Government’s Rules Regarding Airlines Refund
The U.S government requires airlines that canceled or postponed flights to be compliant in providing refunds to passengers. According to The U.S. Department of Transportation (DoT) (2020), airlines both in the U.S and foreign are required to refund to passengers for counseled flights. They are also obligated to provide refunds on ticket prices or additional charges incurred by obtaining the tickets. However, DoT's Aviation Enforcement Office provides airlines with a time frame to comply with the rules before taking action against the airline. For Europe, the commission requires that airlines refund to passengers within the first week of cancellation. However, with thousands of passengers requesting their monies, the commission has compliance issues as airlines resorted to issuing vouchers other than cash. Such countries include Italy, Croatia, and France. On the other hand, passengers are entitled to a refund, but airlines can offer remedies in the form of credits or vouchers. The Competition and Consumer Commission (ACCC) outlines that entitlement to refund ceases if the government results in extreme measures such as a lockdown.
What I Discovered
I discovered that globally, airlines are not cooperating with government refund rules. Although the guidelines are clear, the coronavirus outbreak was unprecedented, and most airlines were caught unaware, and perhaps feeling like cancelations are not entirely their fault. Hence, they have to deal with mass requests of refunds that, in most cases except for countries such as Australia, require refunds in cash. Also, with inconveniences and thousands of claims, airlines result to other means of refund such as vouchers and credit that are somewhat inadequate to cover the costs for passengers who need the money to survive the pandemic. However, as a venture that relies heavily on customer loyalty and commitment, refusing to comply with government rules could negatively impact non-complying airlines even after Coronavirus is death with.
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What is Happening
The issue is that governments have rules and regulations that want a passenger-centric refund process, but the airlines are not complying. For most consumers they want their money back following cancellations. However, with internal airline policies changing each day since COVID-19, airlines result in other means of compensation that do not align with their travelers' wants or government provisions. For example, the president of United airlines outlined that they were enacting policies that would allow for a quicker compensation process. Still, in Europe, cases where the commission has to oversee various countries' compliance, effectiveness is also hindered. Many airlines are taking advantage of how the law applies and optimizes the situation to refuse reimbursement in cash (Deutsche Welle,2020).
Impact on Airline Industry
Consequently, it could result in a negative outlook that impacts consumer choices that influence the industry's revenues. Passengers use airline services based on delivery and the ability to cater to their needs. However, with refunds being delayed and not compensated, some will prefer shifting to airlines that have been true to their word. As Horton (2020) outlines, passengers find themselves giving airlines interest-free loans while some airlines refuse to refund altogether. Although the EU commission has rules, it leaves the individual countries to implement them, which explains passenger's distress.
It could influence the survival of airlines due to a lack of competitive advantage. In the long run, customer loyalty will determine whether airlines thrive or fail. They are not attentive to the needs of clients, disregard vital facts, and provide a pace for disinformation. Companies seem to focus on short term strategies that minimize cost. Hence, such behaviors alienate clients and adversely impact trust. It also means a reduction in purchases for some airlines that do not comply with regulations. If customers feel that the airlines did not have their back when they needed them most, revenues will be impacted in the long run.
References
Deutsche Welle, (DW). (2020). Coronavirus crisis: Airlines make it difficult to get refunds for canceled flights. https://www.dw.com/en/coronavirus-how-to-get-a-refund-for-a-canceled-european-flight/a-54528044
U.S Department of Transportation. (2020). https://www.transportation.gov/briefing-room/us-department-transportation-issues-enforcement-notice-clarifying-air-carrier-refund
Horton. W. (2020). The Legal Reason Why Airlines Should Give Refunds For Cancelled Flight Tickets During Coronavirus. Forbes, https://www.forbes.com/sites/willhorton1/2020/04/06/the-legal-reason-why-airlines-should-give-refunds-for-cancelled-flight-tickets-during-coronavirus/#17676ab51523
