Covid19: Swiss refunds after cancellation

Old May 30, 2020, 7:47 am
  #451  
 
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Originally Posted by warakorn
Looking at the documents, which Swiss has provided to Amex, this is not clear at all - that a refund will happen.



In my case, I got a cash refund back from BA via a chargeback (and the representment period has expired). Wizz refunded the cash within 7 days without a chargeback. And I took Ryanair to court after they fought a chargeback and the card-issueing bank sided with Ryanair.
Maybe slightly OT but how did Ryanair fight it? I have a pending chargeback with them over a flight from a month ago. 50 so not much money though, but all of my chargebacks are on the basis of it taking too long rather than a refund being refused.
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Old May 30, 2020, 7:54 am
  #452  
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Goodness, I wish the chargeback brigade would give it a rest!
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Old May 30, 2020, 7:56 am
  #453  
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Originally Posted by zrh2yvr
Finally got my refund for 2 long-haul business fares. It was actually a refundable ticket that we had to change (in the normal course) during February and I had requested the refund before things went crazy. Request was made February 28 and refund received May 26. Initiated chargeback via AMEX - Canada on May 1. What's strange was that the newly issued and changed ticket (issued Feb 28) was put in for cancellation on March 16 and refunded on March 19 . . . strange enough while the original ticket took ~3 months.

The part I'm frustrated now is that this crazy ticket has a segment on SA. SA uses "YR" for it's carrier surcharge (instead of YQ). Problem is that LX/LH fare rules on refundable tickets say "YR" is not refundable but that "third party charges and taxes are refundable". The thing is that this ticket is not subject to the LX/LH "YR" - - So it's complicated and they have not refunded YR (this was assessed manually by issuing agency - so refund was submitted without the request for YR - - so still time to dispute this).

After all that - the refund came back but short ~300 on each ticket due to local SA YR charges - - which under SA refundable tickets is always refundable.

Now I have to start a long - - long - process and wait to get back ~600 for a bunch of SA taxes that were buried in the LX ticket for which the fare rule words have conflicted rules (YR is not refundable but third-party charges are).

I will say LX is becoming very difficult to deal with and I would not issue any ticket of any kind with LX at this moment (while I have booked 2 new tickets on AC with full confidence).

AC and BA were absolutely seamless on their refunds while LX has been completely impossible to deal with . . (Emphasis added).
Are you sure? I thought on LH Group, YR was the GDS fee. YQ is still the "international surcharge" scam.
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Old May 30, 2020, 8:57 am
  #454  
 
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Originally Posted by LoungeLizzard
Several people have reported that they got their refunds from Swiss. - It seems that those who got the money back were generally not those who did a lot of warm waving, charge-backing or threatening to take them to court.

I do have a certain understanding for getting mad at them, but I find it unfair to all others who wait for refunds and rebooking if you call or write to them a hundred times and therefore bind their already scarce resources. They did make it clear that the refunds will happen, but it will take time. I would like them to stick to that rule and not let people who shout the loudest jump the queue.
If LX / LH had taken a customer-centric approach like other airlines that immediately had functioning websites, reachable phone lines, and clear policies that allowed customers to rebook online or receive a credit that automatically converted to a cash refund if unused after [12] months, I'm sure they would had found many more customers willing to just "go with the flow".

Instead, we were met with websites that couldn't handle rebooking, call centres that couldn't be reached, and policies that kept changing. The lack of e-mail notifications showing that cancellations initiated by them, hiding of the refund possibility on their website (later brought back only to be removed again), and — when pushed — reluctant verbal acknowledgement that refunds are possible but refusal to put anything in writing all served to further the impression that they were trying to hide the ball. They have no one but themselves to blame for the "run on the bank" by customers legitimately concerned about the creditworthiness of a voucher from such a company.

And then to use the excuse of having "insufficient resources" to process refunds while clearly having sufficient resources to concoct disingenuous legal arguments to fight chargeback inquiries further shows where their priorities are. So no, I do not agree that customers should just sit back and "wait our turn" when the airline is clearly not acting in good faith.

