With the DoT proposing changes to rules for airlines that include how denied boarding compensation should be handled, I thought this might be a good time to remind and/or inform folks about what they’re actually entitled to but are rarely aware of.

First, let’s take care of some definitions.  Denied boarding comes in two basic forms.  Voluntary and Involuntary.  Voluntary is when the airline, for some reason unrelated to weather and/or equipment failure or other events that prevent the airline from boarding the aircraft, has overbooked the flight and needs seats to accomodate everyone.  They’ll ask for volunteers and generally offer a travel voucher and guaranteed space on another flight.  How much that travel voucher is worth generally depends on how badly they need the space and how much it takes to get a volunteer. 

For the record, I’ve only volunteered a couple of timese because I prefer to reach my destinations when I originally planned and because I find travel vouchers for the general sum of $200 credit to have little worth to me.  I don’t know when I’ll fly next and I don’t know that it will be on the same airline when I do fly.  The times I have volunteered, the voucher values were considerably higher than $200 and on airlines that did go to most destinations I frequent.

There is no requirement that the airline give you money for volunteering to take a later flight.  A volunteer negotiates for the compensation and makes the best deal they can or just takes what they’re offering.

Then there is involuntary denied boarding.  That happens when the airline is unable (or unwilling) to get volunteers to give up their seats and simply says you don’t get to go on that flight.  Now, the airlines are obligated to offer you either a travel voucher *or* cash compensation (in the form of cash or check) up to a certain value which is dependent upon how long it will take them to get you onto another flight.  The rub is, most people are unaware that the airlines have to give you that compensation in cash (in cash or check form) if you so wish.  In fact, most gate agents leave off that little nugget of information in hopes you’ll simply take what they’re offering as a voucher.  And most do.

Why do they offer travel vouchers?  Because history shows that a certain percentage of those vouchers are never claimed.  They come with expiration dates and the airlines ferverently hope you’ll forget to claim the travel before the expiration date.  (To be fair, I do know of two airlines who have in the past reinstated a credit that wasn’t too far past its expiration date.)  So, if an airline manages to issue $10,000,000.00 in credit over one year and 10% never claim that credit, they’ve just saved $1,000,000.00.  A very tidy sum.

What should you do?  Unless that travel voucher is worth twice what the cash compensation should be, I would take the cash every time (and have.)  Why?  For several reasons.  First, you never know what other costs an impact to your schedule such as that is going to generate.  Why not have the cash available in case you end up incurring more costs. 

Second, a dollar in your hand today is worth far more than a potential dollar in credit a year later.  That dollar can go into your bank account.  It can be used to buy travel on another airline or pay for a hotel stay on a different trip.  It’s flexible and can accomodate you in a variety of ways.  A travel voucher has to be spent on the airline. 

Third, I like punishing an airline.  How are they punished by accepting cash instead of a voucher?  The voucher goes towards the price of the ticket but the airline’s *costs* for the trip you’re purchasing with that voucher are considerably less in most cases.  In other words, it costs the airline a lot less if you accept that voucher than it does to give you currency.   I like punishing airlines who’ve overbooked. 

So, if you are involuntarily denied boarding, make sure the gate agent spells out *all* of our options including the cash you’re entitled to before you make a decision.  Remember that a voucher is worth about 60% of its face value in real world use so if they *really* want to give you a voucher, ask them for more than the cash compensation you’re entitled to.  If they won’t do that, take the cash and the booking on the next available flight and then go find a bar and celebrate beating the airline with a cocktail.

Filed under: Travel Hints by ajax