Department of Transport announced the final rule requiring airlines to automatically refund passengers and informing passengers of their right to a refund on Wednesday. The policy change underscores the Biden administration’s continued, tough support for consumer rights in the air. USDOT forced the airlines to do this pay out over $600 million in refunds in 2022. The agency also downloaded a record fine of $140 million against Southwest due to the 2022 holiday season meltdown.
Final rule requires each airline to provide automatic refunds for canceled or significantly changed flights within seven days for credit card payments and within 20 days for other forms of payment. This provision also applies to checked baggage fees and fees for additional services, e.g Wi-Fi on the plane.
Please note that a refund is only required if the passenger refuses or is not offered a ticket alternative transport or compensation, as funds for the next flight. Airlines must inform customers of their right to a refund, but those seeking a refund will need to be well-informed enough to reject alternatives.
For clarity, defines USDOT significant change because:
– three-hour delay (or early departure) for domestic flights
– six-hour delay (or early departure) for international flights
– change of departure or arrival airport in the itinerary
– adding transfer points along the travel route
– switching to a lower class of service
– changing transfer airports for disabled passengers
– an aircraft replacement that makes the accessibility feature unavailable to disabled passengers
Transportation Safety Pete Buttigieg stated in a statement, “Passengers deserve a refund when the airline owes them money – without the headaches and haggling. Our novel rule sets a novel standard requiring airlines to promptly provide cash refunds to passengers.”
It’s no secret that refunds significantly eat into airline profits. Delta Airlines issued $6 billion in refunds between January 2020 and August 2022. Measures forcing carriers to pay cash compensation also provide an incentive to provide better services with fewer delays and cancellations.