Originally Posted by rosenkavalier
their resources aren't THAT scarce if they are able to systematically reject all chargeback requests in a swift manner like they are doing now...
Originally Posted by Adam Smith
Swiss verbally acknowledged (in mid-March) that I was legally entitled to a refund. They just told me that I had to call them back in 2021 to get one. Not only is thst against EU261, it's just plain ****ing unreasonable.

Judging by the posts in this thread, most people have attempted to resolve the situation directly with LX, and only turned to chargebacks etc after LX has tried to deny them their rights (and their money).

Let's not blame the victims of LX's outrageous conduct for pursuing what little recourse is available to them.
100% agree with @rosenkavalier and @Adam Smith.

Last edited by capedreamer; May 30, 2020 at 9:16 am
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Old May 30, 2020, 9:10 am
  #455  
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Originally Posted by hugolover
Goodness, I wish the chargeback brigade would give it a rest!
How would you suggest consumers enfore the rights that LX is denying them then?
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Old May 30, 2020, 12:37 pm
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Originally Posted by Adam Smith
How would you suggest consumers enfore the rights that LX is denying them then?
Imagine for a moment that you are Mr. Spohr.

Surely you will want to treat your consumers fairly, and you would therefore likely not want to give preference to the "chargeback brigade".
- How likely will you have to declare bankruptcy on the same day that you decide to pay a refund to everyone who asks immediately? (I think close to 100%)
- If your former company is then run by an administrator, how likely is it then that the consumers get back their money quickly?
Example 1: Swissair. Went bankrupt 2001 and is still under liquidation today. If I remember correctly, it took > 5 years for the first partial payment to be made. Most was lost. (most tickets luckily not)
Example 2: Thai Airways: They are bankrupt, and it seems by no means clear what happens with already paid tickets, especially regarding refunds.
Example 3: SQ, which just got $13 billion from the state, does not give dates or a timeline for refunds. They say that they'll process them in sequence of first flight date but not when.

To answer your question: I think that customer rights for refund are not enforceable at the moment because that would lead to the company's immediate bankruptcy which bites the enforcement in the tail.
Hopefully the situation improves as soon as the deal between LH and Germany is finally signed off by all parties, which will also allow LX to draw from the credit from the Swiss state, and I strongly hope that LH will not go via bankruptcy. (there's politics in here as well... i.e. LH has to uphold their threat to go via bankruptcy if the deal which the EU is willing to accept (give up slots in MUC and FRA) is hurting them too much)

That "assumed reasoning" is what makes it tolerable for me, and I'm truly sorry that you are so mad at them. (honestly! I'm definitely not trying to be cynical at all!)

The only part which I fail to understand is why LX & LH are communicating so badly.
I agree 100% percent with you, capedreamer and warakorn that they are doing themselves a huge disfavour by burying their head in the sand or treating customers like complete idiots or 3 year old children and trample on the right of the consumers like a herd of buffalos.
That can be done a LOT better, and it does not even cost anything.
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Old May 30, 2020, 1:41 pm
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Originally Posted by LoungeLizzard
The only part which I fail to understand is why LX & LH are communicating so badly.
I agree 100% percent with you, capedreamer and warakorn that they are doing themselves a huge disfavour by burying their head in the sand or treating customers like complete idiots or 3 year old children and trample on the right of the consumers like a herd of buffalos.
That can be done a LOT better, and it does not even cost anything.
Yep. This was a total failure of leadership.

The exogenous factors faced by LX / LH are also faced by every other airline in the world. There are those that have responded well and those that have responded poorly. Sadly, LX / LH are squarely in the latter.
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Old May 30, 2020, 2:12 pm
  #458  
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TL;DR to the following post: customers are diffuse and therefore vulnerable to predatory tactics by the airline. They shouldn't be criticized for using chargebacks or whatever other means are available to try to recover funds ASAP. All of LX's other creditors are doing the same.

Originally Posted by LoungeLizzard
Imagine for a moment that you are Mr. Spohr.

Surely you will want to treat your consumers fairly, and you would therefore likely not want to give preference to the "chargeback brigade".
- How likely will you have to declare bankruptcy on the same day that you decide to pay a refund to everyone who asks immediately? (I think close to 100%)
- If your former company is then run by an administrator, how likely is it then that the consumers get back their money quickly?
Great, let's talk business. As a corporate finance professional with a fair amount of experience in insolvencies and near-insolvency situations, this is right up my alley

There's no doubt that insolvencies in most European jurisdictions are ridiculously long and terrible processes for creditors. Most places outside of North America, really.

