The U.S. Department of Transportation now requires airlines to provide automatic refunds when a flight has been canceled or significantly delayed.
In a statement from the DOT, significant delays are defined by the government agency as changes to the “departure or arrival times that are more than 3 hours domestically and 6 hours internationally.” The other listed refundable issues include:
- Departures/arrivals from a different airport.
- An increase in the number of connections.
- A downgrade to a lower class of service.
- Significantly delayed baggage returns with checked bag fees.
- Payments made for in-flight amenities like Wi-Fi, which are not provided.
Refunds can also be issued to passengers who’ve been switched to connections at different planes or airports “that are less accessible or accommodating to a person with a disability,” per the statement.
The regulations will roll out over the next six to 12 months, according to Business Insider.
What was the prior regulation?
According to Business Insider, airlines previously had their own rules for refunds.
This individual system, as a result, led to some passengers being provided with default travel credits and vouchers through some airlines. Because of this, some passengers were unable use their refund to rebook with another airline “without navigating a cumbersome request process.”
“Passengers deserve to get their money back when an airline owes them — without headaches or haggling,” Transportation Secretary Pete Buttigieg said in the statement. “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”
Now the refunds must be “prompt,” meaning that airlines must issue them within seven business days of credit card purchases and 20 calendar days through other payment methods, per the statement.
Per Business Insider, refunds must follow the payment method used at purchase — cash, credit card or airline miles — unless the passenger “accepts alternative compensation.” In addition, airlines must provide refunds of the fullest amount, including taxes and airline-imposed fees.
It’s a rule change to protect consumers’ rights for refunds. While speaking at the Ronald Reagan Washington National Airport on Wednesday, Buttigieg claimed the agency’s consumer protection team has imposed “multimillion-dollar penalties” on airlines that have allegedly not given out refunds owed to passengers, reported CNBC.
More transparency with fees and penalties
Along with the new regulation of refunds, the DOT is requiring airlines to have more transparency with extra fees. The new rule focuses on eliminating these so-called surprise fees, and airlines will now have to disclose upfront all extra fees — such as seat selection and checking bags, according to The New York Times.
“Airlines should compete with one another to secure passengers’ business — not to see who can charge the most in surprise fees,” Buttigieg said at the Reagan airport, per CNBC.
Plus, a provision in the transparency rule will reportedly try to eliminate discounted bait-and-switch tactics — a practice which CNBC claimed is done by offering discounts appearing applicable to the whole flight price, but which only apply “to a smaller portion of the price.”
“To be clear, we want the airline sector to thrive,” Buttigieg said, reported CNBC. “It’s why we’re being so rigorous on passenger protection. This will build confidence in air travel at a time when airlines need to do more to secure passengers’ trust.”