Non-refundable airline tickets can be a really bad deal

I recently canceled some airline reservations for a trip that was many months away and found to my dismay that the tickets were nonrefundable! Did I ever feel stupid!

I had been holding reservations on American Airlines, which does refunds, and had switched to AirTran Airways to fly with a family group. This was a huge mistake on my part!

AirTran Airways has adopted the wonderfully profitable business strategy of making their coach tickets nonrefundable. Even if you cancel your reservations months before your scheduled flight, your tickets are nonrefundable.

Being the bighearted corporation that they are, the remaining balance will be placed in a credit file, which may be used for future bookings for up to one year from the date of the original booking. If you don’t use it by then, you lose it.

They have already sold your original seat to someone else and then they get to keep the money. Doesn’t that sound like a business we would all like to run? Getting something for nothing! Wow!

I could see a rationale for a cancellation charge, but this business model frankly smacks of really sharp business practice and let the customer be damned. The only recourse is for consumers to communicate how bad a deal this is and use other airlines whenever possible.

I can see nonrefundable tickets as a viable solution only for trips you are going to take in the next 30 days and you can afford to throw away the money if you change your mind.

When you book a trip many months in the future, there are so many things that can come to pass it makes little sense to buy a nonrefundable ticket.

Incidentally, my refundable tickets on American Airlines were only $60 more than the nonrefundable AirTran tickets. I saved $120 and it only cost me $855! What a "bargain"!

If you are considering flying with Airtran, just be aware that you will not get your money back if your trip is canceled.

You might want to choose a carrier like American that will accommodate you with a refund if you cancel the trip well in advance.

I would not recommend AirTran Airways.

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0 Responses to Non-refundable airline tickets can be a really bad deal

  1. Francisco Vargas says:

    Mr. St. Lawrence,

    Your article about the non-refundable tickets really caught my eye. Myself, being in management of a major airline, I wanted to chime in on the topic.

    When you purchase airline tickets, you are purchasing a contract between yourself and the airline to get you from point A to point B. You can purchase differernt types of tickets based on how important your need is to get to point B. These different “classes” of tickets cost different amounts of money. When you are booking a ticket, there is always an option whether you want to purchase a refundable or nonrefundable ticket. All the fare rule are listed before you purhase a ticket. Most people do not take the time to read the “fine print.”

    Airlines are business just as any other. When you purchase a seat moths in advance like you claim, then you have taken up a seat. This seat can no longer be sold. When you decide that the ticket is of no use for you, and you want that seat to go back in the inventory, the airline, has lost money if it cannot be sold.

    I am not trying ot defend an competing airline’s policies. But every airline runs its business its own way. It is what work for them. Comparing one airline to another is like comparing Wal-Mart and K-Mart. Each have their own business strategies and people show at one or the other based on what works for them.

    At the end of the day, it all goes back to the motto, you get what you pay for.

  2. Francisco makes some valid points: every airline runs its business in its own way and you get what you pay for.

    Francisco is evidently an airline executive who keeps his eye on what the blogosphere is saying about his company and its competitors. Smart move!

    My point is that a ticket that is booked in February for a July flight and is canceled in March should be refundable if the airline wishes to look like a heads-up outfit.

    The AirTran business model is only shoddy if you look at it from a consumer viewpoint. Maybe Wall Street thinks this is a model to be emulated because it cuts airline losses and to hell with customer expectations.

    A simple change like making tickets refundable if canceled 30 days before flight date would make their business model appear more customer-centric.

    If AirTran wishes to be known as a Broadway Camera Shop version of an airline, that’s OK too. They just need to be aware that the marketplace is now connected via the Internet and we discuss the pluses and minuses of our customer service experiences with all who care to read them.

    I hope that Airtran reconsiders its current refund policy. On the other hand, they may just ignore my comments and hope that no one takes notice.

  3. David:

    I’m a little surprised that you of all people did not read the fine print when you bought your ticket. I visited the AirTrans web site this morning and had no trouble finding this on their air fares page:

    “All fares are one-way. All fares are non-refundable and a $60 fee per person applies to any change made after purchase, plus any applicable increase in airfare.”

    A check of several travel agent web sites (like Carlson Wagonlit and American Express) show they also display the policy for non-refundable tickets.

    AirTrans is not the only carrier to use non-refundable tickets for lower fares. According to “The Ticket Newsletter:”

    “In Atlanta, we have AirTran to thank for bringing common sense to air travel—although it has not ballyhooed it as such, Delta has been competing with “Simplifares” on AirTran routes for the past several years. Nationwide, we have Southwest Airlines to thank—if it were not for the success of this Texas powerhouse, we’d still be in the airline dark ages.”

    Did you buy a ticket without checking the restrictions? The first step in responsible consumerism is knowing the rules and restrictions before you spend your money.

    Rather than lump AirTrans into the same pit as electronic equipment bait-and-switch artists why not admit that the fault in this case was yours for not checking the rules before you tried to save 120 bucks? Why should they change their policy? It has been a success and has resulted in other carriers following suit. Discount carriers allow people of modest means to fly but, as a consumer, it is your responsibility to know the rules when you decide to use their services.

  4. Doug,

    I accepted the responsibility for switching from an airline that provides refunds to one that doesn’t.

    I just don’t agree with their business model.

