We are in a difficult time for pretty much every industry around the world. One industry that has been hit particularly hard is the travel industry with many providers of travel almost at a standstill for the last couple of months.
The EU Encourages Airlines to Give Better Voucher Options
The airlines have worked very hard to try and encourage travelers to take vouchers instead of cash as they are all strapped for cash right now (American Airlines issued $600 million in refunds just in May). But, at least in Europe and the US, customers have the right to get reimbursed with cash when cancellations occur.
This leaves it to the airlines to either come up with attractive alternatives or refund – or, like in the case of United, make things up as they go along.
Some of the EU Recommendations for Airline Vouchers
While the EU still acknowledges that passengers have the right to request a refund in the case of a cancellation, they also give airlines some options and recommendations to guide them in how they should be handling the voucher vs. cash dilemma. Here are some key points from these recommendations (the complete list of which can be seen here).
Here is another key point taken from the recommendation – that the voucher “should be covered by protection against insolvency of the carrier or of the organiser that is sufficiently effective and robust.”
Vouchers Should Have a Minimum of 12 Months Validity
I would imagine that most would think that this would be an “of course” but this is just part of the recommendation to outline what should happen with the voucher.
The recommendation says that if the voucher has not been redeemed, the airline should automatically refund the amount in cash to the customer within 14 days after the voucher expires.
This is similar to what United had said they would do back in April. While less than optimum, it is part of the bigger recommendation and would ensure that your cash will still come back to you if you are unable to use the voucher within that time. Remember – this is only if you choose to accept the voucher. This means that the voucher wouldn’t just go to waste.
Along with the validity date, if the voucher is good for a period longer than 12 months, the customer should have the right to request the cash at any point during that 12 months.
This would protect travelers in case the airlines try to get around the automatic refund part by issuing a voucher that is good for like 24 months (since the refund should be done automatically within 14 days after the voucher had expired).
The Voucher Should Have Expanded Use and Timeframe
Unlike normal vouchers, the vouchers issued by the airlines should be able to use the vouchers as payment for all new bookings that are made before the voucher expires “even if the payment or service takes place after that date.”
In addition, customers should be able to use that voucher for any services or travel packages offered by the carrier or organizer. The companies should also consider allowing the voucher to be used for any services offered by the travel group.
The Voucher Should Cover the Original Route
This is a good one and should be a common sense one – that the customer should be able to redeem the voucher for the same route irrespective of fare difference.
While many fares are cheaper now than when people booked, it is also likely that ticket prices could go up over the course of the voucher’s validity. This measure would ensure you can still take that same route, subject to availability, no matter the fare difference.
The Voucher Should Be Transferrable
While normal credits and vouchers are not transferrable, the EU Commission recommends that the travel companies make these to be able to be transferred to another person – without a fee. This would apply to “transport services” and “package travel” as long as the providers of the services in the travel package agree to this without requiring a fee.
This could be helpful if you consider the next part of the recommendation…
The Voucher Should Have a Higher Value than Original Ticket
This should also be something that should be an automatic – and something some airlines are already doing. The Lufthansa group has been offering €50/$50 vouchers on top of original credit for travel that is cancelled or deferred. Turkish Airlines is offering a 15% increase in value if a voucher is taken.
Unused Value Should Be Protected
With many vouchers, you can only use it once. So, if your voucher is worth €600 with the bonus value included and your new flight is only €400, you lose the other €200. This is made even more difficult when you consider that many current vouchers are only good for the ticketed passenger.
But, with these new recommendations, it says that any unused value should also be covered for refund in cash if it is not completely used by the 12 month expiration. This would be a big improvement over current rules for many vouchers.
What This All Means for Travelers with European Airlines
At this point, these are recommendations made by the EU Commission to the airlines and travel providers under their umbrella. This recommendation continues to give the customer the power to request a refund for a cancelled flight and gives the airlines some options for how they should give better options to travelers for vouchers.
If all of this is adopted, it would mean the following things:
- If you do not use all the voucher before the expiration of 12 months, you will get a cash refund on the unused portion
- You can transfer the voucher to someone else
- You can fly the original route without paying any increase in fare
- You will get an increased value on top of the voucher
- You can use the voucher more than once
- You can use the voucher for other travel packages
While cash is preferable, getting a voucher for an airline you will definitely fly again could be a nice trade-off if they give you something extra. If you don’t use it, you get your cash back in 12 months.
But, the airlines will really need to make this all attractive since many passengers would rather have their money back to either keep or use with another airline. At this point, the €50 vouchers from the Lufthansa group do not impress me since you cannot transfer the complete voucher and you lose any unused value.
Just keep in mind that these are EU recommendations. Some member states have already made their minds up on vouchers vs cash so it won’t be something followed by all airlines. Still nice to know that the EU Commission still holds the ground with their recommendations in favor of the customer.
What do you think of these new recommendations by the EU Commission?
