The Department of Transportation requires airlines to allow passengers to:
…hold a reservation without payment, or cancel a booking without penalty, for 24 hours after the reservation is made, if they make the reservation one week or more prior to a flight’s departure date.
Should 24 Hour Holds Be Illegal?
Christopher Elliott, though, believes offering 24 hours holds is deceptive.
He believes that the DOT imposing the requirement that airlines offer a 24 hour hold or fee-free refund was “accommodat[ing] the airline industry.” Even as he suggests that the American Airlines 24 hour hold policy is something the airline “doesn’t want to do…but it has no choice.”
- Is the hold rule a concession to American, or something they don’t want? Pick a side, please!
- More likely it is neither, Elliott apppears blissfully unaware that American offered holds for years before it was a DOT rule (their practice was friendlier than other airlines)
He wonders if he should “step up and ask the DOT to close this loophole permanently” and require all airlines to offer fee-free refunds for 24 hours (thus taking away the option to offer a 24 hour hold without purchase). He believes there are “perhaps tens of thousands, of American passengers who feel deceived” — because American’s policies are different than other airlines (gasp) and consumers may not understand this.
In my experience ‘most’ consumers do not know about the 24 hour refund rule. It’s possible some people assume they have the same thing at American; that that’s the Department of Transportation requirement. If that’s the case, though, it’s a failure of education by the government about it’s rule. And for many, 24 hour holds are better.
Aren’t 24 Hour Holds (at Least Sometimes) Better Than 24 Hour Cancel?
In fact you actually do have the best of both worlds with American. If you want you can put a ticket on hold instead of buying it when booking direct. But if you want a 24 hour refund of an American Airlines ticket instead of a hold prior to purchase, just buy from an online travel agency like Expedia or Orbitz instead of from AA.com.
Net net I think most customers prefer the 24 hour hold over purchase and refund, not having to put funds down on their credit card. There are downsides, but no one policy is going to be best for every customer every time.
As Pizza in Motion writes,
Reasonable people can disagree on which policy is better for a specific traveler. But, neither is customer un-friendly. And, from a basic economic sense, would you rather have an airline take your money and then have to ask them to return it, or would you rather they gave you an extra 24 hours to pay them? Uh, yeah.
Why Is This Even a Thing?
It is crazy in a way that the government regulates the sale of airline tickets orders of magnitude more than most other products, and does so largely for historical reasons. The Department of Transportaiton was granted broad regulatory authority over airlines as part of de-regulation, to buy off concern that without the Civil Aeronautics Board setting routes and fares horrible things would happen.
Nearly every other product in other industries is simply regulated by the Federal Trade Commission. How many products do we have a legal right to put on layaway or return for 24 hours, and then separately still have a right to ‘store credit’ minus restocking fee (change fee) if we decide not to use the product and even inform the seller when it’s too late for them to re-sell?
Unfortunately FTC protection alone isn’t sufficient in a world where you can’t even sue airlines most of the time. But real consumer protection would involve modifying the liability shield contained in the Airline Deregulation Act that – as interpreted by the Supreme Court in Northwest vs. Ginsberg – which means that airlines cannot be sued under state common law (using claims such as those based on a covenant of good faith and fair dealing).
Consumer Advocates Should Want Airlines to Compete With Different Policies
I love the idea of different companies with different policies. That’s the basis of competition. If you’re the sort of consumer advocate who doesn’t like airline mergers, then you shouldn’t like – let alone call for – government policies which require every airline to be the same so no customer has to pay attention. Rather you should argue for, not against, product differentiation.