Traveling is an essential part of many people's lives and we know how hard it is to travel nowadays due to coronavirus restrictions. Some travelers had to change their itineraries, others have canceled their trips and sought refunds from airlines.
While the future of traveling is kind of a blur, many consumers question what has changed in the airline industry: Is it safe to travel? Will you get a refund if the airline cancels the flight? Do airline changes impact your trips?
To help you find the best answers to all your traveling FAQs, Pissed Consumer invited the travel analyst Jamie Larounis.
Jamie is one of the leaders in the travel industry focusing on providing insight to travelers through analysis, trends, data, reviews, and in-depth guides. He is regularly called upon to provide expert opinion in Business Insider, Forbes, the New York Times, and other famous media.
In these video interviews with our CEO and co-founder Michael Podolsky, Jamie explains how airlines work, how you can get a refund on your airline ticket, and what airline changes can affect your trip planning.
Jump to the points below to explore the valuable information and expert opinion in more detail.
1. How to Get a Refund from Airlines?
According to reviews on PissedConsumer.com, many people have faced difficulties with airline refunds. In this first video interview, Jamie talks about the most reliable airlines, booking flights, airline ticket prices, and more to help consumers improve their traveling experience.
Watch the video or go through the transcript with the following points:
- Booking with airlines and booking with travel agencies
- Recommended airline
- Airline ticket prices
- Returning money on canceled flights
- Typical mistakes with air travel
Michael Podolsky: My name is Michael Podolsky. I am the co-founder of PissedConsumer.com. Thank you for jumping on this interview.
Jamie Larounis: My name is Jamie Larounis. So I'm currently a travel industry analyst with Upgradedpoints.com. I also work with a number of different organizations, the Loyalty Summit, Frequent Travel University. I write for a number of major media outlets, referenced quite often and New York Times and Forbes and whatnot. And I deal a lot with educating consumers on travel, finding deals, working with frequent flyer miles and loyalty programs, to help folks. You know, travel better, hopefully, travel a little bit nicer than sitting in the back of a plane occasionally.
Booking With Airlines and Booking With Travel Agencies
Michael: When you book your flights Jamie, do you book through airlines or you go to travel agencies?
Jamie: I always book through the airline itself. A travel agency or travel agent, whoever you're working with can be very useful. And I'm certainly not going to knock on any travel agent because that business is a business for a reason.
There's sort of two avenues here. If you book through a travel agent, they can monitor your flights. They can help you with re-booking. They can help you sometimes with upgrades, discounted fares, right? There is a need for travel agents. I personally don't. I actually, I won't say I don't, there are a few select times that I have because a travel agent has been able to get a better deal than I can get.
But I feel a little bit more comfortable where I can sort of own my ticket, be responsible for the changes, be responsible for seat assignments and flight cancellations and whatnot. That's my comfort level.
For a consumer that wants someone to monitor their ticket. Wants that help, wants that handholding. That's what a travel agent is there for. You know, certainly use one if you need to.
Now that comes at a premium, oftentimes there's either a markup on the tickets. Sometimes they earn a commission, and so there is markup. Sometimes travel agents will only sell you a business and first-class fare because they're not going to make anything or hardly anything off of an economy fair.
So again, there are complexities like everything is to the ways that a travel agent might not want to work with you. My comfort level is to own tickets and take responsibility on my own. Cause if I see a schedule change, come through it. You know, one in the morning, I want to be able to react without having to email my travel agent. But this is why American Express Travel, this is why individual travel agents - they make a living, after that demographic of people that want that extra assistance that want that level of service.
What’s Your Favorite Airline?
Michael: What is your favorite airline?
Jamie: My personal favorite airline is Qantas. And in Australia. I've been to Australia a number of times. I think the service level is fantastic. I think the employees are friendly. I think the lounges are well put together. They've just got such a good operation. I've really never had a bad experience with Qantas. So if I could take Qantas and move it to the US I would be the happiest camper ever. But I guess that's not going to happen anytime soon.
Michael: If I'm not mistaken last year, Qantas actually won JD powers, they are the best airline. They’ve overtaken Singapore airlines if I'm not mistaken.
