How to Buy Flight Cancellation Insurance

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As American Airlines canceled hundreds of flights through October, passengers were left scrambling for alternate flights or airlines to handle their travel plans. Those actually flying experienced more flight delays than normal too. Savvy passengers with travel insurance came out on top though, thanks to a normally unused feature common to many policies.

Blame it on American Airlines bankruptcy issues, labor problems, maintenance problems or layoffs, in a week’s time the troubled airline had canceled about 300 flights, mostly in and out of Dallas/Fort Worth International (DFW) airport.

“Prior to the recent issues, American had been running a good operation, with on-time performance and reliability measures at their best levels in many years,” American Airlines spokesman Bruce Hicks said in an LA Times story. “The recent disruptions are primarily due to the significant increase in maintenance write-ups by our pilots, many right at the time of departure.”

It’s a situation totally out of the control of passengers but one that can be made a bit easier to swallow with some basic travel insurance that covers flight delays or cancellations and, most importantly right now, offers traveler assistance.Travel Guard, for example, has a single trip plan and an annual plan for frequent travelers.

Their Savvy Traveler plan covers trip cancellation, interruption and delay, emergency medical treatment or evacuation, lost, stolen or damaged baggage or personal effects and baggage delay on any one given trip. The cost? About $25 for a $500 flight in October.

Frequent fliers can get Annual Travel Insurance for personal or business travel that covers trips or vacations throughout the year. This one includes everything from trip cancellation and interruption to unannounced strikes, weather delays and more – plus it comes with coverage for medical expenses that might be incurred away from home. That’s especially important when traveling internationally.

I bought one of their annual plans last year for about $200. It paid off when some medical expenses I incurred sailing on a cruise in international waters added up to over $2000, little of which was paid by my primary health insurance. The travel insurance paid the rest.

canceled flightSay a flight booked on American Airlines was cancelled. The airline would do its best to reschedule. Frequent flyers know the drill too: flight canceled, stand in long line at airline customer service counter and hope to get to destination at a reasonable time.

But what would my travel insurance have done for me? We asked Travel Guard to find out.

“In addition to the 24-hour assistance Travel Guard provides customers in rebooking their flights, accommodations and other pre-planned travel arrangements, in the event that their trip is delayed five or more hours, travel insurance can reimburse for expenses incurred until travel becomes possible,” Carol Mueller, VP of Travel Guard North America told Gadling.

That could come in handy when a late, weather-delayed flight causes a missed connection and the next flight out is tomorrow. Weather-related flight delays? Technically, not the airline’s problem. The travel insurance company, much like a travel agent, is on your side and ready to help when needed.

“Cancellation would be covered when due to mechanical/equipment failure of the carrier, or when inclement weather causes delay or cancellation of travel,” added Mueller. “We recommend customers contact us at our toll-free number as soon as they know their trip is going to be delayed, interrupted or cancelled and we can help with alternate solutions to their travel plans.”

Regardless of which travel insurance company we choose, having that protection along for the ride when traveling can pay off. Liability-limiting reasons for airlines to cancel or delay flights due to weather events and “maintenance” issues seem to be on the rise. That takes travel insurance from an optional extra not likely to be used to something that may be seriously considered.

 

When Do You Really Need Travel Insurance
[Flickr photos by Scott Ableman]

One three-hour airline delay this summer … and the industry survived

The latest data from the Department of Transportation suggests that airlines are figuring out how to survive in a world of on-the-ground delays that can last no more than three hours. The summer travel season had only one delay that was affected by the rule. This is a 98.5 percent decline from the summer of 2009.

The airline industry mobilized, when faced with the prospect of the three-hour rule, to counter that there would be a substantial increase in canceled flights, as the threat of hefty fines would cause them to pull the plug. Yet, this hasn’t really happened either. Cancellation rates for the spring and summer were:

  • May: 1.24 percent
  • June: 1.5 percent
  • July: 1.43 percent
  • August: 1 percent

In fairness, May, June and July had cancellation rates higher this year than last, but August held steady, suggesting that it is possible to comply with the three-hour delay rule without sending cancellation rates sky-high.

According to MSNBC:

That’s an acceptable tradeoff, says DOT. “Although the rule has been in effect only a short time, we’ve seen no tangible increase in flight cancellations,” said spokeswoman Olivia Alair, “which means airlines are taking action to prevent delays without canceling flights, as some industry critics claimed they would.”

So, what were the dire consequences forecasted by the airline sector?

Those critics would no doubt include airline consultants Darryl Jenkins and Josh Marks, who published a report in July stating that the new rule would lead to an additional 5,200 cancellations per year (both directly and indirectly), at a cost to the public welfare of $3.5 to $3.9 billion over the next 20 years.

