It happened to Louise Andrew twice last month. She made reservations on the United Airlines Web site, tried to cancel them within 24 hours for a full refund, and was told that the airline would be happy to issue a ticket credit instead.
“Both times, I was initially told that my purchase value would be applied to a future ticket,” says Andrew, an attorney from Redmond, Wash.
That didn’t make sense to her. United promises a no-questions-asked refund on most tickets as long as the request is made within a day of the reservation. And since 2011, the Department of Transportation has required airline reservations to be cancellable without penalty for at least 24 hours after the booking is made, unless the ticket is purchased one week or less before a flight’s departure date.
Andrew’s case illuminates the growing problem of ticket credit deflation. Historically, airlines have preferred to issue credit instead of a cash refund. They’re also fairly generous when it comes to parceling out vouchers for future flights. The reason? Redemption rates on vouchers hover somewhere between 5 and 8 percent, so there’s little cost to the company.
But lately, many airlines have made their credit even more difficult to turn into a usable ticket through a combination of aggressive new policies, fees and restrictions. The net effect could be that your next ticket credit might not be as valuable as you think.
In fact, it may be worth nothing.
Andrew experienced one of the most effective ways airlines can lay claim to all your money. They push you into taking a credit instead of a refund but then make it difficult to redeem the credit. Had Andrew agreed to the credit, United might have imposed additional terms on the funny money that could have rendered it useless.
This spring, United was the first carrier to raise its domestic ticket change fee from $150 to $200 — a move that all the other major airlines, except Southwest, soon followed. High change fees make ticket credits worthless on some discounted fares, since the fees often exceed the value of the ticket.
Other restrictions apply. In late 2011, Delta Air Lines tightened its voucher rules, making vouchers non-transferable and disallowing their redemption in conjunction with other credit. On Spirit Airlines, travel credit requests must be booked within two months of issuance, instead of the industry average of one year, according to the airline’s contract of carriage. When air travelers miss that deadline, their credits are quietly zeroed out, and appeals to reinstate them are met with rejection form letters.
Andrew didn’t accept United’s initial offer, because she knew about the Transportation Department’s 24-hour rule. “I had to repeatedly badger them to get my refunds,” she says. Even so, it took the airline six weeks to refund the cost of her first ticket, she says. An airline representative told her that the second refund could take up to two months.
Charles Hobart, a representative for United, said that shouldn’t have happened. “We offer a full refund back to the original form of payment in the first 24 hours of booking a new ticket through United.com or through a contact center representative,” he says.