I disagree with the assertion that issuing customers refunds when they're owed (i.e. for involuntary cancellations or refundable fares) would cause immediate insolvency. The airlines are certainly playing this up, and I'll admit I haven't studied the LH group's finances, but certainly for the North American airlines, they have vastly exaggerated the impact of refunds on their solvency. I wouldn't be surprised for the LH group to be doing the same.

I don't doubt that they're doing their utmost to mange liquidity and that refunds would have a negative impact on that, but capital markets remain buoyant, and it should be up to LH group and others to raise capital from private investors, who will charge an appropriate price, rather than expect their customers to provide it for free. The major North American airlines have raised something like US$20 billion from private sources (banks, bonds, shares) in the last couple of months.

You talk of treating customers "fairly", but let's look at who is still being paid in full and on time:
  • Lessors
  • Bondholders
  • Banks
  • Trade creditors (suppliers)

Only customers are being denied their rights to be paid (i.e. receive refunds). How is it fair that all of the other creditors continue to be paid?

To answer your question: I think that customer rights for refund are not enforceable at the moment because that would lead to the company's immediate bankruptcy which bites the enforcement in the tail.
That argument would not be applicable to bonds, aircraft leases, bank loans, suppliers, etc. All of them have clear legal recourse to demand payment and potentially force the company in to an insolvency situation if they choose. If the company wants modifications to the terms (e.g. to defer upcoming payments, waive covenant breaches, reduce amounts owing, etc), it would be forced to negotiate with those creditors, who would extract something in exchange for their concessions. If those creditors make the decision that they're better not to precipitate a liquidity crisis by pushing to get their money now, that's a business decision they've made based on what they were able to negotiate. For instance, bondholders might agree to defer payments in exchange for a higher interest rate, or to get security for some or all of their debt.

Customers have no such ability. We have clear contracts with the airline that entitle us to our money, but essentially no mechanism by which to enforce our rights and either receive payment or negotiate concessions. We can't hire fancy lawyers to send letters and initiate legal action, because the amounts we're owed individually aren't enough to justify the cost. What we do have are chargebacks, the ability to pester the airline's customer service staff, regulators (e.g. US DOT), small claims court or similar mechanisms (depending on the jurisdiction - I have no idea whether something like that exists in Switzerland), or class action lawsuits (again, depending on jurisdiction).

In many cases, LX has acknowledged a legal right to a refund, but cited a lack of resources available to process refunds as the reason for the delays in payment. It's pretty disingenuous to claim that they can't get a refund processed, but they can find time to go and dispute a chargeback. Filing a chargeback essentially shifts the supposedly burdensome labour of processing the refund from the merchant to the card issuer. So by filing chargebacks, we're actually doing LX a favour!

There's also an argument that a quick insolvency might be beneficial, overall, to consumers. At the moment, many airline customers are having trouble getting their money back from chargebacks, travel insurance, etc, because airlines are claiming that refunds aren't owed, or won't be processed for an excessive period of time, or travel insurers are arguing that the vouchers provided by airlines mean that no loss has been incurred (and therefore nothing for insurance to pay out). If the airline were to become insolvent, consumers should have recourse fairly quickly to chargebacks, insurance, etc because it would be very clear that the services paid for were never rendered. This would shift the burden of negotiating with the insolvent airline from consumers to a financial institution better equipped to pursue the airline in court.

The bottom line is that all of LX's (or LH group's) big creditors are no doubt busy monitoring and enforcing their rights to ensure their losses are minimized. I don't think that any consumer should be criticized for pursuing the mechanisms available to them, whether it be a chargeback, complaint to regulator, or something else.

That "assumed reasoning" is what makes it tolerable for me, and I'm truly sorry that you are so mad at them. (honestly! I'm definitely not trying to be cynical at all!)
Who says I'm mad at LX? I think their behaviour is appalling and I'm now much less likely to do business with them, but it's just business. If I were in their shoes (and I have been), I might be doing the same.

