This was a close one. When the news came out Saturday night that United was altering its schedule change policy to severely restrict refunds, I immediately dusted off the Cranky Jackass award and began typing furiously. But yesterday I got a clarification that softens the blow, so the Jackass goes back into the closet. I may not love this, but I understand it.
As Brian Sumers first tweeted, United has changed its refund policy on schedule changes. You can only get a refund if the schedule changes at least 25 hours versus your original plans. Previously, this was a 2 hour limit, so it is a very negative change. But why?
With travel demand tanking as this coronavirus spreads around the world, United took drastic measures this weekend by slashing its schedules. (I have an analysis of that change coming tomorrow.) This isn’t the first time we’ve seen a sudden shock downturn like this, and United should be praised for reacting quickly. As Sequoia Capital noted in its ominous letter on Thursday, “…nobody ever regrets making fast and decisive adjustments to changing circumstances.”
In this case, United was the first out of the gate, and it was smart to do so. Other airlines will have to follow at some point, but probably not before they lose more money than they had to lose if they had reacted faster.
That massive schedule change, however, put United in a tough position. The whole reason it was cutting flights was because it was trying to shore up its finances as demand disappeared, but it might have had to shell out a ton of money in refunds to people impacted by the change. That means this proactive change would have had the opposite of the intended effect.
That is quite the pickle, so you can understand why United decided to change its rules on when passengers can get a refund during a schedule change. With this new solution, it can hold on to the money.
That alone would absolutely make this Cranky Jackass-worthy, but yesterday I received more information than was originally reported from United spokesperson Leslie Scott:
We’ve made reductions to our international and domestic schedules and know many customers are impacted as a result. Our goal is to rebook as many people as possible without interruption and right now, more than 90 percent of impacted customers are being put on a flight that is within 2 hours of their original booking. For any rebooking that goes beyond 2 hours, those customers can change for free or cancel altogether, and use the value of that ticket toward future travel up to 15 months from their original ticket issue date.
It’s the last piece that makes the difference here. It wouldn’t surprise me if this was hastily added after the angry Twitter mob exploded, especially since the updated travel agent policy didn’t include this information when I last looked. But how they got there doesn’t matter to me as much as the fact that they did get there… quickly.
Now, you can’t get your money back if the change is between 2 and 25 hours, but you can have that put into a credit which you can use in the future for any United flight. When the time comes to rebook, the change fee is waived, so it’s basically like holding a gift card for the value of the ticket.
There’s one other positive thing buried in here. Almost every airline has a rule that makes tickets valid for one year from the original date of issue. United last week extended that temporarily to 15 months in order to give travelers more time to use their credits.
What’s funny here is that United actually appears to just be exercising its options per the airline’s contract of carriage. Allow me to quote Rule 24, Section C:
C. Schedule Change- When a Passenger’s Ticketed flight is affected because of a Schedule Change that modifies the original departure and/or arrival time by 30 minutes or more, UA will, at its election, arrange one of the following:
1. Provided that the dates of departure and arrival must be within 7 days of the originally scheduled dates of departure and arrival, respectively, transport the Passenger on its own flights, subject to availability, to the Destination, next Stopover point, or transfer point shown on its portion of the Ticket, without Stopover in the same class of service, at no additional cost to the Passenger;
2. When a Schedule Change results in the cancellation of all UA service between two cities, at UA’s sole discretion, UA may reroute Passengers over the lines of one or more carriers in an equivalent class of service;
3. Advise the Passenger that the value of his or her Ticket may be applied toward future travel on United within one year from the date of issue without a change or reissue fee; or
4. If the Passenger is not transported as provided in C) 1) or 2) above and does not choose to apply the value of his or her Ticket toward future travel as provided in C) 3) above, the Passenger will be eligible for a refund upon request. See Rule 27 A).
Look at part 3. United has the right in there to let you use a credit for future travel without paying a change fee. It already had the language, but it just opted to let people get refunds if disrupted by more than two hours in the past. Now it’s shifting its plan to conserve cash.
United created a model and realized money was going to fly out the door with this schedule change. The airline then had to try to figure out how to prevent bloodshed in this very uncertain time. Is this solution as good for customers as the old policy? No, definitely not. But the reality is that it is a mostly fair solution considering the circumstances.