim.

One time I booked travel for a young couple to go to Australia together for a ten day vacation.  A couple of weeks before they were due to go, the guy came in to the office and explained they had split up.  He still wanted to go, as a single, so we changed his hotel bookings, and moved his seat on the plane away from the girl he was no longer traveling together with.

A day or two later, the girl called, asking questions about her ticket and if it could be refunded.  She didn’t say why she was asking, and didn’t mention the split with her former boyfriend.  We explained it was a non-refundable ticket and we couldn’t refund it.

Another day or two later, she turned up in our office with a note from a doctor.  The note simply read ‘Please refund Miss Smith’s ticket to Australia.  In my opinion, she should not be traveling at this time.’

We pointed out to Miss Smith that the ticket was nonrefundable, and the rules did not say ‘except for people with a doctor’s note’.  Because we knew the real reason and were curious, we also- called up the doctor to ask what the medical condition was that was interfering with Miss Smith’s ability to fly.

The doctor invoked patient confidentiality and got a bit stuffy at us for daring to question his ‘professional opinion’.  The fact that his professional opinion was an out and out lie didn’t interfere with his seeking to claim the moral high ground for himself and his attempt to defraud the airline out of about $1000 (the cost of the nonrefundable ticket).

Do you really think that the same doctors who risk everyone’s lives by over-prescribing antibiotics to anxious patients, including those with viral complaints that don’t respond to antibiotics anyway, merely to shut them up (read this terrifying article about the implications to us all of such reprehensible irresponsibility), the same doctors who lavish addictive psychotropic drugs on anyone who asks for them, would think twice about writing a meaningless note instructing an airline to refund a patient’s airfare?  (My lawyer would probably want me to say that such doctors are doubtless only a very small part of the overall population of doctors, most of whom are honest and ethical.)

And, more to the point, how can an airline police such requests?  Airlines already get ‘blamed’ for asking for what seems to be onerous documentation to prove the death of a family member when someone is requesting a compassionate fare (something that used to be massively abused, although now some airlines will actually call the appropriate funeral home as an easy quick way of checking).

Where to Start and Stop with Special Exceptions

Would airlines have a list of official approved doctors who they trust?  A list of appropriate and inappropriate reasons for refunding non-refundable tickets?

And whatever the list – written or unwritten – of special circumstances, there’d be constant pressure for the airlines to then make special special exceptions for people who almost but not completely qualified for a ‘regular’ special exception, and so on and so on.

Instead of both airlines and passengers having the certainty of a ‘no refunds’ across the board rule, there’d now be great uncertainty and ongoing complaints about apparent uneven and unfair exceptions being made.

Summary of the Situation

Selling non-refundable tickets gives the airlines a way to sell some ‘top up’ tickets at lower than normal prices to people who probably wouldn’t otherwise fly.  If we are able to arrange our lives to make the downside risk of such tickets – ie a cancellation penalty of up to 100% – acceptable, we should go ahead and take advantage of the relatively bargain prices they are sold for.

If we have concerns about possibly needing to cancel, we should either buy trip insurance or a more expensive ticket with lower penalties.

If we end up cancelling a nonrefundable ticket, we have no-one to blame but ourselves.  For once, the airlines are completely blameless – even though they’re keeping all our money and giving us nothing in return (hey – couldn’t we at least get the frequent flier miles for the flights we paid for but didn’t take?).

What Travel Insider Readers Think

So what do Travel Insiders think?  Our readers are very regular fliers and generally savvy about ticket issues and the world/life in general.

To my slight surprise, almost a quarter of readers thought that tickets should always be refunded, no matter what the situation.  A slightly greater number of readers agreed that non-refundable should mean exactly that – no refunds.  And nearly half wanted to see airlines make special exceptions in special situations.

The Last Word – From Spirit Airlines

Amazingly, Spirit Airlines and its CEO Ben Baldanza, while showing themselves fearless in the face of criticisms of their carry-on bag charges, caved and refunded the $197 ticket to the dying vet.

Baldanza said

Every day we seek to balance customer service with customers’ demands for the lowest airfare possible. But sometimes we make mistakes.

In my statements regarding Mr. Meekins’ request for a refund, I failed to explain why our policy on refunds makes Spirit Airlines the only affordable choice for so many travelers, and I did not demonstrate the respect or the compassion that I should have, given his medical condition and his service to our country.

Therefore I have decided to personally refund Mr. Meekins’ airfare, and Spirit Airlines will make a $5,000 contribution, in his name, to the charity of his choice, Wounded Warriors.

We have worked hard to build a great company that makes air travel affordable while making our employees proud and customers satisfied.

All of us at Spirit Airlines extend our prayers and best wishes to Mr. Meekins.

Hmmm – very nice.  Do you think the airline got much more than $5197 of publicity as a result?

And that is probably the ultimate rule the airlines will always use to measure their actions – what will it cost us in negative publicity if we don’t do this, or what will we gain in positive publicity if we do?