Should I get a refund (AAdvantage Redeposit Fee)?

A while ago, I booked a flight from Toronto – Chicago – Hong Kong – Denpasar on American and Cathay respectively, using AAdvantage miles. Everything was booked in Business. A couple months later, the Toronto – Chicago flight was downgraded to Economy, as there was an aircraft swap to an airplane without Business. American could not put me in Business that day.

My travel plans changed, and I wanted to refund the booking and get the points back. Unfortunately, I have no status with American, so I was facing a $USD 150 refund fee. However, it was my belief that due to the involuntary downgrade, the fee would be waived.

I called, and the first agent was defensive about her position that I was not entitled to a fee waiver. I spoke to a supervisor. She was also firm in her position. Normally, I would have hung up and called again, but at this point, I was pretty sure there was a notation on my booking and it would be pointless to try again. I told the supervisor I would pay the fee, but under protest, and would seek a remedy after the fact. The fee was charged and my booking was refunded.

Since that, I have submitted a complaint to American, and filed a DOT complaint. I suspect the DOT won’t be terribly helpful as this is an award ticket. Hopefully American will wise up and just pay. If the DOT fails, I will seek a remedy from the Canadian Transportation Agency (CTA).

Why do I think I’m entitled to a refund?

The following is not legal advice, just musings about my personal situation. If you’re here looking for legal advice (you really shouldn’t be looking for that on the internet!), you should consider speaking with a licensed lawyer in your jurisdiction.

The CTA has no jurisdiction over tickets booked by a frequent flyer program where that program is a separate legal entity not owned by the airline (like Aeroplan). However, AAdvantage is owned by the airline, therefore the CTA has jurisdiction. Further, the point of departure is in Canada, furthering the jurisdiction claim.

The CTA’s role in a consumer complaint is to ensure that the airline properly interpreted and upheld the terms in the airline’s tariff. The CTA has previously ruled that travel booked by a frequent flyer program is covered by the terms in the tariff of that airline.

So, I took a look at American’s tariff. It states in Section 72(D), “Involuntary Refunds”, that:

FOR THE PURPOSE OF THIS PARAGRAPH, THE TERM “INVOLUNTARY REFUND” SHALL MEAN ANY REFUND MADE IN THE EVENT THE PASSENGER IS PREVENTED FROM USING THE CARRIAGE PROVIDED FOR IN HIS/HER TICKET BECAUSE OF CANCELLATION OF FLIGHT, INABILITY OF AA TO PROVIDE PREVIOUSLY CONFIRMED SPACE, SUBSTITUTION OF A DIFFERENT TYPE OF EQUIPMENT OR CLASS OF SERVICE BY AA, MISSED CONNECTIONS, POSTPONEMENT OR DELAY OF FLIGHT […] [emphasis added]

Under these terms, we can make the legal statement that “where there is a booking where a downgrade from the original booking occurs as a result of AA’s actions, and AA provides a refund for that booking, that refund is defined as an ‘involuntary refund’.”

Section 72(D)(2)(a) states that, where there is an involuntary refund, that refund must be equal to the cost of what was paid.

WHEN NO PORTION OF THE TRIP HAS BEEN MADE, THE AMOUNT OF REFUND WILL BE AN AMOUNT EQUAL TO THE FARE AND CHARGES APPLICABLE TO THE TICKET ISSUED TO THE PASSENGER. [emphasis added]

Ok, so now we have to ask: on an award ticket, what is equal to the fare and charges applicable? Obviously, the taxes and fees paid are included. But obviously I want my points back. So, do points fall under this term?

Canadian case-law is pretty clear on this question – points have value, regardless of what a contract says. An example of a case that says this is Johnson v. Her Majesty the Queen.

Canadian law says that points have value (regardless of what a contract says), and therefore, it can be used as a “currency” of sorts for the payment of “fare and charges applicable”. In lieu of cash for the ticket, American accepts X AAdvantage points and applicable taxes and fees for a ticket. Therefore, under the involuntary refund rule, the return of points and taxes/fees paid would be subject to refund.

Now, we have to ask, can American levy a charge to refund the booking? Under the tariff, charges to do anything only exist by virtue of what is included in the tariff (which by extension apply to the rules in a fare). Under cases of the specifically defined ‘involuntary refund’, the tariff does not apply any right to levy a charge to refund the booking.

So if that right doesn’t exist in the tariff, does it exist in the AAdvantage terms and conditions? For the reinstatement of miles, the Terms state:

AAdvantage mileage will be reinstated for unused and unexpired awards upon payment of a processing fee. For each additional award reinstatement from the same account at the same time, an additional charge will be collected. These charges are payable by credit card.

Remember that both the tariff and the AAdvantage Terms and Conditions are the applicable documents that govern the legal right and duties between American and myself. The AAdvantage Terms and Conditions are silent on involuntary refunds. That is, under the AAdvantage Terms, a situation like an involuntary refund simply does not exist. Therefore, when there is an involuntary refund, the rules governing that refund are those rules in the tariff. Now, you might say that the AAdvantage Terms state that there is a charge to redeposit miles. However, it does not say that this precludes the rules for involuntary refund in the tariff. It is ambiguous what must be done.

