Retroactive Refund: How Airlines Should Handle Weather Waivers

Last week just downright sucked. I was supposed to be traveling with my family on US Airways to a wedding outside of Cancun. Yes, the same Cancun that was hit by a hurricane/tropical storm/big weather thing. We watched the storm draw closer to Cancun all week, and while US Airways had canceled all other flights to Cancun on Thursday, ours didn’t cancel until a mere four hours before departure.

That was frustrating, of course, and it got me thinking about ways to improve the customer experience in weather disruptions. (I’m not talking about onboard delays, though that was on the news this past weekend.) Most of my ideas would never fly, but there was one that I think makes sense: the retroactive refund.

Hurricane Rina

I don’t want to single out US Airways, because they all have similar policies. When a weather event like this becomes a possibility, airlines issue a weather waiver, which is basically a one-size-fits-all policy that is just about worthless for a large chunk of travelers. The weather waiver nearly always says the same thing.

  • If you are scheduled to travel on a day that is expected to be impacted by bad weather, you can change your flight without penalty to a day or two before or after your scheduled flight as long as you keep the same departure and arrival cities.
  • If your flight is canceled (as with any flight that’s canceled), you can get a refund.

Some airlines extend the change period up to a couple weeks at times, but the problem is the same. This is completely useless for people who are either attending a specific event or people who don’t have a flexible schedule. For them, they either go as planned or they don’t go at all, so the waiver never applies.

It gets really tricky when there are other aspects to the trip involved. Maybe the hotel has a 2 day cancellation policy. Maybe you need to give more notice to people you’re meeting with. Maybe you need to make alternate plans with adequate notice. There is a lot at stake, and when the airlines grind you down to the last minute, it can be a real problem.

For some people, it becomes a gambling issue. If it looks like the weather is going to scuttle your flight but the airline hasn’t canceled it yet, you have to make a decision. Do you cancel the hotel to avoid a penalty and then just eat the $150 change fee on the plane ticket? Or do you wait until the flight cancels and hope the hotel will be forgiving? Some might say that people should just wait because they don’t know if the flight will even cancel at all. That makes sense in a vacuum but with so many moving parts, it can often make sense in a situation like this to just scrap the existing plan and make alternate arrangements.

But for people on a budget, it’s worth trying to see if the flight will cancel in order to get a refund instead of throwing $150 down the drain. That means they sit on seats they don’t plan on using, just hoping to get their money back. Can the airlines improve on this?

We all know how the airlines think. It’s all about revenue. The airlines don’t want to give up any revenue that they already have, so they aren’t going to let people off easy. They’ve created a system that effectively traps travelers until the flight is canceled, and I can’t really blame them for doing it. I do, however, think the retroactive refund would help.

This doesn’t solve every problem, but it’s the only way I can see to make things better for travelers without having a largely negative impact on the airline’s revenue. (And we know that if it’s revenue-negative, the airlines won’t even consider it, even if it makes good sense from a customer service perspective.) Here’s how I envision it working.

  • When a major weather event is predicted, airlines continue to issue a weather waiver as they do today. If people do have flexible travel plans and can take advantage of the offer to change by a couple of days, then that’s great.
  • For those who aren’t helped by that, they can still just walk away and pay the $150 change fee BUT if the flight does cancel at a later date because of that weather issue, then the airline will give them the refund that they would have had if they had waited.

The customer benefit is obvious. If the customer sees a hurricane bearing down on his destination, he can cancel his ticket knowing that if the flight does cancel, he’ll still get that refund that he would have just waited around for nervously all week. If the hurricane goes a different way and the flight operates, well, then it’s a gamble that lost and the traveler is out $150. But that’s ok because it still gave him the flexibility to make the decision earlier on his own time without leaving anything on the table.

Now, the harder part to quantify is the benefit for the airline. Only those with access to airline data could really figure out how this looks from a dollar perspective, but there are very clear potential benefits.

Those people who would have paid the $150 fee to make a change might now get a refund instead, and that’s a loss. But there is also a potential for gain. Those who sat around waiting for the flight to cancel are probably squatting on seats they might not use anyway. They just don’t want to pay the change fee so they hope it cancels. These people would now cancel early, freeing up a seat that can be re-sold or used to reaccommodate passengers if the flight operates. If it doesn’t operate, then at least the person will already be removed from the system. One less person who needs immediate help when the reservations group is probably feeling overloaded.

This doesn’t solve every problem but it would help. Any other ideas out there on how to make this process better for travelers?

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