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Originally published Tuesday, November 6, 2012 at 10:37 AM

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Airlines drag their feet on ticket refunds

Carriers keep hold of travelers' money, sometimes taking months and repeated paperwork to issue a refund.

Tribune Media Services

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Surprising this was Virgin Atlantic that treated her so poorly. They've always been one... MORE

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Kathleen and Eugene Bianucci paid $5,770 for a pair of round-trip tickets between San Francisco and Dublin, Ireland, this year on Virgin Atlantic Airways. A few days before their trip, Kathleen, a fitness instructor from San Bruno, Calif., broke her leg and had to be hospitalized for a week. Her doctor grounded her for six months, and when she told the airline about the accident, a representative promised her a full refund.

You can probably guess what happened next. Virgin, which had extracted the five grand from her credit card in just a few seconds, balked at returning the money. It asked her to fax hospitalization records, but when she sent them, it responded with a form email saying the information was "not sufficient" and asking her to send the same documents again.

"I felt as if the airline was trying to deny the refund," she says. "They would not tell me specifically what they wanted, and everything I sent them was not sufficient, according to them."

Before she contacted me for help, Bianucci had done everything she could to get her money back. She'd re-sent her hospital records several times and tried to contact the airline by phone. But Virgin would communicate with her only by fax or email. "It's a real nightmare," she says.

Passengers have complained about the slow pace of airline ticket refunds ever since there have been airline tickets to complain about. Like other businesses, air carriers are reluctant to part with the revenues they collect from customers, even when they are supposed to.

The Transportation Department, which regulates airlines operating in the United States, requires air carriers to reimburse your credit card company within seven business days after receiving a complete refund application. But the government allows some wiggle room, noting that the rule doesn't apply to all payment methods and warning air travelers that the credit "may take a month or two to appear on your statement."

That kind of wishy-washiness is all the license an airline needs to delay or deny a refund, passengers claim. Indeed, over the long term, the industrywide practice of protracted refunds — of customers being sent countless form letters and having to communicate with a fax machine — is enough to make some air travelers walk away from the process, essentially leaving their money on the table.

Virgin Atlantic says that in Bianucci's case, the delay wasn't deliberate. After I contacted the airline on her behalf, it reviewed its records and said that her refund was on hold pending a document verifying her medical condition and subsequent hospitalization. It apologized for the delay and said that it had located one of the faxes she had sent. "All is resolved now," said Nadia Basil, an airline spokeswoman.

Why so slow on refunds?

What's behind the sluggishness? There are three leading causes, and they have nothing to do with dark airline conspiracies to pocket the money for unused tickets.

The first cause is something called a ticket tariff. It spells out the specific rules governing the ticket, including under what circumstances a fare would be refunded. Strictly speaking, every airline ticket is refundable. For example, if an airline cancels a flight, it owes you a refund whether you're flying in first class or in the back of the plane, and whether you paid with cash or with frequent-flier miles. Ticket tariffs often are long, complex documents rendered completely in capital letters and subject to various interpretations. (It isn't unusual to find a tariff with confusing or contradictory language.) Before issuing a refund, an agent must first determine whether the tariff allows it, which is not always easy.

The second cause of delays is the staffing and systems required for a speedy refund. Airlines, like other businesses, have plenty of incentive to invest in technology that takes money from customers' credit cards but fewer reasons to devote resources to systems that quickly refund money. For example, until this summer, United Airlines had no automated system in place to refund certain seat upgrades. The only way to get your money back for an Economy Plus upgrade fee would have been to ask for it. Those refunds were handled manually, one by one.

And third, as the Transportation Department suggests, even when an airline posts a refund, it can take one to two billing cycles before that money shows up in a credit card account. Although that isn't an airline-specific problem, it can be interpreted as foot-dragging on the part of an airline, just as the government's advice can be seen as a license to delay a refund.

I've had numerous conversations with DOT representatives over the years about the pace of refunds, and its rules haven't always been clear. For example, the seven-day rule on refunds is only for credit card refunds, and in the past it was thought to apply only to fully refundable tickets. I asked a DOT representative whether that's still true, and he said it isn't. "The rule on prompt refunds would also apply to nonrefundable tickets where a refund was due, such as for a significant flight delay," says DOT spokesman Bill Mosley. A regulation that went into effect in July 2011 addresses purchases made by cash and check, requiring airlines to return a customer's money "within 20 days after receiving a complete refund request for cash and check purchases."

But those historical gray areas might explain why, in the past, passengers have waited six months or more for ticket refunds. There's no reason for an airline to move faster, and they're breaking no rules by hanging on to their customers' money.

Airlines should refund all passengers with equal speed, says aviation consultant Michael Miller. But in case they don't, he suggests that air travelers take a few precautionary steps when they want a refund. They include contacting the airline quickly to ask for a refund and saving every email to prove that you've complied with the carrier's requests.

So what's the solution? Maybe DOT's ticket refund rules need to be more uniform, stipulating that all refunds should be issued within seven business days, regardless of the method of payment, and should include fares and fees charged to a passenger for optional services that couldn't be used because of an oversale or cancellation. And your rights to a refund should be clearly disclosed on every ticket.

If that had been in place, incidents such as the four-month delay of Bianucci's refund — and all the inconvenience that went along with it — might be far less common.

Christopher Elliott is the ombudsman for National Geographic Traveler magazine and the co-founder of the Consumer Travel Alliance. His column runs twice a week at seattletimes.com/travel. Contact him at chris@elliott.org.

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