Jamie: Yeah. If they want a few accolades. Yeah.
What Will Happen to Airline Ticket Prices Next Year?
Michael: What's going to happen to airline ticket prices next year? A lot of companies are cutting down on the service, seats are limited yet the travelers are limited at the same time. How is the pricing of tickets going to play into it?
Jamie: Airlines are taking a twofold strategy here. First of all, they're attracting consumers with fantastic deals. I mean, I normally live in Washington, D.C. I can fly to LA for $40. You know, tomorrow, if not less.
Prior to the pandemic, as your date neared for departure, the price would traditionally go up because supply and demand their business travelers were trying to purchase at the last minute. Airlines want to captivate off of that revenue. Right now, those seats are all empty. And so we're seeing prices be really good until even the last minute, which sort of defies your previous business logic.
The other thing that we're seeing that airlines are waiving fees. So now they're all removing their change fees, removing penalties. Now there are some limitations to that but the floodgates have opened as far as these waivers and change fees and whatnot just within the last week.
So, what we're going to start to see moving forward is airlines are going to be reasonable with their fares. They still have to attract consumers back. And that's a twofold strategy between the plane being safe, the general health and safety of consumers when they fly, where they go, destinations, vaccines, right? Everything health-related. And then they're going to have to attract them back with just fares, right? And so sometimes we're seeing folks travel on good fares, even though it's not safe.
And so. You know, those two strategies combined together are hopefully going to bring enough travelers back where once businesses start opening, once that business travel demand starts returning, then the airline's bread and butter is back. And hopefully, that repeat business keeps things going.
I think we're going to see the change fees waived for quite a while, at least through 2021, I think still into 2022, we're going to see it.
If not permanently, you know, there's a chance that that stuff could linger for more than even we're anticipating. And I think those low fares are at least going to resonate through next summer. And once that next summer tourist wave kind of comes through and folks have built their confidence, then we'll start to see prices settle, or really rise back into where their normal ranges are.
Can You Get Money for Canceled Flights?
Michael: Thank you. I speak very often to consumers that are upset. Upset about air travel specifically. The past six months have been very much under the shadows of Corona, of course, and airline canceling flights, and the returning money.
What I am hearing is that airlines do return the money, to the flights that are canceled. But there is another side of the medal. Certain parties travel booking agencies, they are not. There is quite a significant delay for a bunch of travel agencies sitting on the money that airlines have returned. And travel agencies keeping the money for now. What are your thoughts on that?
Jamie: This is a complex issue. So there's a number of ways you can book tickets, right? You can book tickets directly through the airlines. You can book through a third party, OTA, an online travel agency, Expedia, Travelocity, any number of those agencies. You can book through your local travel agent. You can book through a consolidator, right?
There's a whole number of sorts of steps here. The only one where you physically transact with the airline is when you book a ticket on American or United or Delta physically on their website. The rest of them all require this sort of intermediary step where you're essentially paying the travel agency. And then the travel agency is paying the airline.
And so oftentimes what's happening here is that the airline then refunding the travel agency. And then the travel agency is, of course, hemming and hawing, trying to figure out whether they should refund you.
Regarding refunds the general school of thought and this depends on each individual airline, but just overall as an overarching strategy here, if the airline cancels the flight, you are due a refund. So if they cancel it outright, the flight is not operating. You're owed a refund. They can try to re-book you. They can try to come up with some sort of reason. Now, if they cancel it, you're pretty much guaranteed a do-over refund.
If there's a significant schedule change, you're also doing a refund. And so the airlines have changed their policies on this a number of times because they realized they're going to have to change the schedules just due to reduced crew, reduced aircraft.
And so they've changed those numbers back and forth. I can't give you a firm number of what the hard-line one, two, three, four hours is. But each airline has its own policies where if they reschedule your flight beyond a certain time, then you're also doing a refund.
So, there are several ways you can go about getting these refunds. The first one is applied directly to the airline. Now that doesn't help you if they've refunded already the travel agency, and now you're expecting the money from the travel agency.