If there's anyone to be mad at, it's governments/regulators. Because consumers are so vulnerable (for the reasons I listed above), we rely on governments to protect us. They need to implement laws and regulations and then enforce them. The US DOT and the European Commission have actually done a decent job recently. Of course, some European national governments are fighting the EC, and some other national governments (like mine - Canada) are doing nothing for consumers, because they're more concerned about the airlines' health than consumers'.
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Last edited by Adam Smith; May 30, 2020 at 3:05 pm Reason: Corrected typo
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Old May 30, 2020, 2:56 pm
  #459  
 
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Originally Posted by Adam Smith
TL;DR to the following post: customers are diffuse and therefore vulnerable to predatory tactics by the airline. They shouldn't be criticized for using chargebacks or whatever other means are available to try to recover funds ASAP. All of LX's other creditors are doing the same....
I bow to you! This is an excellent explanation. Thank you!
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Old May 30, 2020, 3:50 pm
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Ahhh yes, now it gets interesting. I like it much better like this.

I‘m not in corporate finance, but I can’t let you get away with an unfair advantage ( 🙂 ), so I‘m inviting Mr. Pearce from IATA as my guest speaker:
Link to IATA presentation

I admit that I don’t monitor LH‘s liquidity in detail, so it can be that they are exaggerating, but I know that I can sleep better if I believe IATA when they say that the average cash reserves were good for around two months. (...Of revenues. So that should of course last longer then two months if costs go down)
When I combine that with the fact that LH did so far agree on €0.00 subsidies and add the weak and uncertain outlook, then it still does sound like a slight challenge to me, even before I add refunds.
Yes, can be that consumers are the weakest link, and I don‘t know how much they squeeze out on the other side.
The IATA chart may at least give a hint why US carriers (and SQ) can act in a more customer friendly way, so they won‘t get killed by the DOT. (US Carriers got 1/3 of 2019 revenues as government support vs LH, which until yesterday agreed on nothing. Also AC did not seem to get much so far, which may confirm your perception of how they behave)

Maybe it‘s after all Mrs. Merkel and Mrs. Vestager who dictate how LH behaves to us? [..which would be nice to know. Just to be aware who the chargeback is really going against, and who will support it and who won‘t. 🙂 )

Last edited by LoungeLizzard; May 30, 2020 at 4:13 pm
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Old May 30, 2020, 5:57 pm
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So, in my case I had a refundable ticket ($600CDN cancellation fee). I filed a refund request in March (after cancellation of the flight). The auto-reply said 4 to 6 weeks. While I think Swiss should refund the whole amount, I would be happy to get the $4100 refundable part and would not have pursued. But nothing, no communication, no refund. This should be simple and automatic. This is why i filed a chargeback. I was advanced the $4700 for the work trip and am expected to have refunded it.
All of my other refundable tickets with other airlines were refunded at least in accordance with the fare rules.
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Old May 31, 2020, 1:34 am
  #462  
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Originally Posted by LoungeLizzard
I‘m not in corporate finance, but I can’t let you get away with an unfair advantage ( 🙂 ), so I‘m inviting Mr. Pearce from IATA as my guest speaker:
Link to IATA presentation
If you want to talk about numbers from that presentation... It’s very late at night here, so I’m going to do some stream-of-consciousness financial analysis.

The pending refund number is $35 billion. Governments have already provided $123 billion of assistance to the airline sector, i.e. 3.5x the amount owing in refunds. Is it not reasonable to expect that some of that money go towards refunds?

Slide 3 talks about the median airline having about 2 months worth of cash. For a volatile, cyclical industry, that's probably on the low side, suggesting airlines haven't been doing a great job of managing their cash. But when we dig a little deeper, it appears that may significantly understate airlines' liquidity position, because it only measures "cash and cash equivalents" on balance sheets. However, there may be other, substantial sources of liquidity on balance sheets, without even looking at undrawn credit lines. Take the LH group. Cash and cash equivalents at YE19 were €1.4 billion (IATA's measure). But there was another €1.9 billion invested in money-market funds, short-term debt securities, and other liquid securities. So LH group's position is actually more than 2x as good as IATA's measure would suggest (although at 0.5 months of revenue on IATA's measure or 1.1 months of revenue on my measure, they probably were holding too little liquidity before COVID anyway).

