Downgraded on company-paid flight - who gets compensated?

Question

While traveling for work, I was downgraded from business class to economy class. The airline will have to compensate me for this change, in cash, vouchers, or miles. Am I personally entitled to this refund, or should it go to my employer?

On the one hand, my employer paid for the flight and should only pay for what was actually received, so perhaps the company should get the refund. On the other hand, the company had already paid for the business class seat, and I was the one who had to personally deal with the lower-class fare, so perhaps I should get the refund myself. If it makes any difference, I was traveling on the weekend, so the company didn't lose any productivity in terms of me not being able to work on the flight, or even the next day from me being less rested.

Answer 1

It would come down to company policy I suppose (consult your employee handbook, direct supervisor, the person who coordinated your travel, HR, etc); but I'd be shocked if there were any that let you pocket the difference.

Answer 2

If you want to be in the clear here, I would strongly recommend you check with your manager. Some general rules of thumb:

Accepting cold hard cash is likely a no-no, it's essentially a refund of the company's money to you personally and that's a very slippery slope ethically if you don't tell them and for accounting, taxes, etc if you do tell them.

Accepting miles, on the other hand, is likely fine. Most (but not all!) companies let employees keep theirs as a perk of business travel, and if you lost your company-paid biz seat this time, you can use them for a points-paid biz seat next time, so the karma balances out. They're also off the company balance sheet and don't cause the same kind of accounting headaches.

The vouchers are somewhere between the two: much more fungible than points, but not quite cash either. Most bosses would not object to you taking them and using them for an upgrade the next time the company only pays for economy class, or (points-like) for leisure travel, but selling them on eBay would be pushing it though.

Answer 3

I gather that you don't have clear instructions available. That means that you should ask about it before doing anything else. People who write company policy can't come up with every possible scenario at once (or even in a few years). Give them the chance to clarify it if they feel that this event warrants it.

The company might not receive information about the refund, but think about what happened if they did. I doubt they'd be pleased to learn that you pocketed that money without telling them anything. It may affect the whole impression they have of you as their employee. Small things like this might escalate to unknown proportions depending on how your superiors perceive the situation.

Answer 4

If you work for a large company, then it is very likely that the company's procurement team negotiates with several airlines on an annual basis for discounted rates. I'm pretty sure terms would allow for flexible booking, so the change of ticket to economy is probably invoiced after the fact. In terms of invoicing, it may not negotiate on a ticket-by-ticket basis.

Your case sounds like a gray area. I would say that if you feel comfortable talking to your manager about your line of reasoning, then go for it. If there is a company booking team you can ask, I would try that also to get clear on the rules. I do not think it is worth it to be flagged for something like this.

Answer 5

It would depend on what kind of compensation. I wouldn't be surprised if there is no company policy because nobody thought this could happen.

Let's say the company could have booked you on a cheap flight, but was nice enough to book a nicer, more expensive flight, except that didn't work out. They are still buying for the normal flight, which they could have booked in the first place. I don't think they would pass the compensation for this on to you.

On the other hand, if they run out of food, or worse you get food poisoning, or the heating breaks down, or something similar, that compensation should go straight to you. Extreme case, steward spills red wine on your $1,000 jacket, or the airline loses your luggage: Of course that compensation should be solely yours.

And then there is the possibility that you booked the flight your self, got your expenses paid, and the compensation arrives later in your bank account (because your bank account booked the flight) and nobody in the company knows about it. That would make it possible to keep the money, but that's a risky move if someone finds out.

Answer 6

I work in Sweden and one of our largest companies has the following travel policy: If the trip is > 12 hours in total, then business class is the default option. Any employee that wants to down-grade the ticket and keep the difference in terms of cash/miles/whatever is free to do so. So, to answer your question, to me, the money belongs to you. Your employer has already paid for the business class so why should they get Money in return when you had to pick a less comfortable flight?

Answer 7

It's usually fine to take the cashout, but be clear about it to your boss and the (more importantly,) taxman.

A lot of discussion here is regarding whether or not it is ethical/legal to take the cashout on the business' purchase. While it is true that in some countries this is considered a "fringe benefit" because the cash gained probably isn't any longer used for work... This in itself certainly isnt fraud.

If you were a politician in Australia booking business flights all over the country when you never intended on taking them - then getting credits later on, this has been proven as Fraud... however the other general idea that "it's already paid for, if YOU choose to cash-out your loss" is perfectly acceptible in most countries - so long as you are chalking it up to taxable fringe-benefits.

Subject example: Any popular international speaker will have a good idea of prices to travel to each country (usually business class) so when they are offered expenses to speak at a conference, they ask for the cash - and then can get there however they want. I know several University-level lecturers who are experts in their field who do this, and often downgrade so they can bring their spouse etc. The key is being clear in your tax, so that if the company gets investigated for transferring cash, it is documented that you have taken it as pay, instead. No money is being "scrubbed off the books", and you are not an Australian politician.

recent example: Speaker Troy Hunt gives many examples of why it's easier to "leave it to the speaker" to arrange their travel (etc) and most experienced event organisers are familiar with these costs also... so if it's paid to the speaker, it's what is agreed as fair, and they won't care how the cash is used so long as the speaker performs to their expectation.