A quiet move by American Airlines could have major consequences for the Flying public. Those traveling on miles will be the worst affected.

A quiet move by American Airlines could have major consequences for the Flying public. Those traveling on miles will be the worst affected.

American Airlines (AA) updated its Contract of Carriage, virtually eliminating any rights that the passengers whose flights were delayed or canceled may have for being accommodated on non-partner airlines. With these changes, they also eliminated any rights for additional compensation for other expenses incurred to the delay/cancellation, even when AA is at fault for delay/cancellation.

The three key changes in AA’s Contract of Carriage are:

1. If AA or one of its partners cancels your flight and is unable to provide any alternative options, the airline can simply refund any unused legs on your ticket even if it leaves you stranded in a destination
2. AA will no longer “rebook you on the next flight with available seats” in case of a missed connection, but instead “on the next American Airlines or American partner flight with available seats.”
3. AA won’t reimburse you for hotel expenses, even if they are incurred due to a flight delay or cancellation within the airline’s control. Your options are either to wait in line at the airport for an AA-issued hotel voucher (unclear if AA will do this anymore based on the new changes), receive written authorization to book your own room (also may be done away with), or you can pay for it yourself. No refunds. 

Previously, AA’s policy on delays or cancellations was to “rebook you on the next flight with available seats”―whatever that flight or airline may be. Now, for routes with multiple AA flights each day, that could mean a delay of just a few hours. For routes with only one AA or partner flight, or where service is not daily, the delay could last as long as 24 hours. Furthermore, the flight has to be available and in times of peak travel such as holidays, the traveler could be stranded for days.

In cases where the airline couldn’t rebook your flight, AA’s contractual obligation is only to refund the unused portion of your ticket.

AA tried to downplay the move by saying that this policy has been in practice for a few years already. However, in my experience, in cases where AA was at fault (not caused by weather or other circumstances beyond airline control) and no partner flights were available, clients of elite travel agents, AA elite status flyers, and, on occasion, regular mortals could get rebooked on other airlines that had ticketing agreement on American Airlines.

If American cancels a flight, they could leave a traveler stranded at a destination for days or even a week or more with no compensation. The promised refund may take weeks or even months to come back. Travelers who purchased their tickets well in advance may be on the hook for significant fare differences when purchasing new tickets last minute at a walk-up fare

Passengers who used miles to purchase tickets are most adversely affected.

The consequences for passengers traveling on AAdvantage award tickets are particularly dire since the refund provision is basically meaningless for them. American Airlines would simply redeposit miles back in the original AA or partner airline account that was used to pay for the tickets. AA would not give any cash refunds for miles purchased if all or part of the miles were purchased on aa.com to obtain the award ticket in question.  

In cases where the miles were transferred from a credit card or hotel partner, AA would not return the miles back to the original credit card or hotel account. They also would not make any special provision to extend the validity of the miles where they were redeposited due to delay or cancellation.  

In the past, AA’s obligation was to get you to your destination on the next available flight and compensate for hotel and meals caused by the delays within their control. Now, if AA cancels your flight which was purchased using miles, they still get to keep all of your funds, simply moving them from one American Airlines account (the AA ticket) to another (the AA or AA partner frequent flyer account). You may need to pay cash for a ticket from a different airline but AA will not compensate in any way. They will not compensate you for a hotel stay or any other expenses caused by their delay either.

The airlines have always been protected from liability if they had to cancel or delay for reasons beyond their control such as weather, air traffic control, or border closures. Now AA also freed itself from any other out-of-pocket obligations, even when they cancel their flight for operational or commercial reasons.  

What can the traveler do?

There is not a whole lot a passenger can do. A Contract of Carriage is an adhesive “take it or leave it” contract. You will not be able to purchase an American Airlines award or revenue ticket without agreeing to the terms. One can choose not to travel on American Airlines, but other legacy airlines are likely to follow; most low-cost carriers such Southwest, Frontier, and Spirit already do this.

What you can do is change how you buy the tickets to be more protected in case of delay or cancellation. Think twice about whether to put your spending on an AAdvantage co-branded credit card. Same for transferring your Citi or hotel reward points to AAdvantage. You may be better off going with one of the super cards or even a more budget version reward card like Citi Premier or Chase Sapphire Preferred.  

When using points to buy tickets through Amex pay-with-points program or redeeming them through Chase Travel, AA would actually give you a refund in funds that you could use to purchase a ticket with another airline or use for something else altogether. 

Given that AA is inching closer and closer to a dynamic award chart and change fees were largely eliminated on both cash and award tickets, transferring to AAdvantage makes less and less sense.

Another thing you can do is either use a premium card like AmEx Platinum or Chase Sapphire Reserve that cover all of the travel purchased on them with cancellation and interruption insurance. You could be covered up to 10,000 per trip with one of those beyond the refund you receive. It is very important to read the fine print carefully before assuming you will be compensated and purchasing another ticket. However, they do cover many of the expenses in situations that the AA itself will not anymore. Even when you purchase award tickets, use a card like Amex Platinum or Chase Sapphire Reserve to pay for taxes and fees to be covered by the insurance.

The Call for a Frequent Flyer Bill of Rights is Now More Important Than Ever 

It is disappointing to see a company that accepted billions of dollars in public funds for pandemic relief respond by eroding protections for the consumers, many of whom are the very taxpayers who will carry the burden of repaying that debt. Even more so, that the company did it in such a quiet and opaque manner. When called out, they tried to downplay it. With such changes being made by a mainline carrier like AA, it wouldn’t be too surprising to see other airline companies follow suit. 

If the same American Airlines ticket was purchased to originate from an airport located within European Union, EU law would trump AA Contract of Carriage and the airline would still have to provide compensation to those it leaves stranded or significantly delayed beyond just a refund as there is a law protecting flyers’ rights. In the US, passengers don't have such protection.

This is where the need for a Frequent Flyer Bill of Rights comes in. While the airlines have the right to do as they please, the least the flyers should expect is transparency and fairness.