Sheldon H. Jacobson: Will the automatic refund policy for air travel cause more harm than good?

Just in time for summer travel, the United States Department of Transportation has announced sweeping changes that, on the surface, appear to help air travelers get the upper hand with airlines.

Unfortunately, what the agency has proposed may hurt, not help, travelers at the very time when travelers need airlines to get them to their final destination.

The DOT issued a fact sheet outlining an extensive list of new requirements that affect what air travelers can expect from airlines the next time their flight is canceled or delayed. 

Many of the changes make sense, like automatic refund of fees for checked baggage, in-flight internet connection and preferred seating. The cost to the airline would be processing such refunds, including credit card fees, which will likely lead to higher fees to absorb those costs.

The new policy gets problematic when a flight is canceled or delayed. If the airlines are required to issue a refund to the traveler, and the flyer unwittingly agrees to the refund, then they may be left to rebook their own flights, placing them in a precarious position. For example, this could involve paying a last-minute fare on another airline, rather than a lower advanced purchase fare, ultimately costing the traveler more money.

Airline interline agreements can be used to avoid these situations; they allow an airline to transfer a ticket to another airline. This effectively means that your original airline uses the money you initially spent to buy you a ticket with another airline. The cost to you is nothing, even if your new ticket costs more than the original ticket. Most importantly, traveler interests are protected, and their immediate needs fulfilled — namely, reaching their final destination.

Each situation, however, may need to be managed differently. If the flight cancellation or delay is due to a mechanical problem, then alternative flights would likely be available. If it is weather-related, then all airlines would be affected, with alternative options likely to be very limited or nonexistent. Of course, if such disruptions occur during peak travel periods, such as around the Fourth of July or the late-year holiday season, all such efforts are further complicated, given the limited availability of seats on most flights.

The solution that serves the best interests of travelers is to give them the choice of how they wish to be accommodated when a flight is canceled or delayed. However, many leisure travelers are ill-equipped to make good choices in real time during a flight cancellation or crisis, simply because they lack the necessary experience. That is why the primary objective should be to expeditiously get travelers to their destination, with the burden placed on the airlines to make this happen.

No matter what changes are made, the airline will incorporate any new policies in their contract of carriage, a voluminous discussion of rules and procedures governing every ticket issued. Delta Air Lines offers a 12,000-word “plain language” version, while United Airlines has a 37,000-word version. Few travelers, let alone airline gate agents, have digested its finer details. Such documents provide no practical value for travelers, mostly giving airlines a legal backstop when flights do not go as planned.

There are no one-size-fits-all solutions to helping air travelers when their flights are disrupted. Automatic refunds are not the solution. What is needed are more productive conversations between the DOT and the airlines. What can the airlines reasonably be expected to deliver? How can they deliver such services in the event of flight delays or cancellations, whether they are isolated flights or systemwide outages? How should the cause of such delays or cancellation influence the accommodation?

At the same time, the DOT must continue to improve the national air system with fully staffed and modernized air traffic control systems. Introducing artificial intelligence will go a long way to better manage increased air traffic volume over limited airport runway capacity and air space.

The DOT’s one-size-fits-all effort to protect travelers will not work. Giving the airlines the opportunity to spell out what they can offer and providing an environment to reach an amicable compromise will ultimately help travelers get what they need — namely, to reach their destination and be taken care of by airlines when circumstances disrupt their trip.

Travelers deserve no less, and airlines should work to deliver as much.

Sheldon H. Jacobson, Ph.D., is a professor in computer science at the University of Illinois at Urbana-Champaign. His research as a data scientist on risk-based security informed the design of the Transportation Security Administration’s PreCheck.

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