American Airlines’ one-year rule strikes again

By | August 22nd, 2016

In May 2015, Martha Swain booked tickets on American Airlines from Minneapolis to Shannon, Ireland for a golf trip her husband organized for a group of friends.

Between the ticket purchase and the departure date, Swain’s husband was diagnosed with a serious form of cancer, and had to undergo major surgery, followed by chemo and radiation therapy. Unable to travel, Swain canceled their plans, and American told Swain she had a year to rebook her trip.

A year later, American now says Swain is too late.

Swain’s case raises questions about the meaning behind the seemingly arbitrary one-year-from-the-date-of-purchase rule for use of airline credits, and what consumers should do when it trips up their plans.

In July, Swain called to rebook, but American told her she’s out of luck and should have scheduled her new trip by May 2016. When she canceled, American told her she had a year. What American may not have specified is that the clock had started running when her original tickets were issued.

Swain took notes during her call with the airline and wrote down that she had a year to rebook. Swain may have had other things on her mind when she called the airline — things like her husband’s prognosis and treatment. And without having the benefit of a call transcript to review, it’s tough to say whether Swain misheard the airline representative, or whether the airline didn’t provide any explanation.

But either way, it shouldn’t matter.

Many times a month, we receive help requests from airline passengers who stumble over this same rule. And let’s be clear — while this rule exists across the board at all airlines, it’s just a rule, which was written to limit customer flexibility, to ultimately benefit the airline.

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But consider the rule’s limitations for a moment: Swain booked her trip to Ireland three months before the date of travel. In reality, she could have booked it up to 11 months in advance. Upon cancellation, that would have given her just one month to figure out how and when to use the credit.


Is that fair?

Some of you will say, yes, rules are rules. Some of you will say that she should have purchased travel insurance. And if you’re like me, you’ll say that the airline should bend the rule.

Rules are made to be bent, if not broken. Perhaps not in every case, but in some cases, yes.

Maybe I’m too sympathetic to consumers with life-altering diagnoses. Maybe I too frequently side with airline passengers. I’ll concede that. I’m a consumer advocate, after all.

But even the civil justice system with its complex Federal Rules of Civil Procedure recognizes that dismissal of a case for a procedural or administrative error may be too punitive. If this were a case in the court system, a judge would issue an order to show cause and the party would have to explain why a deadline was missed before a dismissal was deemed appropriate. The party may be given the opportunity to explain why a deadline was missed before the case was thrown out.

But airlines don’t have to be fair. They are businesses that must answer to shareholders and watch their bottom line. It should be noted, perhaps, that American’s bottom line hasn’t done too poorly in recent months.

Swain could write to American and plead her case, using the executive contacts we publish on our site.

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Or, we could write to American on her behalf, which sometimes yields a more thoughtful analysis. That’s what we did for Wayne Brumett when his daughter-in-law’s life was changed with the diagnosis of a severe seizure disorder. And it’s what we did for Paul Bisbee when he encountered the same problem after a heart attack.

But I’ll let you decide on this one.

Should we advocate for Martha Swain?

View Results

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  • Lindabator

    I advocate for my clients – and ask the airline to extend the option date – I know they do not have to, but does not hurt to ask. Just be reasonable in the request – and letting them know she has a trip in mind may actually be helpful

  • Alan Gore

    Advocating in this particular case won’t do any good, but we do need more time to use those credits. After all, on all carriers other than WN we have paid a big fee for the privilege of rescheduling. We should get at least three years.

    Even though Southwest has the same one-year expiration on credits, you can extend for another year for a $50 fee. Since this pax wouldn’t have paid a change fee on a Southwest cancellation, this would have been a really good deal.

  • James

    This is an accounting issue. In company annual reports, there is an accounting for the finances for the company. These unused ticket credits must be carried as a liability (debt) for the airlines — and will make the bottom line for the airline look worse. By limiting the amount of time that these credits are valid, it limits the amount of time the airline must carry the liability for accounting purposes — and effectively carry the necessary capital to fund these liabilities.

  • Regina Litman

    My Yes vote is a Yes, Of Course.

