Democratic senator grills airlines: 'You are continuing to mislead and deceive' taxpayers over refunds

Last month, federal officials ordered airlines to reimburse customers for canceled flights, saying a growing number of passengers are complaining during the coronavirus pandemic that airlines are providing travel credits rather than refunds.

"They feel betrayed," Blumenthal said at a hearing Wednesday before the Senate Committee on Commerce, Science and Transportation featuring testimony from airline industry executives. "When you come to us and ask for more assistance, my mind goes back to the bailout we've just given you."

"More than $25 billion in taxpayer money and now in effect you are continuing to mislead and deceive those taxpayers who have given you that bailout," said Blumenthal. "In effect, you are -- forgive me -- screwing the very taxpayers whose money is going into your pocket."

Nicholas Calio, the head of Airlines for America, the trade and lobbying group representing the country's major airlines, responded that he did not think the airlines were currently misleading passengers. He added that "it ought to be clear" to some passengers receiving vouchers that they're entitled to a refund.

"If a passenger under current law and regulation is entitled to a cash refund, they're getting it," he said.

Calio said the airlines face "two bad choices."

"You can insist that everyone gets a refund who canceled the flight themselves instead of a voucher," Calio said. "Or you can drive the companies towards bankruptcy, which would happen very quickly at the rate things are going."

Calio said that he did not come before Congress seeking more funds but acknowledged that the industry is in such dire straits that "refunds are exceeding revenues" for companies like America Airlines, Delta, United, Southwest and JetBlue. "We're fighting for our survival," he said at one point.

In the past few months, Congress has provided more than $50 billion in assistance for US carriers, including $25 billion to help them keep employees on the payroll through September, and $25 billion in loans for other expenses. But airlines are considering what to do once the money runs out. United Airlines, for example, has recently announced that the company's management and administrative team could be reduced by 30% in October after funding from the US government's CARES Act runs out. Already 20,000 employees, more than 20% of its staff, have taken voluntary leave.

On Wednesday, Calio noted that he did not mention that the airlines "were coming back" to Congress for additional funding.

"It's the hope of our members that this money that we got previously, and the loan program already in place, will be the bridge to the future that we need and not have to come back and ask for more money," he said.

But Todd Hauptli, the leader of the American Association of Airport Executives, testified during the hearing that airports will need billions more -- "at least as large" as what has been recently provided by Congress.

"I recognize it's not popular to come up here and ask for more help," said Hauptli. "But the scale and the scope of this crisis requires it. We're going to have to get past the sticker shock and get to 'yes.'"

Blumenthal was not the only senator to push the industry executives over giving refunds to customers. In a similar line of questioning to Calio, Democratic Sen. Ed Markey of Massachusetts said many Americans need money as badly as the airlines do.

"I recommend very strongly to you that given the federal government's help to the airlines, that the airlines should return try to help these passengers get their money back," Markey said. "I think that would be the right thing to do. They need it just as much as the airlines do right now. It's just a very difficult situation all around."