Airline refund or travel credit? What to check before accepting

When an airline cancels or significantly changes your flight, it will often offer a travel credit first. In the US and Canada, if a refund is owed, you can usually insist on money to your original payment method, and strict rules apply to any credit offered instead. In Australia, if the flight isn't provided within a reasonable time, you can choose between a refund and a replacement. A credit can make sense if you'll definitely fly with the airline again, but check the terms first.

This guide compares the rules and lists the questions to ask before you accept a credit.

First: who changed the plan?

The rules below apply when the airline cancels or changes the flight. If you cancel a nonrefundable ticket because your plans changed, your fare rules decide what you get back, which is often a credit, sometimes minus a fee.

One exception in the US: if you book at least one week before departure, the airline's customer service plan must let you hold the reservation at the quoted fare without paying, or cancel without penalty, for at least 24 hours after booking.

United States

Under 14 CFR Part 260, if the airline cancels your flight or makes a significant change and you reject the alternative, you get a full refund of the fare, taxes and paid extras. A significant change includes arriving or departing 3 hours or more off schedule on a domestic itinerary, 6 hours or more on an international one, a different airport, more connections, or a downgrade.

If the airline offers a credit instead of a required refund:

• It must clearly tell you that you have a right to a full refund.

• It must disclose material restrictions, such as the validity period, advance purchase rules, capacity limits and blackout dates.

• The credit must stay valid for at least five years from the date it is issued.

• It must tell you the expiry date when it issues the credit.

• It can't treat you as accepting the credit unless you affirmatively agree.

Refunds go back to your original form of payment within 7 business days for credit cards and 20 calendar days for other payment methods, with no processing fee.

Canada

Under Canada's Air Passenger Protection Regulations (APPR), refunds and compensation must be offered in money, such as cash, cheque or bank transfer. Refunds are due within 30 days of the airline becoming obligated to pay.

An airline can offer a voucher instead only if all of the following apply, according to the Canadian Transportation Agency (CTA):

• it tells you the money amount you're entitled to

• it tells you in writing the value of the voucher

• the voucher is worth more than the money amount

• the voucher has no expiry date

• you confirm in writing that you know money is available and choose the voucher

Refunds and compensation are paid to the passenger who was disrupted, whoever paid for the ticket.

Australia

The Australian Consumer Law requires services, including flights, to be provided within a reasonable time. The Australian Competition and Consumer Commission (ACCC) says that if a flight is delayed or cancelled and the replacement isn't within a reasonable time, the airline must give you your choice of a different replacement or a refund.

There are exceptions. If you changed your mind, missed the flight for your own reasons, or a third party such as a government stopped the flight, your rights usually depend on your booking's terms and conditions.

In 2018, the ACCC accepted court-enforceable undertakings from Qantas, Jetstar, Virgin Australia and Tigerair over their refund statements. ACCC Chair Rod Sims said at the time that airlines can't make blanket statements that flights are non-refundable, or charge a fee for a refund that consumers are entitled to free of charge.

Example: comparing two offers

Sample, synthetic: Northgate Air cancels Lena's C$600 return flight from Halifax to Calgary. She is offered either a refund or a C$650 voucher.

• The voucher is worth more than the refund, as Canadian rules require.

• Before accepting, she checks that it has no expiry date and whether it can be used for taxes and fees.

• She'd also need to confirm in writing that she chose the voucher over money.

• If she isn't sure she'll fly Northgate again, the refund keeps her options open.

When a credit might suit you

• You're sure you'll fly the same airline again before the credit expires.

• The credit is worth more than the refund.

• It covers taxes and fees, not just the base fare.

• It can be transferred, or used for other people on your booking.

When a refund is usually safer

• You're not sure when you'll travel again.

• The airline may change its routes, or you may want to fly with another airline.

• The credit has an expiry date, blackout dates or a booking fee.

• You paid with a card and want the money back on it.

Checklist before you accept a credit

1. Did the airline tell you that you can have a refund?

2. What is the credit's value, and does it include taxes and paid extras?

3. When does it expire?

4. Are there blackout dates, route limits or rebooking fees?

5. Can it be used for other passengers or transferred?

6. Is it issued in your name or the purchaser's name?

7. What happens to the unused balance if you book a cheaper flight?

8. Did you get the terms in writing?

Questions to send the airline

• Am I entitled to a refund to my original payment method?

• If I choose the credit, please confirm its value, expiry date and restrictions in writing.

• Does the credit include taxes, fees and paid extras such as seats and bags?

• When will the refund be issued, and to which card or account?

Get your airline's offer explained

EasyToDecode is launching soon. Upload the airline's notice and the credit terms, and it will quote what each option says, flag missing items, such as no mention of a refund or a short expiry date, and draft questions you can send. See how it works or join the waitlist.