At common-law, the rule of contra proferentem would apply. That rule states that where there is ambiguity in contract, an adjudicator must read that ambiguity, where reasonable, against the person who drafted that contract [of adhesion]. Here, there is a contract [of adhesion] written by American. As stated above, there is ambiguity as to which rule would apply (the rule in the AAdvantage Terms, or the rule for involuntary refund in the tariff). Therefore, contra proferentem, would apply, and the ambiguity would be read in my favour, that is, the rule under the tariff would apply for an involuntary refund, and no charge is therefore applicable. Even if there were no ambiguity, the CTA would likely decide the case under the rules of the tariff and not the rules of the frequent flyer program, as that is what American is bound to uphold under the Air Transportation Regulations.

So, succinctly, where American Airlines refunds a ticket, and the booking being refunded was subject to the definition of an ‘involuntary refund’ in the tariff (such as a downgrade), then American is barred from charging a fee for that ticket, as no fee is allowed under the tariff for an involuntary refund.

What do you think? Should I have been charged? Is my argument bogus?

Comments

  1. If you were simply cancelling the ticket in response to the downgrade, I would agree that they owe you a full and complete refund without fee. However, if you were keeping some portion of the ticket and just changing part of the routing – particularly if it was not the part of the ticket affected by the downgrade, such that the donwgrade was just an excuse to change another portion of the ticket without having to pay a change fee – then I think the moral position becomes more ambiguous.
    On the other hand, since there is no cost to them in making the change other than the staff time, which they already spent in the discussion with you, failing to refund it fully represents the truly lousy costomer service I have come to expect from US carriers.

  2. On a ticket that covers more than 15K miles, that one segment of less than 500 miles was downgraded is not a valid reason to get your redeposit fee back since you actually wanted to cancel the whole thing in the first place. You were just grasping at any excuse to get out of what the T&Cs are and you had agreed to when you “bought” the ticket. Your ethical standards in this case are petty poor and you only compound this by appealing to various authorities, wasting their time and costing others more than you will ever hope to get back. There’s a reason we’ve seen programs tighten up and decrease benefits all around: people like you who abuse the system at every opportunity they get.

    • Well, if you read what I wrote, I’m arguing that what I did does fit within the terms. As for your adjudication on my ethical/moral standing, think of the situation like this: big (evil) corporation v. average consumer. Airline consistently breaches the tariff. Average consumer does not have capacity to fight it. People like me, who are educated in law and passionate about the industry, do have the capacity and willingness to question the airline’s interpretation and authority. Through that, internal policies are fixed. This is the very basic nature of how corporate oversight works. There is no authority that actively monitors for breaches of a tariff. Rather, the system functions on a complain-action basis. Without complaints like this (by the way the DOT just replied and stated there is sufficient evidence to move it to a formal process), then we would rely on government observation to protect consumer rights, which would either bring about significant tax increases to account for the resources required, or poor enforcement.

  3. I agree with you, a downgrade on any portion of the ticket should allow you to cancel the ticket for a full refund if they cannot provide you what you paid for.

    It would be no different if you paid cash for the ticket and then you had a change of cabin where you could not be accommodated in the same class of service, then you’re allowed a full refund.

  4. you didn’t state when you were informed of the downgrade. If the equipment swap happened 3 months ago and you are trying to use that as the reason, I can see why AA may chose not to refund you.

  5. Change of equiptment is sufficient grounds to cancel an award ticket on advantage — it does not require a downgrade for this to be done fee free. See recent postings, sometime In 2016 — I think it was one mile at a time , perhaps it was view from the wing.

    To the moralist above — who put you in a position to be the judge. This blog is offered free of charge, show some gratitude even if some things seem wrong to you, or move on. The site owner is being truthful, and acting within the law. American has a way over complicated award program, and poorly trained agents and supervisors, who are told to speak to many customers an hour — it is easier and quicker for them to say no.

    Recently Asiana cancelled a flight that was on a united award that I booked 300 days In advance (the only way to get space these days). I asked United to fly me on Korean or another competitor — they said no. I asked them to fly me to the closest two regional destinations on the same day — they said ok, with a change fee as well as a rebooking charge, I declined to pay those fees. I asked for a award redeposit without deposit fee — the agent insisted on those fees — so I asked for a supervisor , who granted the cancellation. An hour plus of my time talking to underpaid undertrained no authority agent in the phillipines .

    It is because of the airlines conduct that we need blogs entitled dcta.

    Blog owner, you should have argued further , asked for another supervisor, said that you are a lawyer , cited Canadian regulations, requested it in writing (which they would not I am sure provided) — you were just too Canadian. Five more minutes I think would of given you what you were entitled to. In most areas of legal practice you will need to be less Canadian .

  6. In my opinion –

    The Conditions of Carriage state:
    MEAN ANY REFUND MADE IN THE EVENT THE PASSENGER IS PREVENTED FROM USING THE CARRIAGE PROVIDED FOR IN HIS/HER TICKET BECAUSE OF ….

    If the change from J to Y “PREVENTED” travel, then you would be entitled to a refund of the entire sector.

    In the case that it did not prevent travel, you would be entitled to a ‘refund’ or reinstating of points for the difference of classes for that sector, without further penalty. Which is what occurred here. You still proceeded to utilize the ticket in Y class – which pertains to the conditions of carriage whereby you have paid for transport from point A to B – which has been honoured, albeit in Y class.

    As it was provided, it would not warrant a refund of the entire booking. Only the difference between J and Y class for the sector in question.

    • Sorry just to clarify – that no penalty should be accounted for this sector only – you should not have to pay a refund fee for the reinstating of difference in points

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