The Biden administration’s new rule allows passengers to easily get airline refunds for flight cancellations or delays. This initiative follows a year of pledges to protect air travelers from disruptions caused by increased demand after the pandemic. The new rule guarantees cash refunds for canceled or significantly delayed flights, not just vouchers.
Airlines and ticket sellers must disclose extra fees, like checked bag charges. These measures follow a chaotic travel season, including Southwest Airlines’ 2022 winter holiday crisis, and reflect the administration’s tougher stance on the airline industry. Here’s everything travelers need to know about the new rules in air refunds in 2024.
Airline Refunds for Changes and Cancellations
Passengers are now entitled to automatic refunds for flights canceled, significantly delayed, or changed, including because of uncontrollable factors like weather.
Refunds apply if alternative travel or vouchers are unavailable or declined by the passenger. Refusing a rebooking entitles passengers to automatic refunds.
The rule outlines a “significant change,” including delays over 3 hours domestically or 6 hours internationally, airport changes, additional connections, downgrades, or less accessible flights for disabled passengers.
This marks a significant change in passenger rights. Airlines previously determined what delays warranted refunds, often resulting in few refunds. The DOT now requires automatic refunds without passengers needing to request them.
Refunds must be issued promptly within seven business days for credit card payments and 20 calendar days for other methods, covering the full ticket amount minus any used portion.
Refunds for Illness
The new regulations include provisions for travelers unable to travel because of serious infectious diseases like Covid-19. If advised against travel by a country or medical professional, passengers are entitled to a five-year travel voucher or credit.
Unlike refunds, airlines may require additional documentation for this compensation.
These protections aim to avoid a repeat of pandemic-related issues. Indeed, 2020 was a bad year for travelers as they faced some challenges getting cash refunds on their canceled flights because of travel restrictions.
However, the DOT aided these problems by fining airlines $7.5 million and required them to give out $600 million refunds to its affected passengers.
Other Airline Refunds
Passengers are now guaranteed automatic refunds for purchased in-flight services that the airline doesn’t provide, such as seat selection or Wi-Fi. They’ll be refunded if passengers pay for these services but don’t receive them (e.g., nonfunctional Wi-Fi or incorrect seating).
The new rules also extend to baggage delays, not just flight disruptions. Passengers whose luggage is delayed beyond 12 hours domestically or 15 to 30 hours internationally can receive full baggage fee refunds. These refunds are significant, considering the recent widespread increases in checked bag fees.
What Else to Know
Previously, airlines set their refund policies due to the lack of federal guidelines on flight delays. Now, airlines must adhere to federal standards for issuing refunds during delays, defined as over three hours for domestic and six hours for international flights. Airlines can still offer alternative reimbursements like vouchers, but they must first inform passengers of their right to a cash refund.
According to the DOT, refunds must be issued automatically without passengers needing to request them. For credit card purchases, refunds must be processed within seven days; other payment methods are within 20 days. Passengers are entitled to refunds if departure or arrival airports are changed, service class is downgraded, or connecting stops are added.
Additionally, passengers with disabilities have additional refund rights if there are changes in connecting airports or accessibility features.
The Reason Behind the Refunds
On Wednesday, the Department of Transportation introduced new rules to shield airline passengers from unexpected fees.
These rules, part of the Biden-Harris Administration’s push against corporate overcharging, require airlines to issue timely and clear refunds and disclose all air travel fees upfront.
The DOT expects these regulations to save consumers over half a billion dollars annually in hidden fees. Transportation Secretary Pete Buttigieg said passengers deserve transparency about costs and prompt refunds without having to request them.
The new regulations announced on Wednesday compel airlines to offer passengers clear information about costs before purchasing tickets and to promptly issue cash refunds when due, aiming to save passengers time, money, and hassle.
Bottom Line
The new rule aims to simplify the refund process for flight disruptions and services. Without it, consumers had to navigate complex refund processes, fill out extra forms, or wait on hold.
Airlines should also notify travelers of their right to refunds, and that complaints should be filed to both the airline and the DOT. These complaints led to record refunds during the pandemic and millions in penalties.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
