Biden-Harris Administration Updated Airline Refund Policy: Final Rule Requires Automatic Refunds of Airline Tickets and Ancillary Service Fees
The updated airline refund policy rule makes it easy to get money back for canceled or significantly changed flights, significantly delayed checked bags, and additional services not provided. Content provided by the US Department of Transportation.
The Biden-Harris Administration announced that the US Department of Transportation (DOT) has issued a final rule that requires airlines to provide passengers with automatic cash refunds when owed promptly. The updated airline refund policy makes it easy for passengers to obtain refunds when airlines cancel or significantly change their flights, significantly delay their checked bags, or fail to provide the extra services they purchased.
The final rule creates certainty for consumers by defining the circumstances in which airlines must provide refunds. Before this rule, airlines were permitted to set their standards for what kind of flight changes warranted a refund.
As a result, refund policies differed from airline to airline. Differing policies made it difficult for passengers to know or assert their refund rights. DOT also received complaints of some airlines revising and applying less consumer-friendly refund policies during spikes in flight cancellations and changes.
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Under the rule, passengers are entitled to a refund for:
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 3 hours domestically and 6 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 the bag 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 in-flight entertainment—if the airline fails to provide it.
Why Does it Matter?
The Department received many complaints against airlines and ticket agents for refusing to provide refunds or delaying refund processing during and after the COVID-19 pandemic. At the height of the pandemic in 2020, refund complaints peaked at 87 percent of all air travel service complaints received by the DOT. Refund problems make up a substantial share of the complaints the DOT receives.
DOT’s final rule also makes it simple for passengers to receive the money they are owed. Without this rule, consumers must navigate a patchwork of cumbersome processes to request and receive a refund.
In addition, passengers would receive a travel voucher by default from some airlines instead of getting their money back. Travelers could not use their refund to rebook on another airline without a cumbersome request process.
The final rule improves the passenger experience by requiring refunds to be:
Automatic
Airlines must automatically issue refunds without passengers having to request them or jump through hoops explicitly.
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 using whatever original payment method the individual used to make the purchase. Airlines may not substitute vouchers, travel credits, or other forms of compensation unless the passenger chooses to accept alternative compensation.
Full amount
Ticket agents must provide full refunds of the purchase price minus the value of any portion of transportation already used. The refunds must include all taxes and fees, regardless of whether the taxes or fees are refundable to airlines.
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Other requirements of the Final Rule
The final rule also requires airlines to promptly notify consumers affected by a canceled or significantly changed flight of their right to a refund of the ticket and extra service fees, as well as any related policies.
In addition, when consumers are restricted by a government or advised by a medical professional not to travel due to a serious communicable disease, airlines are required to provide travel credits or vouchers. Consumers may be required to provide documentary evidence to support their request. Travel credits provided by airlines must be transferrable and valid for at least five years from the date of issuance.
Explore the Department Of Transportation’s Historic Record of Consumer Protection Under the Biden-Harris Administration:
Under the Biden-Harris Administration and Secretary Buttigieg, DOT has advanced the largest expansion of airline passenger rights, issued the biggest fines against airlines for failing consumers, and returned more money to passengers in refunds and reimbursements than ever in the Department’s history.
- All 10 major US airlines guarantee free rebooking and meals when an airline issue causes a significant delay or cancellation. 9 major US airlines guarantee hotel accommodations. DOT can legally ensure these guarantees are adhered to and displayed on flightrights.gov.
- DOT has helped return more than $3 billion in refunds and reimbursements owed to airline passengers. This includes over $600 million to passengers affected by the Southwest Airlines holiday meltdown in 2022.
- DOT has issued over $164 million in penalties against airlines for consumer protection violations. Between 1996 and 2020, DOT collectively issued less than $71 million in penalties against airlines for consumer protection violations.
- DOT recently launched a new partnership with a bipartisan group of state attorneys general. The partnership will fast-track the review of consumer complaints, hold airlines accountable, and protect the rights of the traveling public.
- In 2023, the flight cancellation rate in the US was at a record low of under 1.2%. This is the lowest rate in over 10 years despite a record amount of air travel.
- DOT is undertaking its first-ever industry-wide review of airline privacy practices and its first review of airline loyalty programs.
The Department Of Transportation is also pursuing rulemakings that would:
- Propose to ban family seating junk fees and guarantee that parents can sit with their children for no extra charge when they fly. Before President Biden and Secretary Buttigieg pressed airlines last year, no airline committed to guaranteeing fee-free family seating. Now, four airlines guarantee fee-free family seating, and the Department is working on its family seating junk fee ban proposal.
- Propose making passenger compensation and amenities mandatory. This would ensure travelers are taken care of when airlines cause flight delays or cancellations.
- Expand the rights of passengers who use wheelchairs and ensure that they can travel safely and with dignity.
Implementation of the Updated Airline Refund Policy
The final rule has different implementation periods. Airlines have 6 months to provide automatic refunds when owed. Airlines have 12 months to offer transferable travel credits when consumers cannot travel for reasons related to a serious communicable disease.
More Information on the Updated Airline Refund Policy
The final refund rule can be found at https://www.transportation.gov/airconsumer/latest-news and regulations.gov, docket number DOT-OST-2022-0089. Information about airline passenger rights and the DOT’s regulations, guidance, and orders can be found at https://www.transportation.gov/airconsumer.
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Updated Airline Refund Policy images provided by AdobeStock
