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Avoiding Airline-Voucher Gotchas

A traveler I know recently had a flight canceled, and the airline not only failed to re-accommodate him on another flight but also had the chutzpah to deduct a cancellation penalty from his refund. That, of course, violated not only general legal principles but also the airline’s own contract of carriage. In response to a vigorous complaint, the airline realized its mistake, issued a full refund, and, as a “sorry about that” apology, also issued a voucher good for $200 toward a future flight. But that voucher included a severe gotcha: To use it, he had to rebook a flight within two months, something he was very unlikely to do. The airline didn’t owe him the voucher; it was pure lagniappe, so he couldn’t logically raise too much of a fuss. But this story does illustrate one of the big problems with vouchers.

Related: 7 Secrets of Ultralow Airfares

You can potentially encounter a voucher problem whenever an airline owes you something—refund, penalty, or whatever. Even though airlines might admit their obligations, they really hate to cut you a check. Instead, they try to fob you off with a voucher valid toward a future service. They prefer vouchers for two reasons: Their out-of-pocket cost of your voucher flight is almost always much less than the cash face value, and they also know that some percentage of vouchers—I have no idea what percentage, but I suspect it’s substantial—never get used at all.

The problems with vouchers are centered around the fact that they aren’t really as good as cash:

  • Typically, you have to exercise them within a limited time. I haven’t seen many with as short a fuse as two months, but I’ve seen plenty with a requirement to be used within six-months. To a frequent flyer, an airline voucher with a six-month limit may pose no problem. But to a once-a-year leisure traveler, it might be completely worthless.
  • Often, you can’t transfer the service to anyone else. If you aren’t able to travel or just don’t want to travel within the voucher’s limit, it becomes a worthless piece of paper.
  • Also, you may be limited in the way you can use the voucher. Some vouchers limit use to off-peak seasons, days, or times, or even include a general “subject to availability” limitation.
  • And even when you are able to use the voucher, it may not cover the full costs of the service you want to buy with it. I’ve heard of airline vouchers that are limited to covering just the “base fare,” not fees and taxes. That’s understandable with government fees and taxes, but what do you do on an airline that breaks down its real fare into a phony low-ball “base” and tacks on a stiff “airline imposed fee,” and says that the voucher covers only the base fare? In some cases, that ploy turns an $800 ticket into a $350 base-fare ticket with a $450 “fee,” which it says the voucher does not cover.

Related: 10 Rules for Planning Round-the-World Trips

Often, you have no choice but to accept a voucher, but sometimes you do. If you’re bumped on a flight, for example, the airline typically offers you a voucher toward a future flight rather than the government mandated cash penalty. Whenever you have a good case for a cash refund, my suggestion is that you consider accepting a voucher only if it meets your needs. Rather than blindly accepting the first voucher offer, negotiate:

  • A validity period during which you can realistically expect to use it.
  • The ability to use it for someone else’s trip if you can’t use it.
  • No restrictions on when, how, or for what you can use it.
  • And a cash value well in excess of the cash value of what you can claim as a cash refund or penalty. The Canadians say that an airline voucher issued as bumping compensation should be for three times the cash value of the penalty—way to go, Canada

If you ask for too much, the airline may drop its offer and try another passenger. But, hey, cash isn’t a bad alternative.

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