Jenkins and Marks stand by their projections, creating a situation in which the same data is leading to two perspectives. But, one thing is clear: in terms of percentage, flight cancellations have stayed consistently under the 15-year average for four consecutive months.

[photo by nafmo via Flickr]

Airline cancellation fees worse than baggage fees

Airlines rely on you to have minor and major personal crises. Everything from changed meeting dates to family emergencies generate around $2 billion in change and cancellation fees a year, according to the Department of Transportation. That’s pretty much twice the amount the airlines pull in from extra bag fees – a measure that’s already been lauded by the Wall Street set for its impact on the airlines’ finances. For American Airlines parent AMR, for example, change and cancellation penalties came to $116 million for the first quarter of the year, while baggage fees amounted to $108 million.

These penalties, lamented almost universally by passengers, upped airline passenger revenue by 3.2 percent in the United States. As usual, business travelers get screwed most (probably because they travel most. They paid the bulk of $527.6 million in first quarter change fees.

Even with fewer people climbing onto planes this year, increases in penalty amounts have led to a net gain in revenue for airlines from this type of fee. A number of the larger airlines upped their change fees from $100 to $150. JetBlue moved it from $40 to $100 – and saw first quarter fees surge 29 percent, from $25 million to $32.2 million, relative to the first quarter of 2008.

These change fees are actually pretty important. With the money they bring in, airlines can offer discounts elsewhere, financed by the extra income. And, they make it more attractive for passengers to buy full-fare tickets, that way they have a bit more flexibility. The more expensive tickets benefit the passenger … and of course, the airline.

Roll the dice with “job-loss guarantees”

It makes a lot of sense right now. You have a job, and you’re feeling comfortable in it. You’ve survived the latest round of layoffs, and it looks like the bleeding has stopped for a while. Or, you’re just so stressed out you throw caution to the wind and book a vacation, just so you can recharge a bit.

But, you aren’t reckless.

Because we all live and work in a world at financial risk, you had the presence of mind to take advantage of a “job-loss guarantee.” If you lose your job, you get your money back … maybe. It turns out that guarantees aren’t always guaranteed. Several travel companies – including JetBlue and Norwegian Cruise Line – the rules are being tweaked.

Defining “job” can be the tough part. Several programs require that you be employed for at least a year at your current gig and that it be full-time. But, it varies. Check the terms and conditions before you bank on this benefit.

Job loss” can be tricky, as well. If you were laid off, you seem to be in the best position to recoup what you’ve paid. But, if you were fired for cause, some programs may not pay. According to JetBlue, for example, “The spirit of the program is to accommodate those who have involuntarily lost their jobs due to the economy.” Resignations and buyout programs, also, may not qualify under some job-loss guarantee programs.

Be prepared to prove that you have lost your job. Chances are you’ll find something in the stack of paper that Human Resources gives you (usually your termination letter).

These programs can be helpful, but read the fine print. If you’re at all worried, spend your day off on your front stoop and hold onto your cash for a more stable time.

Delta Airlines ordered to pay customer money for cancelled flight

Oh, it’s so satisfying when the little guy fights back and wins. I have no idea how big Mitchell Berns actually is, but he took on Delta Airlines in small claims court and won.

As the story goes, Delta canceled a flight that Mr. Berns was to take using bad weather as an excuse. When delays or cancellations are because of bad weather, airlines don’t have to cough up refunds. Delta’s solution was to book Berns on a red-eye flight which he refused to take. As he found out, the bad weather had yet to start. It wouldn’t be happening for hours later.

Pooh pooing Delta’s explanation, Berns booked a flight home on JetBlue and then filed the claim against Delta that was equal to the cost of the JetBlue ticket. That seems fair. It’s not like he was claiming pain and suffering. The court sided with Berns because no one from Delta showed up for the court appearance.

The moral of the story is to stick up for yourself when you can when it comes to travel. It’s almost like becoming a dog with a bone. I have my own dog with a bone story.

Once when I was flying from La Guardia to Albuquerque, I was bumped off the flight because the airline wanted to switch to a smaller plane. As I saw other people arrive after me be given seats, I complained. (This was when seats were assigned first come first serve at the airport.) The airline personel told me that the computer was randomly picking who would get on the flight. Ha!! That’s rich! I thought.

After refusing to leave and continuing to politely, but incessantly complain, the ticket counter person gave me a taxi voucher to go to John F. Kennedy Airport and rerouted me since there was a flight leaving from there that I could take. This allowed for me to make my connection in St. Louis and arrive in Albuquerque when I wanted to.

There is something about these small wins that gives one hope that ones well-being is important indeed.