In those cases, if you book with our credit card, by all means, dispute it because most likely you're disputing against the travel agency and not necessarily the airline itself. Because the charge on your credit card is going to show. You know, so and so travel agency.
And so they're going to get dinged for that dispute. So if you know for a fact that the money has been refunded and you can contact the airline, usually they'll provide proof or provide some explanation that says, "Hey, we've refunded so and so travel agency".
If you're now waiting for a travel agency to then refund you, you're already armed with that evidence that the refund has already been issued to the travel agency. You can provide that to the credit card company and just dispute it that way. So that's the easiest way and quickest way you can resolve it. If you know, the refund has already been issued and that it's not in your hands.
Now there are other complexities here. You know, travel agencies will try to impose fees, "Oh, we're going to hold it because you've signed something separate. And now we're going to try to rebook you", right? There's a whole bunch of complexities here that could sort of ruin that plan.
But most times, if the refund has been issued, the credit card is the way to go. And that's why:
...when you purchase a ticket you need to purchase it on a credit card. Don't cut the travel agency a check, don't transfer the money. Don't do anything that isn't really disputable. The only thing you can dispute is on your credit card.
How to Avoid Mistakes With Air Travel
Michael: Thank you, Jamie. This is a very good suggestion and we'll certainly use it. What are the typical mistakes you think consumers are making with the airline industry, with air travel? What do you think?
Jamie: One of the things is that folks are under this misconception that certain tickets are cheaper on a certain day. Oh, if I book a certain week, certain months in advance, some of that holds truth. A lot of it doesn't hold any truth.
So, one of the common misnomers out there is to just book your ticket as far in advance as possible. So if I could book a ticket 12 months from now, somehow I'll end up with the cheapest fare. And that's actually not how it works.
Generally, the cheapest fare is available somewhere a month, two months ahead of time of the departure date and not 12 months. You're actually getting a premium at 12 months because the airline says, "well, you're planning this far in advance. You most know that you want to go to a certain destination and we're going to capitalize on that".
It's usually not the most expensive fare, but it certainly does come at a premium. The other thing I would say to consumers. You know, commonly mess up on assuming low-cost carriers are cheaper than Legacy airlines. So when we say low-cost airlines, we say Spirit, we say Frontier, we say Southwest.
These are airlines that operate on a more low-cost model. Some of them are ultra-low costs. Some are more just low costs. And when we say full service, we mean American. We mean United, Delta, Alaska, those traditional legacy carriers.
And so there's this common misconception that Southwest is cheaper than everyone else. Not necessarily, you can actually look at many flight examples where Southwest is much more expensive than the traditional Legacy Carriers. And I could name the same example on Frontier and Spirit and other airlines.
Now, partly some of this is due to the fact that Legacy airlines have now started offering basic economy or whatever their variant of that program is to match those low-cost airlines. So in some regards, that is a level playing field for many flights. But in other flights, don't always assume that Southwest, for example, is cheaper.
Now, its policies may be a little bit friendlier or the Legacy carriers policies may be friendlier. That's a separate argument, but as far as the fears themselves. You know, sometimes we see something better on a Legacy carrier, simply because they're trying to attract people out of a certain market where Southwest may not be trying to do that.
So those are kind of two big ones. You know, if you want me to give you a few more, I probably certainly can, but those are kind of the big ones. Other mistakes that consumers make, another funny one actually is assuming that first-class is priced well more expensive than Coach.
So you'll find on a lot of flights if the price differential is actually not that much, sometimes it's as little as $50, $100, maybe $150, depending on the flight length. So buying up into first-class can actually be quite reasonable on international flights.
Many times you're offered a buy-up offer if there are seats remaining. So you know, folks will think, oh "I can never sit in business class. I can never sit in first class. I'm not going to ever afford that". For the right flights, certainly, it's going to be reasonable.
Now if you're trying to fly to Sydney, if you're trying to fly to Hong Kong, some very far off premium destinations, finding those deals is going to be a little bit harder. But you know, when you're flying from Chicago to Detroit, or Chicago to San Francisco, or San Francisco to Dallas. Sometimes you can actually find quite reasonable premium cabin fares within the United States.
