Refunding a nonrefundable

"$150 to retain the value of a $300 ticket I had to cancel," complains a reader "Is a complete rip-off." I agree. What started as a reasonable policy -- charging $25 to allow you to retain the value of a nonrefundable ticket you had to cancel -- has morphed into still another gouge. The big lines now typically charge $150 to retain the value of a canceled domestic ticket and up to $250 for an international ticket. You still don't get your money back; you just get to use what value is left after the fee toward a future ticket. Clearly, those fees bear no relation to an airline's costs; they're punitive and so high as to make a mockery of the "reusability" claim. My reader went on to ask, "Why can't you pay a small fee up front to guarantee reusability?" The answer might surprise you: You can, but the fee is truly "small" on only one airline.

Southwest is unique in that it assesses no charge to exchange a ticket -- an advantage it is pushing in the marketplace. Other big airlines routinely offer travel insurance from a leading independent travel insurance company on an opt-out basis when you buy a ticket online:

-- Alaska, American, Continental, Delta, JetBlue, United, and US Airways use Access America.

-- Hawaiian, Frontier, and Virgin America use Travel Guard.

Both sets of policies are about the same. What you buy is a bundled travel insurance policy that includes conventional trip-cancellation insurance (TCI). As a side benefit, these policies also include trip-interruption, emergency medical and medical evacuation, and some delay/baggage coverages. And you get your money back, not just a credit. But TCI in conventional bundled packages has several downsides:

-- Conventional TCI pays only if you cancel for a "covered" reason or in the event of a "named peril." Those reasons normally include accident or sickness afflicting you, a travel companion, or non-traveling close relatives, as well as many (but not all) unforeseen problems in your destination area.

-- Conventional TCI does not cover you if you cancel because of changed personal or business plans.

Conventional TCI, in a bundle, isn't cheap. For example, to refund a $400 nonrefundable ticket, the insurance would cost around $35 (based on a quote from the Delta website for a four-day domestic trip). Optional policies for frequent-flyer award trips provide the same medical and delay coverages, but the TCI and interruption figures are much lower -- enough to cover a mileage redeposit fee but too low to cover the cost of buying a return ticket if you can't get an award seat.

Allegiant -- an airline I frequently criticize for its fee policies -- actually offers the best deal. "Trip Flex" allows you unlimited date, schedule, and itinerary changes with no fees. The cost is $11.50 for a flight or flight/car package, $37 for a flight/hotel package. You don't get a cash refund, but you get to retain the ticket value. And there are no "covered reasons" limitations.

Rather than accept the airline's deals, you have two other options:

-- You can buy "cancel for any reason" TCI through an independent travel insurance agency starting at around $45 for my test $400 trip (prices vary by age and trip duration). Clearly, this is the surest way to protect your ticket "investment." You can change your plans without worrying about having to fuss with an insurance company bean counter about the reason for your cancellation. But, even for a middle-age person, the cost is pretty stiff: more than 10 percent of the ticket value, and higher for a senior.

-- Depending on your age and itinerary, buying a third-party conventional bundled policy with TCI from an independent agency can often duplicate the coverage and beat the price of an airline site's policy, but probably not by much. You have to compare each trip.

Why don't other lines copy Allegiant? Probably because they're afraid they'd sell far fewer of their very expensive refundable tickets. So for now, if you're likely to want to cancel, buying a cancel-for-any-reason TCI policy is probably a better bet than risking those huge cancellation fees.

(Send e-mail to Ed Perkins at eperkins(at)mind.net. Perkins' new book for small business and independent professionals, "Business Travel When It's Your Money," is now available through www.mybusinesstravel.com or www.amazon.com)

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