Originally Posted by
YEG USER
I'd suggest an alternate to putting a premium on the credit to making it more enticing. I'd recommend that if the credit is applied to the same origin and destination, that in addition to no change fee being applicable, that no fare difference is applicable either. I assume many passengers who bought tickets on a seat sale and still want to take the trip later won't be happy to find out that not only did AC keep their money, but now wants to charge them double to go where they wanted.
That's reasonable, and that's what AC was doing at first with the waiver. I suspect they ditched it because it became such a hassle to administer with all the different waivers to different destinations and different dates... If they simply issued a blanket waiver allowing re-booking without ADCOL in the next 12 months, perhaps it would be feasible.
Originally Posted by
Stranger
This said, credit card insurance might cover the non-refundable part of a cancelled ticket under trip interruption/cancellation policy. One has to wonder at which point credit cards would rather go to the chargeback route instead...
Unfortunately credit card insurance can be fairly limited. The Amex Canada site isn't working properly at the moment, so I can't check on the Platinum card's policy, but on the AeroPlat, it was a maximum of $1,500 per person per trip or something like that. For a weekend getaway, not a big problem. But if it's a longer trip, maybe J cabin airfare somewhere... It can disappear quite quickly. (It may have been $3,000 per person per trip, but either way, the point holds).
Originally Posted by
expert7700
From my knowledge of merchant agreements, unlike e-commerce or brick and mortar stores, airlines do not get the revenue funded by credit card issuers the day someone buys a ticket. A large amount is or can be withheld until time of travel (perhaps depending on an airline's balance sheet). AC issuing a full refund would thus not be taking that $ all out of their bank account at once. Even if AC got immediate funding up till now, a rush of consumer complaints and chargebacks could cause new ticket purchase funds to be held back in reserve.
Some is withheld, but AC gets most of the money up front. I don't know exactly what the credit card holdback is, whether it's 5%, 10%, 15%, but it's not really a large portion.
For context, AC had $926MM of receivables at December 31 and $2.94B of advance ticket sales. The $926MM will include not just what's held back on credit cards, but any tickets sold in the last few days of the quarter (for which AC has not yet received payment), tickets booked through TAs that pay in bulk, amounts owing from interline partners for tickets on AC flights sold by those partners, any amounts owing under corporate contracts that are paid in arrears, payments owing under flight passes (individual or corporate) with monthly or quarterly payment plans, amounts owing from merchants for sale of Aeroplan miles, etc.
So, one chargeback is easy to deduct against the amount owing to the airline. A few chargebacks, no problem. But they can very quickly overwhelm the holdback, leaving the card processor chasing the airline for money.
Increases in credit card holdbacks can be a problem for airlines that are struggling. As airlines' financial positions get more difficult, the risk of a card issuer having to refund customers for services not received increases their risk, and so on they often want to increase the holdback.
Here's an article on how that was a problem for Norwegian and Flybe last year. And way back in 2008, Frontier's credit card processor significantly increasing their holdback (to 50%; from what, I'm not sure) was supposedly
a key cause in their filing for bankruptcy.