2. How Do Changes in the Airline Industry Affect Consumers?
We’ve talked about flight costs, refunds, and how to avoid issues when booking airline tickets. However, the new normal that we’re living now makes its adjustments in the airline industry.
In this next video interview with our travel expert, Jamie Larounis, we ask him to speak of the changes in the airline industry and how these changes will affect consumers.
Key questions covered in this discussion:
- How to stay updated with the airline industry
- New standards of air travel
- The airline service changes
- Increase in airlines’ capacity operating
- The effects of online business on the airline industry
- Should you hold flight miles?
- Airlines’ response to customers reviews
How to Stay Updated With the Airline Industry?
Michael: I am extremely excited to have a conversation with you because a little secret, PissedConsumer.com started about 13 years ago when I was sent to the wrong vacation and I was pissed.
Jamie: 'Cause I'm a travel industry analyst with Upgradedpoints.com. And so, we talk about strategies to use miles, where to use miles, where to stay at what hotels, basically, any site that you go to for research, we have that data. We have that advice. We're sort of a one-stop-shop where you can learn about those different credit cards and hotels and airlines and those step-by-step processes.
You can follow me on social media. @TheForwardCabin is my Twitter, my Instagram, Facebook, TheForwardCabin. I occasionally will write online on my website. Although, I mainly now write and consult for a number of other different companies, rather than just sort of putting out the stuff on myself. So most of my work is sort of done on social media. I write for a number of major publications. Occasionally, you'll see stuff published in one form or another.
I highly recommend for consumers that are looking for education about this, when to buy tickets, how to find deals, how to use miles, there's a series of seminars called Frequent Traveler University where you can attend and actually learn about those different functions from various speakers in different cities.
I'm involved with a project called The Loyalty Summit and Frequent Traveler Awards where we honor airlines and hotels, rental car companies for the good work that they're doing, and how consumers are voting. And we teach actual airline executives about loyalty.
We have other airline and hotel and car rental and bank executives that are teaching other airline hotel, car, bank executives. And so, it's a nice sort of panel discussions and whatnot, and that's open to anybody that wants to sort of gain an insider look into the industry.
And you can find all of that stuff. I post regularly on social media. So in one way, form or another, you'll find out about those events and publications, and websites. TheForwardCabin is my handle, website, theforwardcabin.com, all social media. And then, you'll find me regularly posting on Upgraded Points.
What Are the New Standards of Air Travel?
Michael: A huge part of consumers are interested in the travel industry. It could be air travel, it could be a hotel, it could be cruises. It's all over the place. You specialize more on air travel if I'm not mistaken so let's talk about air.
We are, for the past six months, we are living a new normal. There is no standard flying the way it used to be. If you put your vision cap on, when are we going to be back to normal and how the new normal is going to look?
Jamie: So most of the experts that you talk to are saying that 2024 is when we're realistically going to get back to prior levels prior to the pandemic. Now that said, I think we're going to see significant recovery by the end of 2021 because towards the end of this year, early 2021, a vaccine is expected in some fashion.
Whether that happens or not, I'm not really sure, but let's just sort of go off what's generally known at this point is that a vaccine will be distributed sometime around that point. Of course, not everyone will receive the vaccine upfront and there's going to be some sort of a waiting list or some sort of a procedure that folks will get it over time.
That said, as the vaccine is distributed, whether or not folks actually have the vaccine, it's automatically going to build consumer confidence that okay, well, I may not have the vaccine, but other people do. And somehow, that's going to translate into perhaps this virus is not as prevalent as it is currently.
So that said, I think we're going to see the sort of recovery of demand in some sort of significant fashion somewhere between next summer and next winter.
You're already having airlines that are canceling service next year. I mean if you look at Qantas, for example, down in Australia, they're looking at canceling most of their international services at least through a year from now, if not until the end of next year.
And so, if you start to look at both airlines and start to look at both trends with the vaccine, that's somewhere in the ballpark area where airlines will have some sort of recovery where they're going to be able to make money off of it where they aren't right now.
