Tag Archives: DOT

DOT orders airlines to pay out refunds

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DOT orders airlines to pay out refunds
Photo Credit: Oliver Le Moal/Shutterstock

The Transportation Department on Friday issued an enforcement notice, telling airlines that they remain obligated to pay out refunds for flights that they have cancelled.

The order was prompted by an increase in complaints from ticketed passengers who have been denied refunds, the DOT said. Airlines instead are often giving travel vouchers.

“The longstanding obligation of carriers to provide refunds for flights that carriers cancel or significantly delay does not cease when the flight disruptions are outside of the carrier’s control,” the DOT said in the order. “The focus is not on whether the flight disruptions are within or outside the carrier’s control, but rather on the fact that the cancellation is through no fault of the passenger.”

The unprecedented schedule cuts airlines have made in response to the Covid-19 crisis has left the airline industry with a $35 billion refund liability worldwide, according to a recent IATA estimate.

With airlines already struggling due to enormous losses in revenue, IATA has been lobbying governments to suspend refund requirements. Thus far Canada, Germany, the Netherlands and Colombia have issued favourable rulings for airlines.

Airlines have also acted individually to make refunds more challenging to obtain. Some have stopped processing them entirely while many others are making it difficult for customers to find information on applying for refunds. In the U.S., United recently altered its refund process so that international ticket holders will have to wait a year to get repaid for a flight cancelled by the airline.

In addition, 33 airlines (as of April 3) have unilaterally suspended refunds through the GDSs or ARC’s Interactive Agent Reporting system, forcing travel advisors to deal directly with the carrier.

Meanwhile, the sheer volume of refund transactions facing airlines that are still processing them in the GDS has compelled ARC to delay its weekly remittance schedule. ARC will now turn over refunds to agencies 10 days after the Sunday end of each business week, rather than five. That decision, said ARC’s managing director of airline services Chuck Fischer, was prompted by the fact that with current refund volumes, many airlines simply can’t go through their procedures fast enough to meet the five-day schedule.

Fischer said ARC doesn’t like that some airlines have cut off GDS refund processing, “but we can’t stop them from doing that.”

IATA, which oversees agent channel billing and settlement for most of the world other than the U.S., has no such reluctance. In an open letter to travel agents Thursday, IATA director general Alexandre de Juniac said that the best solution right now for airlines and agents alike is for governments to suspend refund requirements.

“This would remove the pressure that is currently on agents to issue cash refunds at a time when airlines are making decisions based on their own need to preserve cash,” he wrote.

The DOT’s enforcement notice pushes back against such airline efforts. The department stated that it considers any contract of carriage provision by an airline that denies refunds for cancellations or significant schedule changes to be a regulatory violation. (The DOT does not specifically define “significant schedule change.” A DOT spokesperson said it is determined on a case-by-case basis.) The notice applies to both U.S. and foreign carriers that operate in the U.S.

The department said that for now, it will hold off on enforcement action against airlines that have provided travel vouchers in lieu of refunds to travellers with cancelled flights, but only if they meet three conditions:

• Carriers must contact passengers to tell them they have an option for a refund.

• They must update contacts of carriage to make refund rights clear.

• They must brief all relevant personnel on the circumstances in which refunds should be made.

Horror stories told in support of cruise legislation

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By Tom Stieghorst

Amanda Butler, cruise hearingSen. Jay Rockefeller (D-W.Va.) began his final push for tighter regulation of the cruise industry with a hearing that put some of the worst stories about cruising on public display.

Four witnesses painted a picture of cruise line self-interest and incompetence during emergency situations on cruise ships. No industry witnesses were called to rebut their testimony.

The July 23 hearing was in support of Rockefeller’s Cruise Passenger Protection Act, which cruise lines say is burdensome and would lead to higher overall costs that get shifted to cruisers.

Rockefeller is chairman of the Senate Commerce Committee, which held the hearing.

Rather than try to pass the act on its own, Rockefeller’s political strategy is to fold it into must-pass legislation to authorize U.S. Coast Guard operations for the next two years.

“If you separate this, the Coast Guard bill will pass and the cruise ship bill will get flushed down the toilet,” he said. “My job as chairman is to make sure we don’t play the game that way.”

Rockefeller’s apparent animus toward the cruise industry was evident for much of the hearing. He opened it by saying the industry “continues to deny it has a problem,” has “circled the wagons” and sometimes treats customers “with shocking callousness and disregard.”

“We continue to see the same issues continuing to continue,” he said. “I’m fed up with it. I’m fed up with them trying to stonewall us. Yes, they have lots of money and lobbyists.

“We’re going to win this one,” he said.

Rockefeller bolstered his case for stronger regulation with stories such as Amanda Butler’s, whose mother collapsed last year upon returning from a shore excursion. Butler blamed the cruise line for her mother’s death, which she attributed to an anoxic brain injury.

Jay Rockefeller“My mother died needlessly because the main emergency protocol was not followed or enforced,” she said.

Other witnesses included Laurie Dishman, who testified she was raped on a ship in 2006; Kimberly Ware, a passenger on the Carnival Triumph cruise that lost power because of an engine fire; and Philip Gerson, a Miami attorney who testified that a 15-year-old autistic client was raped.

