How refundable are airline fees? Not so much

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By | January 11th, 2015

The North American airline industry collected an estimated $8.2 billion last year from fees for items such as checked baggage, premium seat assignments and early boarding privileges — a $700 million increase from 2013. But are they keeping more of your money than they should?

Andrew Petrilla wondered about that after his travel companion fell seriously ill this fall. That forced both of them to cancel a planned flight from Dallas to Southern California on American Airlines.

“We’ve always been aware of the no-refund policy of the heavily discounted coach tickets, and we’ve always accepted that as a cost of getting the lower fare,” says Petrilla, a retired market researcher from Dallas. But not so for the $180 they paid for an upgrade to “Main Cabin Extra” seats, which have about the same amount of legroom as the coach class cabin before airline deregulation.

Petrilla was surprised when American pocketed his upgrade fee. It hadn’t disclosed the fee’s non-refundability until the last page of the reservation screen, he says. And it kept the money even though another passenger probably paid for the upgrade, allowing the airline to double-dip.

“This makes no sense,” he says.

Maybe not. But, at least according to the government, the refundability — or non-refundability — of these fees is perfectly legal, as is the way refund policies are disclosed. As the income from ancillary fees balloons, the cries for regulating these extras are bound to grow louder. Until then, you can protect yourself from fees by taking a few common-sense precautions.

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Petrilla didn’t press for a refund of his upgrade fee because, technically, American had disclosed its terms. When he booked the ticket online, he could have clicked on the terms listed in small print, which would have generated a pop-up window with the applicable rules, according to the airline. Petrilla says he didn’t see it.

“The non-refundability is described in the terms and conditions when you purchase a Main Cabin Extra seat,” says Joshua Freed, an airline spokesman. He adds that refund requests are reviewed “on a case-by-case basis.”

But at what point should they disclose these terms? With airlines adding or increasing ancillary fees every month, most air travelers would assume the answer is: clearly and up front. But what does “up front” mean in a world of small print and ad-blocking software? Worldwide, the average passenger paid an estimated $15.02 in fees per ticket in 2014, up from $13.64 the year before, according to IdeaWorks, a consulting company that specializes in consulting on ancillary fees. At the same time, there are few, if any, disclosure requirements when it comes to fee refundability.

In 2011, the U.S. Department of Transportation (DOT), which oversees airlines, required that fees for baggage, meals, canceling or changing reservations and upgraded seating, be disclosed on airline Web sites. But it was silent on the issue of whether airlines should refund those fees if a traveler’s plans change.

The government requires that airlines refund baggage fees only when they lose your bag. It also mandates that airlines refund fees for optional services that you can’t use when they cancel or oversell a flight, like seat-reservation fees or early boarding privileges. Regulators also considered — but ultimately rejected — requiring carriers to refund fees when luggage is delayed.

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  • polexia_rogue

    here is my stance. lets say you get a $200 ticket then you want to treat yourself to an upgrade or maybe even a fast bag check, making your total now $350.

    then -oh no!-you need to cancel and the cancellation fee is $100!

    how much are you getting back in credit (NOT a refund-a “good for a year”credit)?
    250 or 100?

    of the answer is “100! we pocket ALL extras!”

    that is not fair.

    250 is fair

  • So I’m guessing you don’t fly Spirit airlines much. I think personally that airlines should refund or even not charge some of the add on fees like bag check fees if you don’t take the flight but if you buy a non-refundable ticket they aren’t obligated to refund that money. Many will still do this if you complain. Many times what I see happens is that people just don’t show up for the flight then expect a refund. You need to call. You also shouldn’t expect them to refund your money if you just do a “no show”.

  • We’re having a conversation about this issue over on the forum, too.

  • AJPeabody

    The difference is between “Should” and “Can.” Of course a company within an oligopoly with semimonopolistic characteristics CAN set rules to favor itself so as to confiscate unused add-on fees for unused services. They SHOULD not. The exalted Free Market with unrestrained competition favors “can.” Social commity favors “should.” And the law should be used to restrict eggregious “cans.” But can laws that should exist be passed?

  • Nigel Appleby

    I couldn’t vote on this. If you buy the lowest priced ticket then it’s not refundable, but if you book a refundable higher priced fare it should be refundable in full and immediately. I’m sure airline pricing allows for a certain number of cancellations or no-shows and reselling of the seats.

