Mark Pestronk
Q: If I buy a nonrefundable airline ticket and do not cancel or change it before the flight, I get no refund whatsoever if it's not used. How come the airlines aren't required to refund the taxes on a totally unused ticket? Isn't there a law or a DOT rule on this? Wouldn't this make a terrific class-action suit against the airlines?
A: Let me answer your questions in reverse order. The class-action approach has been attempted several times, and all of the attempts have failed. The cases get dismissed because the plaintiffs are making claims that are "pre-empted" under the Airline Deregulation Act (ADA) of 1978. This means that only the DOT has the authority to rule on this question.
The ADA provides that, "no state ... shall enact or enforce any law, rule, regulation, standard or other provision having the force and effect of law relating to rates, routes or services of any air carrier. ..." So if you ask any state court for a ruling on whether the taxes should be refunded, you would be asking the court to adopt a standard relating to airline rates, which the court cannot do.
The pre-emption doctrine applies in federal court, too. Even though the statute says, "no state," the Supreme Court interprets the law to mean that federal courts cannot enforce state laws affecting airline rates, routes or services.
The main exception to the pre-emption doctrine is that you can sue for breach of contract in state or federal court. Unfortunately airlines' contracts of carriage don't say a word about refunding taxes, so failure to refund would not be a breach of contract.
All that is left is to complain to the DOT, which, to my knowledge, has never ruled on this issue. Perhaps it is time for the DOT to do so.
So the answer to your question, "How come the airlines aren't required to refund the taxes on a totally unused ticket?" is really that no judge or government agency is forcing them to do so.
In fairness, the airlines should refund at least some of the taxes and government fees that it doesn't have to remit to the government when you don't travel. Unfortunately, no one has developed an authoritative list of those taxes and fees. It would take a deep dive into the details of every relevant tax statute to get reliable answers.
Various sources claim that the $4.50 Passenger Facility Charge and $5.60 September 11th Fee are refundable, and that the airline may provide a refund if you specifically ask. On the other hand, the biggest tax -- the 7.5% domestic excise tax on the base fare -- is a tax at the point of sale and apparently remitted to the IRS regardless of whether you use the ticket.
To complicate matters, when you get a refund for a refundable ticket, you get all the taxes and fees back. Doesn't that prove that all the taxes and fees are in fact refundable? I wish I knew the answer.