In a statement, CLIA said that the hearing “presented a distorted picture of an industry that has an exceptional guest care and safety record. “

“It also did not provide a balanced view that would help policy makers and the public better understand the full implications of the Cruise Passenger Protection Act — and why it is not needed,” the statement said.

During the hearing, Rockefeller asserted the bill is needed, based on feedback from several hearings. He has proposed:

• Giving consumers a plain-language summary of the terms in a cruise contract.
• Making the Transportation Department (DOT) the lead regulator over cruise ship consumer protection, as in the airline industry.
• Creating a toll-free hotline for consumer complaints and a standing advisory committee to recommend cruise consumer protection improvements.
• Requiring that all allegations of crime on a cruise ship be made publicly available.
• Mandating video camera placement in public areas and setting rules for archiving video footage.
• Establishing a victim advocate at the DOT who would provide help to crime victims, make sure they’re aware of their rights and facilitate access to appropriate law enforcement.

In its statement, CLIA called Rockefeller’s bill “a solution in search of a problem.”

“The cruise industry is already heavily regulated,” said the statement, which called adding a new layer of federal regulation and bureaucracy, “both unjustified and unnecessary.“

Rockefeller said he called a hearing with those directly affected by cruise ship problems to try to drive home the need for his remedies.

Butler, who is from Columbus, Miss., was in the gangway area of the Carnival Conquest last year when her mother passed out. She said it took 10 minutes for a nurse to arrive, no one performed CPR, and the cardiac defibrillators were locked, as was the ship’s infirmary. She said Carnival put her family off the ship in search of a hospital with little aid.

Carnival Cruise Lines, in a written statement, said the ship’s medical staff responded and the patient was successfully resuscitated and then transferred to a shore-side medical facility.

It said shipboard doctors and nurses carry radios and mobile phones to ensure prompt response to emergencies and that defibrillators are on all Carnival ships in a variety of locations.

Ware provided a personal account of the problems that were publicized on CNN and elsewhere after the Feb. 10, 2013, fire and power outage on the Carnival Triumph.

Carnival noted that everyone returned safely from that cruise, received a full refund, $500 cash, reimbursement of expenses and other compensation. It said Ware “is part of a group of litigants who are partnering with plaintiff’s counsel for the purpose of opportunistic financial gain.”

Only a few of the 24 senators on committee attended the 90-minute hearing, including Richard Blumenthal (D-Conn.), a co-sponsor of Rockefeller’s bill, and Mark Begich (D-Alaska), who wondered if consumers would really look at a DOT website before buying a cruise.

Sen. Roger Wicker (R-Miss.) said he thought cruise consumer protections should be considered on their own and not as part of the Coast Guard act.

Strategically, if Rockefeller can get them into the larger bill, which has multiple constituencies, they could be approved by the Senate and then adopted in conference by the House, which already passed a Coast Guard bill without the Rockefeller measures.

It will be the cruise industry swan song for Rockefeller, who retires next January after three decades in Congress. He urged cruise lines to “honestly consider” whether they could improve consumer protections.

“I believe there are steps you can take, and I will continue pushing you to make them,” he said.

The cellphone debate

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Technology brought us together in 2013, but in an unexpected way: It brought about the Great In-flight Phone Debate, an apparently one-sided discussion in which we all finally agreed on something. Nobody seems to want to listen to cellphone chatter on commercial airline flights. 

As the Federal Communications Commission began the process of ending its ban on technical grounds, it pointed out that it will be up to the airlines to decide whether to offer passengers the option of using their wireless phones for text, email, Web browsing and/or voice calls.

But will it?

The mere prospect has led to such an extraordinary outpouring of angst and outrage that politicians are taking notice. Bills have been introduced in Congress to ban cellphone calls in flight, and Transportation Secretary Anthony Foxx asserted that his department already has — and will try to use — the legal authority to settle the question.

This demonstration of government responsiveness is interesting, but is this pre-emptive intervention really necessary?

As we report in the news pages today, a growing number of international airlines — including some with reputations for excellent service — are already using the technology, and their passengers are not rebelling, starting fistfights or jumping out of windows.

Although U.S. consumer confidence in airlines is understandably in, shall we say, a recovery mode, the international experience to date has shown that, in the words of Kevin Rogers, the CEO of wireless provider AeroMobile, the airlines are “quite capable” of managing this. He pointedly concluded, “You don’t need to regulate it.”

We hope Congress and the Department of Transportation (DOT) get the message. Although the airline industry was deregulated in 1978, the industry’s customer relations are still heavily encumbered by federal rules. We don’t think the government should add to that burden without a compelling demonstration of need.

There is also the risk that pre-emptive congressional or DOT action at this stage could create jurisdictional battles that don’t need to be fought. Will any U.S. rule stop at the water’s edge? Will it apply to foreign airlines in U.S. airspace or on their inbound flights to the U.S., as other DOT rules now do? How will foreign governments react?

If common sense and market forces can settle or avoid any of these questions, the government should stay in standby mode. We will surely need it if there’s a market failure, but are we really so sure the market will fail?