Airline cancellations are making news again as the omicron variant brings its own disruption, refueling a drama playing out over refunds that found major airline executives on Capitol Hill this week explaining policies and recovery snags that continue to frustrate millions of travelers.
Though they had a major role in glamorizing loyalty programs, airlines can apparently use a refresher course in how to retain loyalty with meaningful moves like issuing timely refunds.
Appearing Wednesday (Dec. 15) at a committee hearing titled “Oversight of the U.S. Airline Industry,” CEOs and top executives from American, Delta, Southwest and United, along with the Association of Flight Attendants, outlined operational challenges faced by the air industry in 2020 and 2021, and answered for the record consumer complaints about refunds.
As ABC News reported, United CEO Scott Kirby said, “All of us, particularly our regional partners, simply don’t have enough airplanes to fly. We have almost 100 airplanes effectively grounded right now, regional aircraft, because there’s not enough pilots flying, which means we just can’t at the moment fly to all the small communities that we would like to.”
Delta COO John Laughter noted, “The omicron variant has created further uncertainty and there is no clear consensus on when business and international travel will return.”
Admitting that scheduling mistakes and an unprecedented pilot shortage led to many of the cancellations in summer and fall, airline leaders had a lot to answer for. In 2020 airlines received $54 billion in taxpayer funds help to prevent layoffs. While it’s not helping with the refund situation, American Airlines CEO Doug Parker said the bailout “saved the airline industry.”
See also: DOT Report: 18 Airlines Still Being Probed Over Pandemic Refunds
Though the industry may have been saved, customer experience was not.
CBS News reported that “In 2020, the U.S. Department of Transportation received nearly 90,000 complaints about ticket refunds, up more than 5,000% from less than 1,600 in 2019. Airlines still owe customers upwards of $20 billion in refunds for flights that were canceled last year, experts say.”
That story added, “Hemorrhaging cash, many airlines opted to preserve capital by not reimbursing consumers for canceled flights as air travel came to a virtual stop. Under U.S. law, airlines are required to offer refunds to passengers when a flight is canceled or the schedule is significantly changed. Still, there are no such guarantees for those who willingly opt not to fly, even due to a global pandemic.”
It’s easier to take one’s business to a competing retailer or ecommerce site than to another airline, but travelers are angry over refunds and billions of dollars in expiring flight vouchers.
The right refund policy at such times can secure customer loyalty at its most vulnerable.
In the study Merchant Refund Policies: Keeping Travel And Entertainment On Track, a PYMNTS and Fortis collaboration, research “suggests that merchants’ cancellation and refund policies significantly impact customer retention and customers’ willingness to use hospitality services.”
For example, 70% of consumers who canceled bookings and received a full refund also say they are “very” or “extremely” likely to rebook in the next year.
The study found that “Of consumers who canceled their reservations, 49%, the equivalent of 30 million people, sought refunds from their credit card issuer via a chargeback, while 34%, or 20 million consumers, sought refunds from the provider of the hospitality service.”
Get the study: Merchant Refund Policies: Keeping Travel And Entertainment On Track