Over at AF, much higher cash balance, both absolute and relative, at €3.7 billion, or 1.6 months' sales. There's probably about another €1 billion and change of solid liquidity stashed around the balance sheet in short-term debt securities, AAA bonds (which sit in long-term investments on the balance sheet, but can be easily monetized), and so on, which would take the ratio to 2.1. So the French/Dutch seemed to be managing themselves much more prudently than the Germans... Mon dieu! Meanwhile, IAG (those cavalier Brits and Spaniards!) had €4.1 billion* of cash and cash equivalents (1.9 months of sales), but a whopping €2.6 billion of other short-term deposits, for a 63% increase in total liquidity, increasing the ratio to 3.2 months. Blimey! They’re also beating the Germans at the game of Vorsicht!

Presenting the cash position in terms of months of sales also makes it sound like airlines are going to run out of cash imminently. It ignores the fact that their costs are down substantially, so those cash reserves will go farther than they look like, based solely on revenues (as you acknowledged). And even once we included other sources of liquidity on the balance sheet, we didn’t look at undrawn credit lines. LH had €0.8 billion of those available at YE19 (which, again, is probably lower than was prudent, but adds further to its liquidity).

Also, that presentation cites total airline industry debt at year-end 2019 as $430 billion. Processing refunds owed to customers would add less than 10% to that number.

It’s far from clear, from that presentation alone, that the refund issue is the killer that the airlines are claiming it is.

*That's right, IAG does its financial statements in euros.... will BoJo force IAG to Brexit its accounting from the euro?

When I combine that with the fact that LH did so far agree on €0.00 subsidies and add the weak and uncertain outlook, then it still does sound like a slight challenge to me, even before I add refunds.
Has LH really not received any subsidies? They've placed a huge amount of their staff on kurzarbeit, which means the government is picking up a very large chunk of Lufthansa's wage bill at the moment. That's a program that has been available since the financial crisis to any company in Germany, so it's not a COVID-specific airline measure, but it has certainly generated billions of support for the LH group. (I’m not sure whether kurzarbeit is included in IATA’s numbers for government assistance, by the way; it’s unclear)

Also, it seems that on May 25th, LH agreed the terms of a bailout with the German government (according to this press release). The deal still needs to be voted on by LH shareholders, but has been agreed to between LH management and the German government.

I will admit that LH’s liquidity position is poor relative to AF and IAG. And I don’t dispute that providing customers with refunds puts a strain on their balance sheet and lessens their flexibility. But as I laid out extensively in my previous post, why should customers be the only ones forced to prop up the airlines, and to do it for free?

If airlines are of such national importance that they need to rescued, the government should be pushing them to take expensive capital from the private sector, or if that’s not available, providing the money themselves, with a steep cost (the German government is getting a 20% equity stake in the LH group as part of the bailout I mentioned above). We, as taxpayers or consumers, are ultimately going to pay for it. So let’s at least get something out of it by doing a formal bailout rather than a stealth one (via lack of refunds).

The IATA chart may at least give a hint why US carriers (and SQ) can act in a more customer friendly way, so they won‘t get killed by the DOT. (US Carriers got 1/3 of 2019 revenues as government support vs LH, which until yesterday agreed on nothing. Also AC did not seem to get much so far, which may confirm your perception of how they behave)
As with the cash chart, I question the consistency of those figures from IATA. A large chunk of that US assistance that’s in those numbers was in the form of payroll subsidies. But Canada has also offered a substantial payroll subsidy program which, like kurzarbeit, is available to any company that has suffered from this crisis. That program has been worth far more than 1.3% of revenues to AC (and WS, our 2nd biggest carrier).

The US DOT also cracked down on the airlines’ failure to provide refunds before that bailout package was passed, so they were being forced to repay customers well before any funds were made available.

AC also may have entered the crisis with more liquidity than any airline in the world. They had a massive cash position plus undrawn bank lines as true short-term liquidity. They also had a whole bunch of unencumbered aircraft and other assets available to pledge for secured financings. Yet they’ve been extremely aggressive in not providing refunds. Then again, perhaps those are both born of the same prudent mentality...

