There’s a big pandemic problem brewing for travelers—billions of dollars worth of vouchers and credits that will soon expire. And not all of it because travelers snoozed.
Consumers find themselves in a Catch-22 with soon-to-expire credits: Many don’t feel comfortable traveling yet. And even if they do, many borders remain closed. Extensions on vouchers given to consumers for canceled trips instead of refunds are drying up, and complicated terms make them difficult to use.
Many airlines gave consumers a pandemic extension on voucher expirations to the end of this year. But lots of travelers doubt they will travel this year, particularly to Europe or Asia, where canceled trips produced vouchers worth thousands of dollars each and now no one knows if travel there later this year makes sense.
Some tickets expire long before Dec. 31, too. If you booked on Delta after April 17 last year, your credit expires one year from your date of purchase. That may mean you lose hundreds of dollars if you don’t travel soon. For Southwest, the pandemic ended Sept. 7, at least for tickets. If you booked after that date, perhaps hoping you’d be able to travel for Christmas only to run into surging infection rates and state lockdowns, the regular policy applies—you must complete travel using your credit within one year of the date of purchase.
American, United, Delta and Southwest, the four biggest U.S. airlines, had $10 billion in unused travel credits on their books at the end of 2020, according to company filings with the Securities and Exchange Commission.
United says it has $3.1 billion from Covid-19 cancellations, and “given the uncertainty of travel demand caused by Covid-19, a significant portion…may expire unused.” Southwest says it’s holding about $2 billion in customer travel funds. The airline had just $110 million on the books at the end of 2019.
Airlines haven’t disclosed what percentage of their vouchers never get cashed in, like gift cards that get lost, beyond United’s estimate that it could be significant. American says that as a result of the pandemic, “breakage” may “differ from historical experience.”
TripActions, a corporate travel management firm, says 28% of the unused ticket credits in its system expired in the first quarter or will expire by the end of March. About half of the credits, which have an average value of $482, will expire sometime in 2021.
Some people are putting their credits to work: Bookings with unused ticket credits normally make up 1% to 2% of new bookings. Today, about 8% of all new flight bookings are made with ticket credits, the company says.
Earlier in March, American had so many calls from people trying to redeem vouchers—picture vaccinated seniors booking trips to see grandchildren—that phone lines were jammed and wait times reached about two hours. A spokeswoman says the airline has started returning more reservations representatives to work.
And it isn’t just airlines. Norman Stephens paid $1,300 to the Hotel Maison FL in Paris for a stay last year that was canceled by the pandemic shutdown. The hotel gave him 18 months to use the credit—it expires in November. But U.S. tourists still aren’t allowed to enter France, and Mr. Stephens doubts he’ll be crossing the Atlantic this year.
“They’ve issued a voucher that can’t be used,” says Mr. Stephens, a teacher in California.
He tried to get his credit card company to refund the charge and has lost that battle so far because the hotel won’t relent. The hotel said in response to questions that it plans to refund Mr. Stephens after the 18-month voucher expires, as is allowed under French law. Mr. Stephens remains worried about whether that will happen.
“They could gain a loyal customer who would be happy to come back,” says Mr. Stephens, who teaches economics. Instead, “I feel like a pawn.”
Mike Breck got two vouchers worth a total of $3,800 from American for two first-class tickets to Ecuador for a Galapagos trip with his wife. The tour company canceled all boat trips to the islands at least until 2022. Yet the voucher expires at the end of this year.
“It’s a little bit like a Three-Card Monte game on the streets of New York,” says Mr. Breck, a retiree living in Asheville, N.C. “I can’t think of another example of a corporation getting away with doing this.”
Mr. Breck has a long chain of emails with an American representative whose only suggestion was that he and his wife take short, cheap trips with the vouchers. If he spent $400 of that $3,800 on a trip to Cleveland, he’d get $3,400 back with a new expiration date that he could later use to get to Ecuador.
You pay to extend the loan you are giving to the airline, essentially.
American says customer-service agents “are encouraged to work with customers.” On Tuesday, the airline said it decided to refund Mr. Breck. American also said it decided to extend many of its flight credits and vouchers set to expire this year out to March 31 next year. A spokeswoman said based on vaccine availability and increasing leisure travel bookings, “we are confident that by next spring, anyone who wants and is able to travel will be able to do so.”
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Southwest has an unwritten policy about charging customers to extend the value of customer vouchers. Southwest doesn’t publicize it, but the airline has a standard practice of offering customers a six-month extension on vouchers if they pay $100 a ticket.
Southwest spokeswoman Brandy King says the pay-to-extend offer is made on a case-by-case basis “as a gesture of goodwill.”
Southwest customers are potentially in an awkward position with vouchers because the airline was generous with its pandemic policy—to a very specific limit. Southwest offered an extension on credits to Sept. 7, 2022—next year—not only for tickets canceled by the pandemic in 2020 but also vouchers that would have expired during the pandemic. So if you bought a nonrefundable ticket in March 2019 and canceled the trip, that credit wouldn’t expire for 3½ years from purchase. Tickets bought a year before the pandemic could outlive tickets bought today.
Southwest says its reasoning is that customers know more about pandemic risks today. The airline was navigating uncharted waters with the two-year extension, Ms. King says, “while making the best decisions based on the evolving situation.”
Keep Your Vouchers Viable
Airline credits for canceled trips are complex and often difficult to use. Here are some steps to take to protect your funds:
Check your expiration dates. Many airlines now use electronic vouchers accessible through your frequent-flier account. Others still issue paper vouchers. Either way, it’s important to get the expiration date on your calendar.
Check your voucher terms. They are different, sometimes even within the same airline, and confusing. Do you have to complete travel by the expiration date or only book travel by that date? Can you use the voucher for any fare, or are they not valid for the cheapest fares, forcing you to pay more? Will you get residual value if your trip is less expensive than your original booking?
Beg for mercy from punitive airline rules. Some airlines will offer further extensions if you really can’t travel. Others may now be willing to pay refunds to customers who were entitled to refunds but forced to take vouchers when airline cash was running short.
Complain to the Transportation Department. Consumers were forced to take vouchers when they should have received refunds under federal regulations that apply to all airlines flying to the U.S. The previous administration didn’t enforce the rules; the new administration hasn’t yet shown if it will side with consumers over airlines. Here is the DOT’s complaint form.
Game the system—the last resort. Pay to extend a voucher if you have a lot of money tied up in it. Or use it on a cheap flight if the airline puts residual value on a new voucher.
Write to Scott McCartney at [email protected]
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