How Will the Economy of Flying and Airline Service Change?
Michael: How do you think the economy of flying will be changing over the next four years and how will it affect the consumer? Will the service suffer or instead, maybe it's going to improve with better training, better new employees coming in? What are your feelings on that?
Jamie: So service is a very interesting thing and so, let me give you an example here to put this into perspective. So when the pandemic hit, American Airlines said, "Well, we're going to stop any meal under 2200 miles."
So if you were in first-class or even in coach, right, different levels of service, but "We're going to limit the service if your flight is under 2200 miles. We are not going to offer you a meal." And so eventually, that formed into, "Well, we're not going to offer you anything over 2200 miles." So it evolved even more.
And so recently now in August, it may even be in late July, but I know it was in August, the change was made where basically they said, they didn't admit it, but you can look at the data, they said, "Well, wait a second. We've eliminated everything. Something is not right here. Now, we're not offering anything in first class." And so, they added back at first a cheese plate, and now demand has proven even more than that where they're saying, "Okay, well, now we're going to offer that or a choice of something else."
We're not back at the pre-pandemic service, but what airlines have done is they've removed all this stuff in an attempt to cost save and they realized, "Wait a second, that's too much. We're going to see consumers not book our product because now, we're not offering anything."
And so, especially with a premium product, a first-class, a business class product, you have to offer something that's going to match that price. And in some markets, the price did go down. But by and large, you didn't see the price of the first-class drop with the level of service. You saw it really remains the same for an advance purchase fare.
And so, what we're going to see probably over the next several months is two things are going to win back consumers in the airline industry into flying. The first thing is a loyalty program, and I know loyalty doesn't necessarily deal with the onboard service, but it does deal with the overall service of the airline.
And so, you are going to see airlines perhaps offering sales on mileage tickets, increased mileage earning, benefits with elite status, all sorts of different tactics to capture that loyalty market.
As far as the onboard service market, I think we've seen airlines pretty much hit where their lows are going to be and we've already seen pretty much every carrier. I don't think I can name a single carrier now that really has gutted everything and hasn't done something to bring back some sort of level of normalcy, whether that's bringing back some sort of beverage service, whether that's bringing back some sort of meal service.
The low was really in May, was really in April, was really in early June. And when we started to see that improvement in June as far as the number of COVID cases, right, we saw a demand for airline travel increase.
Well, unfortunately, that spike then caused a decrease. And so before, when it was at that low, we were seeing folks book tickets, the airlines were responding, "Oh, my gosh, we've got consumers back." But then when that second spike hit, now we've kind of got a problem.
And so, we're slowly starting to see airlines add back more and more service. Whether we're going to get back to pre-pandemic levels is a question to be seen here. There's the old Bob Crandall story, former CEO of American Airlines, where they removed an olive off of the salads and they saved hundreds of thousands of dollars a year.
We're going to probably see that initially. You're going to see elements of service that are going to be cheapened or lessened, and you can certainly see that on American Airlines in the story I referenced, it's not a plated meal. It's a packaged sandwich and so, quite a difference.
We're going to see airlines experiment with what it takes to bring a consumer back? What does it take to make them feel comfortable in first and business class? What does it take to make them pay that fare, but us not provide that level of service?
So will a passenger book first or business class, and we can give them a sandwich versus giving them a plated meal, or are we going to lose any customers if we don't give the plated meal? And so, I think it's going to be a lot of trial and error and find out where exactly is the line between gaining a customer back and paying for that service, paying for that meal, paying for that drink, whatever it might be that's going to get them back versus not paying it and seeing where consumers book away.
We've already started to see some of that even with inflight entertainment prior to the pandemic, there's research that says that if there is no inflight entertainment, people do book away to other carriers where there is a TV screen, where there is a movie being offered, despite the fact that folks have iPads and laptops and iPhones where they can watch their own thing.
There is some book away, there's a book away effect where, if there's a TV screen, somehow someone is more likely to book that flight. And so, we're going to see that replicated with food, with service, with loyalty, where I can get a sandwich even if the flight is a hundred dollars more in price, maybe I will book that flight because there's some sort of psychological reasoning behind it.
