Source: Wall St. Journal
Author: Scott McCartney

The anger travelers feel after a canceled flight can flare up all over again when the refund from the airline that arrives is only a fraction of the original ticket price.

United canceled Bill McCanne's connecting flight from Denver to Eagle County Airport near Vail, Colo.—the last leg of a $1,414 trip to Northern Ireland—because of crew problems. United offered Mr. McCanne and his wife Deb the choice of waiting 24 hours for another flight or getting a refund on the canceled flight and taking ground transportation home at their own expense. They drove and waited for the refund. United sent $27 for each ticket, even though the off-season fare between Denver and Vail is more than $200 each way.

"I think it's completely unfair," Mr. McCanne said, adding that United didn't explain how they reached that number. "No matter how they did it, it is ridiculous."

United now says the refund represents the portion of the total fare that it attributed to the Denver-to-Vail leg of the trip: $20.04, plus $7 in related government taxes and fees. When a fare is offered for a connecting itinerary, the airline internally prices each segment of the trip.

But passengers point out that if they miss a flight or change plans, they're the ones who typically pay a hefty penalty: a $200 fee to change a domestic nonrefundable ticket, plus any difference in published fares, for example.

Getting refunds from airlines has been an annoyance for travelers in several areas. After imposing fees to transport checked bags on flights, most airlines refused to refund fees to customers whose bags went missing. The Department of Transportation stepped in and forced airlines to refund baggage fees when bags are lost (but not when delayed). "It's just common sense," then-Sec. Ray LaHood said in announcing the rule.

Last year, the DOT also began forcing airlines to give consumers refunds without penalties or cancellation fees if customers cancel reservations within 24 hours of booking (as long as the reservation is made at least one week before departure.) JetBlue Airways got fined $60,000 in June this year for charging a cancellation fee to some customers who canceled within 24 hours.

JetBlue says in the first 11 months the rule was in effect, only 89 of 118,769 cancellation requests were erroneously charged a fee, and 99.9% were handled properly.

Complaints about refunds from U.S. airlines spiked considerably last year, but the numbers have settled back down this year. In 2012, refund complaints filed at the U.S. Department of Transportation by travelers jumped 27% for U.S. airlines.

American Airlines saw a 33% increase and United's refund complaints doubled to 356 from 170, according to DOT. So far in 2013, refund complaints for U.S. airlines are down more than 30%, with United showing a major decline after ironing out the kinks of computer troubles that caused some problems. Refund complaints at American continue to climb, however. The airline declined comment.

Mr. McCanne, who retired from the financial services industry and lives in Carbondale, Colo., says he received his $27.04 United refund on a $1,414.20 ticket and "thought gosh, that can't be real."

He complained and United offered the McCannes $75 travel vouchers each for their inconvenience. But the airline wouldn't budge on the refund, telling him the compensation offered was "fair and reasonable" and his request for additional compensation was "respectfully denied."

One factor working against Mr. McCanne: The fuel surcharge of $428 that was included in Mr. McCanne's $1,414 ticket was excluded from refund calculation, United said. Though the surcharge, which United labels as an "international surcharge," is money collected by airlines as part of the ticket, they don't consider it a fare in some circumstances.

The inner workings of how airlines construct fares is a computer-based science where competitors' fares are studied by airline analysts, along with demand for flights, history of sales in past seasons and projected travel for particular days. Tens of thousands of prices can change in seconds.

Another common complaint about refunds comes from passengers who bought a first-class seat but got moved to a coach seat.

Susan Taylor's 92-year-old father and disabled sister paid $1,301 each for two first-class seats round-trip from Los Angeles to Portland, Maine, but only got first-class seats on the trip east, losing out on the return.

Their trip home May 22 started with a late flight because of a crew scheduling problem and they missed their connection in Philadelphia. US Airways told them they couldn't confirm first-class seats on another flight, and flew them home in the last row of a packed plane, promising a refund for the fare difference between first-class and coach.

Since the first-class tickets cost about $900 to $1,000 more each than coach when Randall and Nancy Chester bought the tickets Feb. 13 and they only flew first-class on half the trip, Ms. Taylor figured they would receive about $500 each. Instead, US Airways refunded $101.95 for each ticket. "We didn't think $100 was fair," Ms. Taylor said.

Ms. Taylor's father and sister, who had to spend one night in Philadelphia waiting for another flight after missing their connection on the way back to L.A., offered to stay an extra day in a hotel at their own expense to get first-class seats. Ms. Taylor said the extra room and service were essential for traveling coast to coast. The airline said it couldn't rebook them in first class.

Ms. Taylor thought the refund amount must be a mistake and wrote to US Airways requesting a larger one. (The airline gave them $200 vouchers for their inconvenience after her first complaint.) US Airways' refund department told her that the case was reviewed twice and the refund issued was "specific to the fare value for the segment you were seated in coach."

US Airways said the refund represented the fare difference between what was paid for first class and what a coach ticket would be. But a spokesman said the carrier won't discuss how the comparable coach fare is determined, or how the first-class fare for that flight could be only $101.95 more than coach. "We applied our refund policy and it's all based on algorithms," he said.

To Ms. Taylor, her refund battle comes down to principle. "I'm like a dog with a bone on these things. I just don't want to let it go," she said. "They didn't get what they paid for, and they should get a refund."