The United States Department of Transportation (DOT) has announced new rules that will require airlines to provide automatic refunds to travelers in the event of flight cancellations or significant changes. This marks a major change for consumers and is aimed at making it easier for them to receive their money back.
The regulations, released on Wednesday, outline the circumstances in which passengers are entitled to refunds for all travel to, from, and within the US. The goal of these new rules is to make refund policies more consistent across the industry and to protect consumers’ rights.
According to the DOT, complaints related to airlines and ticket agents rejecting or delaying refunds made up a staggering 87% of all air travel service complaints at the height of the COVID-19 pandemic in 2020. This highlights the need for these new regulations to ensure that passengers are not left at the mercy of airlines when it comes to receiving their rightful refunds. Transportation Secretary Pete Buttigieg stated in a press release that “passengers deserve to get their money back when an airline owes them — without headaches or haggling.”
Under the new rule, passengers will be entitled to refunds if there is a “significant change” to their flights. This includes changes to departure or arrival times by more than three hours for domestic flights or six hours for international flights, being downgraded to a lower class than originally purchased, changes to departure or arrival airports, and more. Passengers will also receive refunds for checked bag fees if their luggage is lost and not delivered within the specified time frame.
One of the key changes under these new rules is that passengers will automatically receive cash refunds or refunds through the original form of payment. This will make it easier for travelers to receive their money back and prevent them from having to haggle with airlines to get what they are owed. Buttigieg stated that the majority of these new requirements will go into effect in about six months.
However, these changes are likely to add significant costs to the airline industry. This could have a disproportionate impact on low-cost carriers, according to Seaport Research analyst Daniel McKenzie. He believes that these added costs could make it more difficult for budget airlines to compete, making them less attractive to consumers. On the other hand, the Airlines for America trade group, which represents major carriers such as American Airlines and Delta Air Lines, stated that its members already abide by and often exceed regulations on consumer protection.
In addition to the refund changes, the DOT has also released a final rule that requires airlines to clearly communicate extra fees upfront for services such as checked luggage, carry-on bags, and changes or cancellations. This comes as baggage fees have seen a 30% increase between 2018 and 2022. Transportation Secretary Buttigieg stated that this rule will save travelers over $500 million annually.
Buttigieg also indicated that more rules are on the way, including expanding rights for passengers who use wheelchairs and allowing parents to sit with their children on flights without being charged extra fees. He also emphasized that the DOT will continue to pursue more aggressive enforcement when airlines violate regulations, such as the record $140 million fine against Southwest Airlines for a major operational meltdown in December 2022.
“The level of toughness reflected in the Southwest enforcement is not an exception, but the new standard,” Buttigieg stated at a news conference. These new rules showcase the DOT’s commitment to protecting consumers and ensuring fair and transparent practices in the airline industry.