When Will US Airlines Increase Capacity?
Michael: You speak a lot about US-based airlines. I travel more across the Atlantic and there is certainly less air traffic going through the Atlantic. What is the percentage of US-based flights? How low are we right now? I mean 30% capacity operating, 50% capacity operating, where are we right now?
Jamie: Yeah. So we're somewhere in the 30 to 40% range. United just came out this morning with a press release that said by October, November, they're going to be at 40% of their schedule pre-pandemic. So we're hovering somewhere in that 30 to 40% range.
American was looking to operate almost half their schedule this summer, but the fact is we had that second wave or whatever you want to call it, perhaps it's not a second wave, but that increase in cases, which ruined that plan.
And so, we know the demand is there. The demand for air travel is there. There's actually pent up demand. We can see the research that says people are booking for next year or they're already searching for travel next year. What's hindering them, the dam is there with the cases, with the health environment.
And so, I know this sounds easy. I know this is not something that's not obvious to everyone. If the pandemic wasn't there, we would have the demand. And so, as we start to creep towards this vaccine, the second it's released, I really do think there's going to be some sort of a flood gate that's going to open.
Now it's not going to be everyone by any means. It's certainly not going to be everyone because as I mentioned before, we're looking at probably 2024 as a pre-pandemic recovery, but there will certainly be some sort of flood gate that's going to open where business travelers will see confidence, where consumers will see confidence.
And so we're 30% now, perhaps 40% by October, November. I think we can realistically get to 50% somewhere in the January, February timeframe. I don't think we're going to hit it earlier because traditionally, December is a slow month as it is with the holiday season and business travelers not traveling.
So even if we get to 40% by November, I think we're going to see a few months before we then hit that 50% mark. Because you have to remember that it's going to dip anyways in December, and we've got to climb out of that natural dip that happens every year and recover probably looking at the end of January, February, maybe even into March, we'll probably be hopefully somewhere in the 50 to 60% range.
By next summer, I think we're realistically looking at somewhere in the 70% range. I know that's going to sound high to a lot of people, but remember, when this vaccine gets released, that in combination with this pent up demand is going to make people want to travel.
And so, we may see a shift from business travel where a lot of companies have said, "No, we're not going to send our employees on the road." And that market's going to shift to an increase in consumer travel where people will say, "Wait a second. I spent the whole of last year at home. Next year, I'm going to take three or four vacations whereas I usually only take one or two."
And so, that forward-thinking, it's not necessarily going to replace the business market, but it will certainly help in sort of stabilizing that trend.
How Online Business Affects the Airline Industry?
Michael: Zoom has proliferated the entire business market right now. Everyone is doing online meetings, everyone is learning, and getting used to it. What is your prognosis? How is it going to affect business travel?
Jamie: So Zoom can't replace the human factor. Sales meetings still need to occur. You know as well as I do and every other consumer knows that it's a lot better to pick up the phone to speak with someone than send a text message or send an email. It's a lot better to visit someone in person than pick up the phone.
And especially when you're trying to close a deal that could be worth millions of dollars, you're not going to send someone a text message. You're not going to hop on a Zoom meeting. You're not going to pick up the phone even. You're going to spend a hundred bucks, 200 bucks, 500 bucks flying out to wherever it is, buy a hotel for the night if the arrangement is worth so much money on the line. And so certainly, Zoom is not going to replace that.
Where Zoom might replace things is international travel as far as time zones. There may be a little bit easier going onto Zoom because somebody can do it from their living room versus having to worry about flying and spending money.
There's going to be various examples that we can use. And for the short term, sure, Zoom is going to take the place of air travel. But there is no question that as soon as that vaccine is released, we're going to see Zoom, not fall by the wayside. Zoom is going to be a compliment to the airline industry, to the travel industry.
Consumers will want to travel. Business travelers will want to travel. And you can try to say that companies won't have the money. You can try to say they're going to try to save money. Ultimately, there's nothing like that human interaction. And there's been tons of studies. I'm not a psychologist. I'm not a sociologist, but any common sense person can say, "I would rather speak to you in person if I had something that important to tell you."