Maybe it‘s after all Mrs. Merkel and Mrs. Vestager who dictate how LH behaves to us?
They certainly have the power to change LH/LX’s behaviour. If they want to.

..which would be nice to know. Just to be aware who the chargeback is really going against, and who will support it and who won‘t. 🙂 )
If you want to argue that giving customers refunds now will drive the airlines to need state aid or become insolvent sooner (not necessarily tomorrow), I would agree. But again, if other creditors have their rights violated (i.e. don’t receive payments on time), they won’t stand for it. They will either force the airline in to insolvency, or trade concessions. If they can extract some or all of their money today, rather than wait around, they will absolutely do it. So consumers should do the same. Request refund. Initiate chargeback. File complaint with regulators. Whatever recourse is available, take it and don’t feel bad about it. The lessors, bondholders, etc, certainly won’t.

And if you ultimately end up having to finance LX or LH group via your tax dollars, at least the government will get some interest payments, equity, etc as compensation, whereas you as a consumer are getting absolutely nothing in exchange for your financing.
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Old May 31, 2020, 2:32 am
  #463  
 
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My 2 chargebacks against Swiss filed through Amex Germany changed from temporary credits on my account to permanent credits yesterday. I have not as yet received any communication from Amex but my card balance online has decreased which was not the case when the chargeback was initially actioned. The credit on the account (Gutschrift) carries no reference to the airline, leading me to believe Amex have resolved this in my favour. Yesterday was 37 days after requesting the chargeback.
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Old May 31, 2020, 3:14 am
  #464  
 
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Originally Posted by LoungeLizzard
Ahhh yes, now it gets interesting. I like it much better like this.

Im not in corporate finance, but I cant let you get away with an unfair advantage ( 🙂 ), so Im inviting Mr. Pearce from IATA as my guest speaker:
Link to IATA presentation

I admit that I dont monitor LHs liquidity in detail, so it can be that they are exaggerating, but I know that I can sleep better if I believe IATA when they say that the average cash reserves were good for around two months. (...Of revenues. So that should of course last longer then two months if costs go down)
When I combine that with the fact that LH did so far agree on 0.00 subsidies and add the weak and uncertain outlook, then it still does sound like a slight challenge to me, even before I add refunds.
Yes, can be that consumers are the weakest link, and I dont know how much they squeeze out on the other side.
The IATA chart may at least give a hint why US carriers (and SQ) can act in a more customer friendly way, so they wont get killed by the DOT. (US Carriers got 1/3 of 2019 revenues as government support vs LH, which until yesterday agreed on nothing. Also AC did not seem to get much so far, which may confirm your perception of how they behave)

Maybe its after all Mrs. Merkel and Mrs. Vestager who dictate how LH behaves to us? [..which would be nice to know. Just to be aware who the chargeback is really going against, and who will support it and who wont. 🙂 )
isnt the IATA a sort of de-facto lobbying group for the airlines?
as in everything in life its all about perception and how you present things...I wouldnt use their analysis as a reference to feel sorry for the airlines...
M. de Juniac goes on Quest means business to plead the airlines case, and while I acknowledge its a dire situation, its all PR and it still doesnt justify the consumer being forced to giving interest free credit when there are other avenues to raise capital...
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Old May 31, 2020, 5:10 am
  #465  
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Originally Posted by Adam Smith
And if you ultimately end up having to finance LX or LH group via your tax dollars, at least the government will get some interest payments, equity, etc as compensation, whereas you as a consumer are getting absolutely nothing in exchange for your financing.
Some carriers offered vouchers with an uptick in redemption value, akin to a (risky) return on your cash. I think TAP's was 20%, though they rather ruined things by giving their bonds a life of two years, during which they were valid for transport, but after which they expired valueless.

Lufthansa's lavish EUR50 bonus for those willing to reschedule rather than receive a refund was a flawlessly modest version of this.

If the bond-issuing airline goes belly-up voucher-holders will likely be at the back of the queue of unsecured creditors, having given up their recourse to cash-back.


So best free yourself of Stockholm inhibitions. Don't treat the airline as you might a friend going through hard times. Insist on a refund. If it doesn't materialise get your bank/credit card to help recover it: if you are in no hurry, fine, wait. But don't delay things through misguided altruistism or sentimental concern about the airline.
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