    Canceling a ticket four months before flight date does not create a hardship for an airline.

    I suggest that they might want to review their policy to avoid creating unnecessary customer resentment. They are actually demanding money for nothing with their present policy. The seats are sold to others and they keep the money anyway.

    A simple change in their cancellation requirements would protect their profitability and not make Airtran look like money-grubbing opportunists.

    This could turn out to be a huge business opportunity for other airlines that are competing for low-priced fares. All they have to do is offer some degree of refundability.

    They can even charge more for their tickets and promote the fact that the tickets are refundable if canceled 30 days before flight date.

  5. kevin says:

    David,
    I checked for flights online, and AirTran sells unrestricted fares that are refundable.
    Their business model is sound and works in many different places (presales of DVD’s with nonrefundable deposits, travel packages, etc.). By forcing you to think twice about canceling your trip and pushing more of their business risk to the customer, nonrefundable tickets are a good business model for the airlines. If you want more flexability and less risk for yourself, you pay more and get the refundable ticket. Becuase people mostly travel on the restricted ticket, it shows folks want to take more risk themselves and pay less, and most folks like it that way. Both are made available to folks to buy, we the flying public have made our choice and fly accordingly. The airlines are responding to our collective purchasing choices.
    American also sells nonrefundable tickets, so I am not sure why you say American is better than Airtran here. If you bought refundable at American, why not with Airtran?
    The restrictions are easy to find on their website and well know to the flying public. That is why you can buy travel insurance in case you get sick and need to cancel your trip, etc.
    This is not Airtrans fault, nor is it a problem with their business model. It works for them and the other businesses that use it. Otherwise it wouldn’t be so wide spread around the world (I am stationed in Europe and they use it here too). In fact, I don’t know of any airline that doesn’t use the same pricing structure of refundable vs. non-refundable. It is our responsiblity to make sure we buy the right type of ticket, not to blame the airlines for asking us to honor our part of the contract. You signed up for this contract and now you are complaining because they are enforcing it. If a man gives his word in a business deal, you should not complain if you are held to your original deal. It especially rings hollow to say later “I didn’t know” or “I can’t believe they actually are enforcing their contract, they didn’t with my friend Joe”. I believe if a business pulled the same on you, complaining you are holding them to what they signed up for (but wait, Joe is sick this week and so we won’t be able to ship your product on time and it will be more expensive, becuase we had to hire another guy to do his job while we pay him sick leave, besides we didn’t know what we were signing up to deliver to you) you would be up in arms compaining that the company isn’t fulfilling their deal.
    I read your reviews and most of them are right on, however, this one was pretty much something you signed up to fulfill and is a commonly accepted well know industry practice. A practice set by the buying choices of the flying public. I, as the flying public, don’t want the airlines to change this, because I want to pay much less for my tickets and pay extra to change the ticket if I need that option (which isn’t often). I don’t want the airlines forcing me to pay for the refund option, even if I don’t need/want it.

  6. Hi Kevin,

    Great comment! Thanks for taking the time to research this and respond.

    I am aware that Airtran sells refundable tickets. I have no issue with the fact that Airtran can sell non-refundable tickets. That is part of their business model.

    My point was that it can be a bad deal for a consumer to buy a non-refundable ticket for a flight that is months away.

    Canceling the flight many months before flight date as I did leaves me as the consumer with no recourse. I have paid money for nothing. The company sells the seats to other passengers and pockets the money I paid. Good for them. Bad for me.

    They haven’t done anything illegal. All of the restrictions were in the fine print. I think there are more enlightened business models and their competitors should take advantage of what they are doing. See my next post for details.

    They have the right to set up the business model they choose and I have the right to say it can be a bad deal for the consumer.

    You have the right to say I am unfair to Airtran and readers have the right to find a discussion that is more interesting.

  7. shelly says:

    I agree with David that it is an unfortunate policy that airlines have of not refunding the money for cancelled tickets. The ticket was cancelled well in advance for the airline to be able to sell the seats to other passengers.
    Although the ticket says its non -refundable, the airline should consider that it was cancelled well in advance and refund some percentage of the ticket price, if they are able to sell the seats to others. Lets not forget we are dealing with human beings and this is a service industry. The same thing happened to one of my friend’s who had to cancel his tickets because of a death in the family. These incidents cannot be predicted and hence the airline policies and contracts should be more humane.

  8. Dimitri says:

    One of the reasons your ticket is non-refundable is the way airlines price tickets. We all know that passengers pay different prices to be on the same flight. In fact the price one passenger pays affects the prices of the other passengers on the flight. So for example, tickets start relatively cheap because the airline is trying to fill seats to cover the cost of the flight. Once a certain number of seats have filled up, they can start increasing the prices since the costs are covered and they are working on maximizing profit. They do this price change based on the demand they see for tickets. (BTW, they record everything, even how many times people set up the flight but don’t go along with the purchase). When you bought your ticket you indicated increased demand and some guy who bought after you got jacked on the price. This of course all takes place electronically and behind the scenes. Now you come along and want to cancel a flight. The airline has plenty of time to fill your seat. What they can’t do is go back and change the prices they charged all the passengers who bought tickets after you, prices you affected by your purchase. You are messing with their optimization model and that is a big no-no for the airline industry!

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