Where we may sort of struggle is startups may not want to go on travel because they're going to conserve money with Zoom. Even larger corporations may not reward their employees with travel. Maybe they'll reward them with something local, right? We're going to have various examples where companies are going to try to cut corners and go back to Zoom.
But Zoom is not a replacement. GoTo meeting is not a replacement. Those are compliments to the travel industry. "Okay, tomorrow, I'm going to see you in London. I'm going to fly to London. Let's hop on Zoom now so I can prepare for that meeting tomorrow."
Zoom is not going to replace that meeting tomorrow where I have to go to London. It's going to be a precursor to that meeting. Maybe I can get more work done. Maybe I can chat with colleagues and prepare for that business trip. Maybe I need to make one less stop on my business trip 'cause I can use Zoom while I'm there, whatever it might be. But I certainly don't think Zoom is going to be the new American Airlines, the new United, the new Delta. Those guys are going to be around for quite a while.
Will You Be Able to Use Your Award Miles?
Michael: Are there any US-based airlines that you think might go under as a result of the pandemic? That's the first question. The second part of that question is if I hold the miles, if I have a status mile card on that airline, what are my options?
Jamie: So as far as airlines going under, the airlines that we've seen so far go under are the regional carriers for the major airlines. So most airlines have the mainline operation, in the case of American, it's American Airlines, in the case of their regional operation, it's American Eagle, right?
Those are the two different arms. We've seen operators for that regional arm, American Eagle, Delta Connection, United Express go under and that's simply based upon demand and there's just not enough cash flow there to keep those airlines operating.
And often, when one airline pulls out, that may be the only airline that regional carrier has a contract with. So as far as airlines going under, those are the ones to be cautious of right now.
We're not going to see a United go under. We're not going to see a Delta go under. We're not going to see an American go under. You have to remember that the airline industry has been in consolidation now for many, many years.
Northwest has merged. Continental has merged. US Airways has merged. And so, we're now down to these three huge airlines, American, United, Delta. We have Alaska in the mix and certainly, they're not someone to be ignored, especially with their progression into the Oneworld Alliance. Southwest is certainly not someone to be ignored.
Now, the cash flow is different for each of these airlines. Certain of these airlines have more debt than other airlines. They have more aircraft that were on order, more aircraft that need to be paid for. So certainly, the debt structure is different, but I don't think we're going to have any go under to the point where they're just not going to exist anymore.
Now, your question about miles and loyalty programs in relation to airlines that go under, consider those miles safe. When an airline values how much debt they have, how much value they have as an airline to ask creditors to fund them, they oftentimes will leverage the loyalty program.
They will leverage the value of the miles. So even if an airline goes under, the value of those miles is still there 'cause consumers still hold those mileage currencies. So the chance that you won't be able to use those currencies is very slim to none.
Now we can see, if you use the example of Virgin Australia, which was going through a reconsolidation process right now, restructuring process, many consumers were worried that Virgin Australia, their miles would not be able to be used.
And we actually saw Virgin shut down several redemption options, several transfer partner options, several redemption options to buy products because they didn't want a run on the bank for consumers to spend these miles and then, the airline has to purchase those goods and services that those miles were worth. So they basically artificially shut down that process of consumers sort of running to the bank.
The long story short, you don't have to worry about your miles going under because we've gone through so much consolidation at this point, we're left with the big guys. If someone does go under, chances are someone else will buy them out or there will be some sort of restructuring where those miles will then just move into whatever the new programs.
Michael: Let me go back to what you explained about Virgin Australia. I need a little bit of clarification. So let's say I'm a Virgin Australia traveler. I have miles. Virgin Australia is in restructuring right now and they shut down the program that would allow me to spend my miles.
As a consumer, I would be terrified and be upset about it. Are you saying that my miles are still safe at Virgin Australia doing it on purpose for me to keep the miles?
Jamie: So what they're doing is their cash flow is short. So they're going through a restructuring process where they need to conserve as much cash as possible. So what they've done is they've artificially shut down redemption options that would cost them money.