  • FQTVLR

    I can see the one year rule for domestic tickets where we might have more opportunity to use the ticket. But international tickets should have a longer use time on them–at least two years from the date of issue. Not everyone who has to cancel international tickets can reuse them in the limited time available, especially if they bought 10 months in advance for a trip.

  • Mel65

    I’m a little torn. I understand the accounting issues of dealing with what is essentially outstanding funds; however, I just threw out a voucher I received from United (customer service counter, so it was paper) for a missed flight connection and’no hotel, because it expired June 16th and I hadn’t paid attention to the date. Frustrating and irritating, but totally my own fault for not keeping on top if it. :(

  • Jeff W.

    Shouldn’t matter if it is international or domestic. If the airline gives you credit for a flight originally to Ireland, you can certainly use those credits to book a trip stateside.

    There are plenty of people who book domestic trips well in advance. Especially to favorite locations like Hawai’i or Orlando.

  • SierraRose 49

    Wish Elliott.org existed in 2007. Had to cancel United tickets to San Francisco. Hubby needed to have bypass surgery. Got caught in the 1-year rule. Unable to re-use tickets. Lost $500. Lesson learned. Expensive.

  • MikeInPA

    Using a credit card that provides trip insurance would also have provided protection at no cost.

  • Annie M

    I agree. But if these people would just buy travel insurance, I would bet 90% of them would be able to be reimbursed if they bought the right policy.

  • MarkKelling

    Please let us know which credit card includes trip insurance. I have not heard of that and it would be a useful perk.

  • MarkKelling

    Yes, airlines could and should be more flexible on how long you have to use flight credits. At least Southwest allows you to extend your credit for an additional year without any real hassle (just a $50 payment). But they aren’t and they don’t for the most part.

    Would insurance really have paid anything on this? It might cover the change fees. But you have the year to use the flight credit so you really have not lost that unless you don’t rebook within the year. If the doctor said this passenger could never fly again, insurance should pay, but in the situation where you can’t fly right now, probably not.
    .

  • Bill___A

    I think the current cancellation policies do not take into account everything people run into….and are based upon the premise that the person affected could easily reschedule their flights. Sadly, this is not often the case, with some people having health issues where they can not fly again, or they can’t fly for quite some time. Perhaps there should be no such thing as a “non refundable” ticket. How about fully refundable, 75% refundable and 50% refundable? I am sure that within those parameters, the airlines could protect themselves from “fickle” passengers and still offer a variety of fares. They should be giving money back instead of holding it.

    Just as an example, when I am in a retail store (and I very rarely return something, usually when I do it is because it is defective) if I see “no refunds” in the store, I generally walk out without buying anything.

  • MarkKelling

    This was the same argument Southwest used when they cancelled all unused drink coupons a few years ago — they were tired of keeping them on the books.

  • MarkKelling

    This is especially true when people go and buy their plane ticket months in advance to get a “better” price and then have to cancel. This many times leaves them with as little as one month to use the credit. I think the window to reuse the funds should be a year from the date of the original flight itself.

    British Air worked with me a couple years ago when I had to cancel a flight fairly last minute. For my nonrefundable ticket, they offered to charge me a 10% cancellation fee (plus what I had paid to choose my seat early) or to rebook without a change fee. Since I didn’t know when or if I would be able to fly with them within the year, I took the refund. Simple and easy. Glad they were willing to be flexible. More airlines should try this.

  • Bill___A

    Really you should be able to find that. I spent less than one minute finding one, I am not sure if one is allowed to post links as that’s “advertising” but try looking for a card that issued by a bank that rhymes with “race” and an airline that is headquartered in Chicago for one example. This is a very common perk for premium credit cards and I think a lot of them have that.

  • Bill___A

    If they refunded it, then it would be off the books immediately, what a solution!

  • MarkKelling

    Well, I have one airline card from that bank for that airline that was actually for a different airline that merged with this one (the card is no longer offered to new customers). The travel insurance is limited to only purchases made with that card and the dollar amounts are fairly small so it is fairly restricted when compared to other travel insurance you can purchase. But you are correct, Trip Insurance is included.

