The White House recently announced a final rule mandating that airlines promptly provide automatic cash refunds to passengers when owed. This new regulation simplifies the process for passengers to obtain refunds when airlines cancel or significantly alter flights, experience significantly delayed checked bags, or fail to deliver purchased extra services.
“Passengers deserve to get their money back when an airline owes them—without headaches or haggling,” said U.S. Transportation Secretary Pete Buttigieg. “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”
The final rule offers clarity for consumers by specifying the circumstances under which airlines must issue prompt refunds. Previously, airlines could set their own criteria for what constituted a refundable change, creating inconsistency and confusion for passengers.
Under the new rules, which will be implemented within six months, passengers are entitle to a refund for the following:
Canceled or significantly changed flights: Passengers will receive a refund if their flight is canceled or significantly altered and they do not accept alternative transportation or travel credits. For the first time, “significant change” is defined as changes to departure or arrival times exceeding 3 hours domestically and 6 hours internationally, departures or arrivals from different airports, an increase in the number of connections, downgrades to a lower class of service, or changes resulting in less accessible conditions for passenger with disabilities.
Significantly delayed baggage return: Passengers who report mishandled baggage are entitled to a refund of their checked bag fee if the bag is not delivered within 12 hours of their domestic flight’s arrival, or 15-30 hours of their international flight’s arrival, depending on the flight’s duration.
Extra services not provided: Passengers are entitled to a refund for any extra service fees – such as Wi-Fi, seat selection, or inflight entertainment – if the airline fails to provide the purchased service.
The DOT’s (U.S. Department of Transportation) final rule simplifies the refund process. Previously, consumers had to navigate complex processes to request and receive refunds, including searching airline websites, completing extensive “digital paperwork,” or waiting for hours on the phone. Additionally, some airlines defaulted to providing travel credits or vouchers instead of cash refunds, making it harder for passengers to rebook with another airline when their flight was changed or canceled.
Refunds must be:
Automatic: Airlines must issue refunds automatically without requiring passengers to request them explicitly.
Prompt: Airlines and ticket agents must issue refunds within seven business days for credit card purchase and 20 calendar days for other payment methods.
In Cash or Original Form of Payment: Refunds must be provided in cash or the original payment method used, such as credit card or airline miles. Airlines cannot substitute vouchers, travel credits, or other forms of compensation unless the passenger opts for alternative compensation.
In Full Amount: Refunds must cover the full ticket purchase price, minus the value of any used portion of transportation, including all government-imposed taxes and fees and airline-imposed fees, regardless of their refundability to airlines.
The final rule also requires airlines to promptly inform consumers affected by a canceled or significantly changed flight of their right to a refund, including extra service fees and related policies.
Notably, in 2023, in the U.S. experienced a record low flight cancellation rate of under 1.2% despite a surge in air travel – the lowest rate in over a decade.
However, if an airline causes a significant delay or cancellation, pressure from the Biden-era DOT has led all 10 major U.S. airlines to guarantee free rebooking and meals, with nine also guaranteeing hotel accommodation. These commitments are now part of airlines’ customers service plans, which the DOT can enforce. Details are available on flightrights.gov.
Eliminating Hidden Fees
A second rule mandates that airlines and ticket agents disclose all fees upfront for checked bags, carry-ons, reservation changes, or cancellations. This ensures consumers are aware of potential extra charges when purchasing tickets from airlines or travel agents, whether online or offline.
This rule helps consumers avoid unexpected fees that can quickly inflate the cost of an initially cheap ticket.
Guaranteed Seating Information: To prevent unnecessary ‘set selection fees,’ airlines and ticket agents must inform consumers that seats are guaranteed without extra payment. The rule also prohibits airlines from advertising promotional discounts on base fares that do not include all mandatory carrier-imposed fees.
Learn all the details from DOT, here.
Different implementation periods apply to these rules, ranging from six months for automatic refunds to 12 months for transferrable travel vouchers or credits when consumers cannot travel due to a serious communicable disease.
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