  • taxed2themax

    To me, I see two issues – one is the disclosure part.. the other is the ability to refund (or not) aspect.. I agree that disclosure is good and should be required.. I think that’s more than reasonable and fair.. I also think the other part of this is — personal/consumer responsibility – to read first the disclosures made, and if unclear, to ask questions first..

    Yes, I cede, that most, myself included, do not read each and every disclosure once may encounter daily.. but.. I do so with the full understanding that IF something goes “bad later on, I am largely not going to be able to use the defense/excuse of “you didn’t tell me” when I suffer an adverse action..

    As I read this article, I note that some of the angle is the “timing” or the “when” is this disclosure made.. To me, I don’t see a lot of sense in making in at the beginning of the transaction simply because at the beginning, it’s not known if that passenger is going to elect to buy an add-on or not.. To me, the more fair way might to have a pop up like box that alerts you to the terms of an add-on at the time you indicate your interest..

    As to the refundable part.. to me I see this as a case where I’ve bought a “base” product/service, and as a part of that, have elected on a voluntary basis, to buy additional or supplemental services or goods to go with that base purchase.. so to me, the two parts – the base purchase and the add-ons are ‘tied’ together in that the add-ons effectively become part of the base purchase.

    So, if I elect to not use the base purchase, and it is disclosed as non-refunadable, AND the add-on purchases were also disclosed as non-refunadable, then I see no wrong there..

    While the original story does not go into this area, I do think governmentally imposed taxes are different as those are imposed by a governmental agency – and not the airline – and those agencies and/or law, define the point at which the taxes are actually due or payable which are really more driven based on the actual commencement of travel, not on the mere act of ticketing..

  • MarkKelling

    Should airlines refund fees for extras you paid if you don’t fly? In a perfect world, yes they should. But then in a perfect world, every airline ticket would include a checked bag, a carry on, extra leg room, flexible change policies, and maybe even full refundability. We don’t live in a perfect world.

    We are faced with paying extra non-refundable fees for things we want when we travel. If these things were refundable, then the price of travel would be higher to cover the refunds. How much higher? I have no way of knowing because data on how many people cancel or reschedule travel who have paid for the extras and lose those payments is not a published statistic. I’m sure the airlines, and every other travel related business, know exactly to the penny how much that is.

    I always hope that the extras paid would at least be transferable if you reschedule and would apply to the new ticket. But even this is not common. British Airways will let you pay a fee to select a seat on your flight. But if that flight changes, whether through the passenger’s choice or with the airline rescheduling, the fee does not carry over and has to be paid again. Southwest takes the same approach to their Early Bird fee. These types of practices are what really annoy me. You are still traveling with them, they still get your fe, why do they want to get a second fee from you? Because they can, of course.

    Is there a solution to this that would make the travelers happy? I don’t see one in today’s travel business environment.

  • Carchar

    I thought that some airlines charge a $200 change fee. If so, that means you don’t even get that $100 credit.

  • LonnieC

    To me, the basic issue isn’t the refund-ability of fees, but the lack of clarity in the carrier’s conditions for refunding them. It should be required that the various conditions attached to any charge (refunds, surcharges, taxes, etc.) be at least as clear and obvious as the charge itself. Once that’s done:

    caveat emptor

    .

  • bodega3

    Some carriers make you pay the change fee separately and can no apply the unused fare to it.

  • Judy Serie Nagy

    There is no reason that paid fees should not transfer over to your next booking. It only makes the passenger feel like they’re being cheated. What? Did someone think that an airline gave a single thought to how their passengers feel? Silly me.

  • Mike Z

    I can understand the reasoning behind the non refundable ticket, or even charging a change fee. however, if you do not use a service that you paid for, then those fees should absoluetly be refunded. (or at least applied toward your next flight)

  • Mel65

    If it is a fee for a service or commodity that can, and likely will, be resold, then I think they should be refundable, to an extent. Of course, that is probably too subjective a metric for many things. But, if you pay for an upgraded seat and you give the airline enough notice that they can resell that upgrade, you should be refunded for it. Your non-refundable ticket though? No.