    Guess I should have done the research. Thanks.

  • William Leeper

    We have been in existence since the mid 90’s as an online advocacy service.

  • disqus_wK5MCy17IP

    Yes, the one year across the board rule is arbitrary, but it’s across the board and doesn’t vary, so in that sense it isn’t unfair.

    It seems rather disingenuous to criticize the airline for not specifying that the credits were good for one year from booking when in the previous paragraph there is a link to airline’s website which states exactly that. No, I’d say the policy is pretty specific in this case.

  • Michael__K

    The up to 11 months in advance of travel that the airline possesses their customer’s money, and can invest and earn interest from it, could likewise be referred to as an “accounting issue.” That particular “accounting issue” makes the airline’s bottom line look better.

    BTW, I don’t see any line for unredeemed ticket credits in the consolidated financial statement that AA presents for investors in their 10-K. Maybe it falls under the line for “Other accrued liabilities.” Which is dwarfed by the line for “Loyalty program liabilities.” So, if they are truly averse to carrying liabilities on their balance sheet, they could do much more towards eliminating the “problem” if they discontinued their loyalty program ;)

  • Mel65

    Although in my case, it wasn’t an unused ticket, it was a “goodwill” gesture so there was nothing to refund.

  • MikeInPA

    My Chase United Milage Plus and my Citi AA Advantage cover up to $10,000.

    I recently booked a cruise on one card and the associated flights on another.

    In the past, I was reimbursed for $400 in change fees.

    Try logging in to your cc website and checking Travel Benefits.

  • SierraRose 49

    Did not stop to think before typing. Yep, Chris has been here since 1997 his website “About Us” says. Should have checked. At any rate, I’ve learned a lot from this site since finding it a few years ago. Thanks for the heads up!!

  • JewelEyed

    Especially galling because when you buy as far in advance as possible, the airline is holding your money all that time and then punishes you for it if you have to cancel by cutting short the amount of time you have to use a credit.

  • Lindabator

    they haven’t paid a change fee on a cancellation either – the fee comes in play ONLY when rebooking the ticket. And 3 years is just too long.

  • Lindabator

    cancellation due to illness or injury would be covered under third party – they just refund the ticket

  • Fishplate

    Sure, go ahead and advocate. I would, if it was my ticket.

    But as for the word “arbitrary” – what time period would not be “arbitrary”? Two years? Five years? I bet there would still be complaints.

    The time period has to be set somewhere. And yes, from the consumer’s point of view, a year from the travel date is better…but wait – start of travel, or end of travel? There’s always going to be an arbitrary answer that fails someone.

  • jim6555

    “If they bought the right policy”. These are very important words and emphasize what is not understood by the majority of travelers purchasing insurance. Many times the travel insurance industry finds ways to deny claims because of pre-existing conditions. I would wager that only 40 to 50% claims are paid. The rest lose the cost of their travel and the useless insurance premium.

  • cscasi

    I think that , as some mentioned, people purchase their tickets way in advance; like 10 months in advance, they should protect themselves with trip insurance. That would preclude the possibility of them losing their money by missing the year deadline. I purchased tickets, got travel insurance, had to cancel my trip, canceled the tickets with American Airlines (who told me right up front, I have the value of the tickets to use within ONE YEAR from the date of purchase, less $200 change fee per ticket). My insurance company said to me, do you plan to use that value within the year or not? If I said no, it wold have reimbursed me the full amount I paid for the tickets. I told it to wait and a couple months later, I booked new tickets, filed the claim and the insurance company reimbursed me the $400 change fee for the tickets. Thing is, I did not purchase travel insurance the second time, got sick again and had to cancel. Same rule applied. Full value of the tickets are good for ONE YEAR from the ORIGINAL DATE of purchase, less the $400 change fee which I now have to pay. I have until next April ot use the value or lose it. To me, this is fair. Of course, I do not like the high change fees, but that is the way it is. Purchase travel insurance or take your chances.

  • Shouldn’t a travel agent consistently advocate for the interest of customers, rather than against?