Now, a consumer is not going to see this as pro-consumer. They're going to say, "Well, wait a second. I have these miles. I want to use them. Why are you not letting me use them?"
"Well, we're not letting you use them because we need to conserve that cash for the airline to be able to survive into next year. And once we survive into next year, we have new creditors, we have new owners, then your miles will be worth more 'cause now you can use them on more things as we expand whatever that operation is."
Of course, consumers don't realize that and consumers don't care, frankly, right? They have miles. They want to be able to use them no matter what. And so, the general recommendation is that when you have airline mile currencies, you are never saving them.
This is not an investment bank. Your airline miles don't get any more valuable over time. In fact, they always lose value, almost always lose value over time. And so, if you are holding miles, use them. If you suspect that an airline is going under, why are you hoarding millions of miles? You should've already used them over the past number of years.
And so, the preference is that if you're going to have a credit card that's going to earn miles, have a credit card that's going to earn transferable miles, miles that are not stuck in one airline, miles that are stuck within a conglomerate like American Express or Chase or any one of these companies that you can say, "Okay, I want to transfer to British Airways. I want to transfer to Delta. I want to transfer to Singapore." And so, you still hold the miles until you're ready to transfer and you're not locked into anything.
So, that's kind of the preferred strategy. Of course, if you do have airline miles in a particular program, it's just one of those things where you have to learn you're not investing here. You're not going to get any more value, use the miles.
Do Airlines Check Customers Reviews?
Michael: What value do you think PissedConsumer.com offers consumers concerning the airline? Is there a value that airlines can draw from the content that consumers are writing about them online?
Jamie: The thing is that many times consumers won't vent directly to the airline. “I'm not going to write United. I'm not going to write Delta about my bad experience. I'm going to go vent online somewhere else. I'm going to vent to Facebook. I'm going to vent on Twitter. I'm going to vent to a site like yours, Pissed Consumer, right.”
Those are the outlets. We want to get our story out. Sometimes, people don't necessarily want to tell the story back to the airline 'cause we know we're going to get a canned response. We know we're going to get 2,000 miles and have a nice day, but we want the world to understand, "Wait a second. They charged me for something. They didn't refund me for something. There was a bad level of service."
And so, this is where airlines can learn. And we've seen over the past several years, airlines have been such good stewards of social media. They have increased their staffing in social media departments. They've created task forces, brand protection units, all sorts of different facets to their airlines to monitor and respond to social media.
People that monitor Facebook, people that monitor Twitter, they're looking for trends. They're looking for certain keywords. They're looking for messages that are being sent because they know that their stuff can go viral. And so, we know that there are dedicated team members from pretty much every airline that monitor forums, that monitor websites, that monitor any place where a consumer is likely to post something.
Because not only do we want to address those concerns, but from an airline standpoint, we want to prevent those concerns from getting out. We don't want it to become viral. We don't want that to get to the news. We don't want other people piling on and traffic to build.
And so, we know those team members exist amongst pretty much every legacy airline.
...With a site like Pissed Consumer, you're likely to develop almost a relationship with the airline...
Because you know consumers are going to go to you to vent. They've got a problem, they want to make it known, they want to tell the world. How can the airline work with those consumers?
There might be a relationship that may be able to set up where an airline employee might be able to say, "Okay, well, we're going to monitor your traffic. If we see something, we're going to personally call them. We're going to personally send them a response. We're going to address it. We're going to respond publicly," right? There's a number of different things the airline can do to sort of combat things spiraling out of control.
Michael: Jamie, thank you very much. Certainly, appreciate it.
Air travel is sure the best and most convenient way to move around the country and explore overseas. During these uncertain times, as a consumer, you may face issues with bookings, flight cancelations, and refunds from airlines or travel agencies. If you consider the expert advice that Jamie has shared with us in these interviews, we’re sure you will be on the safe side.
We thank Jamie for sharing his invaluable tips and opinion on the travel industry with consumers. If there’s anything you’d like to ask our expert, please let us know in the comment section below.
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