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?