  • At today’s historically low interest rates, the opportunity cost of carrying flight credit on the books for three years rather than one is minuscule, especially when you compare that cost to the income from change fees. Meanwhile, the additional business from passengers who appreciate the ability to to postpone a missed trip to next year would be massive.

    And indeed it is – for Southwest. Small wonder that other airlines refuse to cooperate with it and have ordered their pet legislators to pass special laws restricting it.

  • MikeInPA

    You make a good point. When does insurance cover the cost of the ticket?

    I would think if you booked a packaged tour that includes air and cruise, then it should cover everything. Since I booked air separately, the tickets still have value until they expire. If I only have a few months until expiration, then what? Interesting …

  • Tricia K

    I don’t see that it hurts the airline to maintain the credit for one year from the date of travel. It’s an arbitrary date anyway, so why not allow the customer to have a real year. I bought tickets for a trip to Rome for next Spring, which would mean if we can’t use them due to an illness or something like that, my year will have already expired so I sought some advice on the forum. I covered the costs with trip insurance that also covers previously existing conditions, so at least in theory, I’m covered. Imagine how grateful this couple would be (translation in marketing terms, more likely to use the airline again) if they were allowed a full year from the originally planned date of travel? I’m with Chris on this one.

  • Bill___A

    That said, I’ve had cards with trip cancellation insurance for decades,and I don’t think I have ever filed a claim. I have paid for things out of pocket from time to time when something happens, but it isn’t a frequent or major thing.

  • Annie M

    Not in our actual experience. In 20 years of being a travel agent, we have never had anyone with a pre-ex condition denied their claim. They bought their policies when they needed to, were well enough to travel on the day they purchased and had proper documentation when they had to cancel.

    Perhaps its because they use a travel agent that knows the in’s and out’s of travel insurance, I don’t know. But we have never had an issue. In 20 years we have had one client denied a claim and we advised him not to cancel because the insurance wasn’t going to cover the cancellation. He said he knew someone to falsify medical records. He didn’t.

  • Annie M

    Absolutely right. And if you decide that the amount of your trip isn’t worth insuring, then you shouldn’t come here crying later on.

  • AAGK

    Travel should be good for 1 year of your actual travel. Moreover, if you have already departed when the credit “expires” it should still be good.

  • jsn55

    Among the thousands of awful ‘rules’ that airlines have, this one is so obviously slanted toward the fact that ‘a year from the date of booking’ is totally counter-intuitive. We could probably do a survey and find that most people hearing ‘a year to rebook’ would intuitively think a year from the original trip. This lovely rule nets the airlines millions from people who are rudely knocked down when they try to rebook a trip. Disgusting.

  • jsn55

    So here we have a great example of drinking the KoolAid. People now think that instead of requiring airlines to actually offer customer service, let’s let them torture their customers. If the customers don’t like the torture, they can spend even more money and buy insurance.

  • jsn55

    I agree, Bill … but airlines can’t let people cancel at the last minute and their seat fly empty. A reasonable period might be cancel within 60 days of the flight and you get a refund. If they want to deduct a reasonable administration fee, that’s fine.

  • jsn55

    I like my Sapphire card from Chase.

  • jsn55

    But Mark, that’s the point … you DON’T have a year to use the credit. If you book in February for a Christmas trip and start cancer treatment in October, you have maybe 3 months to use your credit. Few seriously ill people are ready to travel again that quickly. It’s just a revenue-generator for the airlines, hundreds of thousands of credits that expire before being used. The airline keeps the money.

  • jsn55

    Most people could deal with one year from the date of the outbound flight. That’s intuitive. Setting it at the date of purchase just means that only half the credits will get used. The rest? Your dollars stay in the airline’s bank account.

  • jsn55

    The coverage depends on the bank issuing the Visa card. An internet search will reveal all kinds of credit cards with all kinds of benefits.

  • MarkKelling

    That’s exactly why I don’t book that far in advance — I’m not sure exactly what I will be doing next Thursday for lunch so how do I know what I will be doing for Christmas?

    I buy my tickets close in when I am absolutely sure of my plans (and even then they can change unexpectedly) so I do have a large window to use them if things do change.

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