David Lazarus: Why doesn't cash fly on many airlines?

By David Lazarus

Jan. 24, 2010 12 AM PT

Beginning Feb. 1, your money’s no good on American Airlines.

The carrier is the latest to go completely cashless during flights, meaning that if you don’t have plastic, you won’t be buying food, drinks, duty-free items or whatever.

“The implementation of cashless cabins on select flights last summer has simplified the in-flight transaction process for both customers and flight attendants,” Lauri Curtis, American’s vice president of onboard service, said in a statement.

“For this reason, we look forward to going cashless on board all American Airlines flights.”

Wait a minute.

Take a look at the paper money in your wallet or purse. Look at the words on the left-hand side, either above or below the very impressive seal of the United States Federal Reserve System: “This note is legal tender for all debts, public and private.”

It doesn’t say “all debts unless a business would rather take plastic.” Or “all debts except for when you fly.”

It says “all debts.” Period.

Yet American now joins United Airlines, Continental Airlines, Southwest Airlines, JetBlue Airways, Alaska Airlines, Frontier Airlines and other carriers in rejecting cash during some or all flights.

So how can an airline discriminate against cash users? Isn’t that, well, illegal?

A spokeswoman for the Treasury Department told me I should ask the Fed.

A spokesman for the Fed said this was a matter for the Treasury.

Talk about passing the buck.

As it happens, the Fed spokesman was right. On the Treasury Department’s website I found some information about the Coinage Act of 1965, which delves into the minutiae of what “legal tender” means. And it’s pretty straightforward:

“United States coins and currency (including Federal Reserve notes and circulating notes of Federal Reserve banks and national banks) are legal tender for all debts, public charges, taxes and dues.”

There it is, right? Cash is king.

Apparently not.

The Treasury Department goes on to say that there’s no law “mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services.”

“Private businesses are free to develop their own policies on whether or not to accept cash unless there is a state law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills.”

Tim Smith, a spokesman for American Airlines, elaborated on this interpretation of the law. “Any business can do what it wants,” he said. “If they say you have to pay in carrots, they can do it.”

I asked the Treasury Department why my money says one thing but the law is apparently interpreted differently. A spokeswoman reiterated that “there is no mandate requiring private enterprises to accept currency as payment for goods and services.”

In other words, American and other airlines -- and all other businesses, for that matter -- are free to reject cash if they please.

Santa Monica resident Mark Bartelt, 61, flew American recently from Los Angeles to Boston. He said he bought a small bottle of wine during the flight for $5. The flight attendant wouldn’t take cash.

“I was surprised,” Bartelt said. “It’s not really an inconvenience to have to use a credit card, but what if a kid is flying unaccompanied? What’s the airline going to do, tell him that he has to go hungry?”

Bartelt added that when he asked the flight attendant about the cashless policy, she joked that it’s because the airline doesn’t trust crew members with passengers’ money.

Smith, the airline spokesman, told me at first that this was indeed “a small factor” in the company’s decision to go cashless. But he corrected himself later to say that sticky-fingered fight attendants weren’t a factor at all.

“The vast majority of our flight attendants are hardworking and honest,” he said.

Flight attendants are of two minds about the cashless flights.

“The good part is that flight attendants don’t have to carry around the cash,” said Corey Caldwell, a spokeswoman for the Assn. of Flight Attendants. “The bad part is that we have to rely on machines, and machines go kaput every now and then.”

She said most cashless airlines try to make sure they have backup card-processing devices on board in case one breaks down. Caldwell also said that the issue of unaccompanied kids who lack plastic comes up from time to time.

“Usually the flight attendant will take care of any costs herself,” she said, “or other passengers will pay.”

American’s Smith said the airline will typically cover any such expenses. “We don’t make a big deal about it,” he said.

People talk about heading toward a totally cashless society. It would be better for the environment, they say, and more convenient in general. I don’t really have a problem with that.

But I believe you should mean what you say. If our money says it’s good for everything -- and it does -- then it should be good for everything. Otherwise, it shouldn’t promise something it can’t deliver.

Our cash also says “In God we trust.” Maybe I should take this up with a higher authority.

David Lazarus’ column runs Wednesdays and Sundays. Send your tips or feedback to [email protected].