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How to Handle an Airline Downgrade From First-Class

CNBC.com with Wires
Thursday, 20 Dec 2012 | 12:50 PM ET
Hans Neleman | The Image Bank | Getty Images

There is lots of urban lore about coach passengers on airlines being magically upgraded to first-class seats. But less is said when it happens the other way around—being downgraded to coach after holding a confirmed first-class seat.

Travelers who paid extra for a special seat have a case for getting something in return when it is taken away. Yet when it comes to involuntary downgrades, consumers are often left on their own to make the case that they should get something back.

As the height of the holiday travel season approaches, understanding how that works can help you avoid feeling cheated if this happens to you.

Why Downgrades Happen

First, it's important to know why downgrades happen. The most common reason is an aircraft substitution, when an airline swaps in a different plane with fewer first-class seats than what was scheduled. This happens most often due to a mechanical issue.

Another reason is the airline may have sold more seats in a premium cabin than the aircraft holds. Overselling flights is a common practice in the airline industry as there's usually a percentage of people with confirmed reservations, who don't show up. While airlines tend not to oversell the first-class cabin, they will often sell more business-class seats than the aircraft can hold.

Plus, since 9/11, more federal air marshals have been assigned to flights than in previous years. And they often approach the gate at the last minute and must be provided a seat by the airline, often in the first-class cabin. If the flight is booked to capacity up front, airlines are required to downgrade a paying passenger to accommodate a federal air marshal.

Finally, system errors occur where two passengers hold a boarding pass for the same seat. This happened to me last year where another passenger (who paid the full first-class fare) had the same seat assigned as mine. Since I upgraded from coach, I was the unfortunate one to get the downgrade.

How to Get Compensation

There are some strategies if you do get downgraded. "Nothing's automatic. You can't just expect an airline to do it right," frequent flier guru Brian Kelly — who runs ThePointsGuy.com and travels more than 125,000 miles a year — told Reuters.

It's not that anything shady is going on, but rather that the changes tend to happen in a chaotic environment. "When you're at the airport, it's highly stressful for the gate agent. Their job is to get the plane out. Most of the time, the airline isn't going to proactively reach out to compensate you," Kelly said.

This is what happened to Aaron Reese and his wife, Kate, this summer, when she was downgraded from a first-class seat. It was not until they wrote a complaint letter that the airline offered any compensation, but it took a long time for them to deliver.

Reese said he appreciated the airline got him and his wife where they were going, but is frustrated that months later they still had to keep asking United Continental Holdings for the miles to be credited. "It definitely would have been nice to have been told upfront, 'Hey, we see you're being downgraded, we'll refund you half or all the miles you used for the upgrade,' " Reese told Reuters.

United spokesman Charles Hobart said something went awry in the Reeses' case, but that has finally been rectified.

"As part of the downgrade process, we automatically refund any applicable difference in fares and redeposit the miles back into the customer's MileagePlus account," he said. "In the case of the Reeses, we erred in the process and did not fully redeposit their miles. We have since done so, and have reached out to the Reeses to apologize."

It Depends Where You Are

In the United States, there are no specific rules about what should happen if a passenger is downgraded.

"Airlines handle those issues individually, according to their own practices," said Jean Medina, vice president of the industry association Airlines for America. "They do, however, try to accommodate customers as best they can, and often will extend an offer to make amends."

In Europe, however, there are strict rules. If you are flying on a carrier subject to European Union rules, you are entitled to a refund of 30 to 75 percent of the ticket price, depending on the length of the trip. And the airlines have got seven days to do it.

Kelly said if the downgrade happens on a flight to or from Europe, it is particularly important to make sure the consumer recovers not only the amount of airfare in question but also the related taxes —which can be considerable.

What to Look Out For

The contract of carriage that establishes the relationship between passenger and airline is written by the airline, consumer advocates note. The contract makes the primary commitment of getting the passenger to his or her destination.

"One of the contract of carriage fine-print issues is that they can move you for any reason," said Kate Hanni, founder of the advocacy group FlyersRights.org. "Everything with the airlines is a one-way street."

Most frequent travelers will have more leverage to obtain what they want from the airline and they most likely will obtain the best results by dealing with a supervisor, said Northeastern University economist Harlan Platt, an airline finance expert.

"The amount of compensation is subject to negotiation," he said.

His idea of a better solution would be to use a price from a particular point in time, but he knows that this would create an "extreme technical problem" because airline prices can change several times in a day.

The key to obtaining the highest amount in return, Kelly said, is to assert your claim quickly and calmly. Ideally, that should take place at the gate or, if the seat change happened on the plane, upon landing.

"Never, ever get angry at the airport staff," Kelly said. "If you don't find someone who is helping you, ask someone else. Come up with a rational compensation request - like you want a confirmed upgrade to use in the next year to make up for the fact you lost one."

CNBC.com's Darren Booth contributed to this report.

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