ATR Opposes Government Power Grab of Airfare Refund Policy

Submitted by mpalicz on Friday, June 26th, 2020, 5,09 PM

Senate Democrats are renewing their push for greater regulation and increased price controls on commercial air travel. Five Senate Democrats, including Sen. Elizabeth Warren (MA) and Sen. Edward Markey (MA), have recently introduced legislation that would require major carriers and third-party ticket sellers to offer full refunds, in cash, for any reservation cancelation during the Coronavirus outbreak, even if that cancelation results from an individual deciding not to travel.

The effort is only the latest attempt from Congressional Democrats to assert greater control over the cash-strapped airline industry through regulation and price controls. In March, Senate Democrats delayed the Coronavirus relief package over a host of provisions unrelated to the pandemic. Sen. Sheldon Whitehouse (D-RI) insisted that “carbon offsets,” which would deliberately raise airfare costs during a demand crunch, be a prerequisite of any deal. Sen. Markey withheld his support of a deal while publicly insisting on a new batch of regulations ranging from price controls on baggage fees to government mandates on passenger seat size. 

Ultimately, the relief package passed and provided financial assistance to airlines suffering from a dramatic decrease in passenger volume largely due to government-imposed travel bans and stay at home orders. However, this relief did not come without significant strings attached. In order to qualify for assistance, airlines must refrain from involuntary furloughs or reductions in compensation until the end of September, refrain from performing stock buybacks, or issuing dividends for 18 months and must freeze the compensation of company executives. These limitations were the result of a bipartisan agreement meant to cover airline operating costs and keep airline employees on payroll and off of unemployment lines.

Now Senate Democrats are abandoning this agreement and pushing for more regulation. 

While Democrats claim their bill is pro-consumer, the reality is that such legislation will only increase the cost of airfare and reduce the number of flights available. All while increasing the likelihood that taxpayers would be on the hook for an additional round of airline relief funding. 

In reality, market forces have already driven airlines to address the concerns of their customers. Carriers have greatly increased consumer flexibility during Coronavirus, including waiving change and cancelation fees, offering credits for the full value of a reservation, and even extending the life of previously purchased tickets, meaning flights can be rescheduled or used towards future travel. 

Just this week, the largest airline trade association for U.S. airlines announced that its members will fully refund tickets for any passenger who is found to have an elevated temperature during the pre-boarding screening process. These offers from airlines, paired with lower ticket prices from reduced demand and waived ticket taxes, are successfully addressing the concerns of customers as passenger volume begins to increase

Americans for Tax Reform opposes the effort to have the federal government insert itself into the refund policy of private companies and urges Members of Congress to reject this legislation.

Comments