DOT issues new rule on airline refunds; no more ‘headaches or haggling’

Airlines are now required to promptly provide passengers with refunds when it cancels or significantly changes their flights.

The U.S. Department of Transportation issued a final rule today that also applies to delays in checked bags and failure to provide extra services purchased.

“Passengers deserve to get their money back when an airline owes them – without headaches or haggling,” said U.S. Transportation Secretary Pete Buttigieg in a news release. “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”

The final rule creates certainty for consumers by defining the specific circumstances in which airlines must provide refunds. Prior to this rule, airlines were permitted to set their own standards for what kind of flight changes warranted a refund.

Information about airline passenger rights, as well as DOT’s rules, guidance and orders, can be found at  https://www.transportation.gov/airconsumer.

Refund details

• Canceled or significantly changed flights: Passengers will be entitled to a refund if their flight is canceled or significantly changed, and they do not accept alternative transportation or travel credits offered. For the first time, the rule defines “significant change.” Significant changes to a flight include departure or arrival times that are more than three hours domestically and six hours internationally; departures or arrivals from a different airport; increases in the number of connections; instances where passengers are downgraded to a lower class of service; or connections at different airports or flights on different planes that are less accessible or accommodating to a person with a disability.
• Significantly delayed baggage return: Passengers who file a mishandled baggage report will be entitled to a refund of their checked bag fee if it is not delivered within 12 hours of their domestic flight arriving at the gate, or 15-30 hours of their international flight arriving at the gate, depending on the length of the flight.
• Extra services not provided: Passengers will be entitled to a refund for the fee they paid for an extra service such as Wi-Fi, seat selection, or inflight entertainment if an airline fails to provide this service.

Refund requirements

The final rule also makes it simple and straightforward for passengers to receive the money they are owed.

• Automatic: Airlines must automatically issue refunds without passengers having to explicitly request them or jump through hoops.
• Prompt: Airlines and ticket agents must issue refunds within seven business days of refunds becoming due for credit card purchases and 20 calendar days for other payment methods.
• Cash or original form of payment: Airlines and ticket agents must provide refunds in cash or whatever original payment method the individual used to make the purchase, such as credit card or airline miles. Airlines may not substitute vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation.
• Full amount: Airlines and ticket agents must provide full refunds of the ticket purchase price, minus the value of any portion of transportation already used. The refunds must include all government-imposed taxes and fees and airline-imposed fees, regardless of whether the taxes or fees are refundable to airlines.

The final rule also requires airlines to provide prompt notifications to consumers affected by a cancelled or significantly changed flight of their right to a refund of the ticket and extra service fees, as well as any related policies.