The new refund regulations for airline passengers by the US Department of Transportation (DOT) have now come into full effect. According to the new rules, if a domestic flight is canceled or delayed for more than 3 hours, passengers are entitled to an automatic refund. Similarly, if an international flight is canceled or delayed for more than 6 hours, passengers also have the right to an automatic refund.
The DOT announced this new regulation on April 24, requiring airlines to provide passengers with an immediate cash refund when they are owed money. This new rule allows passengers to easily obtain refunds in cases where airlines cancel or significantly alter flights, experience significant delays in checked baggage, or fail to provide purchased additional services.
Transportation Secretary Pete Buttigieg stated in a press release, “When airlines owe passengers money, passengers should get their money back without hassle or haggling.”
“Our new rule sets a new standard, requiring airlines to provide timely cash refunds to passengers.”
Some aspects of the DOT’s new regulations went into effect as early as May following the reauthorization of funding by the Federal Aviation Administration, but the implementation of certain provisions required more time.
Here is how the new regulations work and what rights passengers are entitled to:
Prior to the announcement of the new regulations, the DOT had already required airlines to provide refunds to passengers whose flights were canceled when they chose not to take an alternative flight offered by the airline.
The DOT’s policy clarifies how these refunds should be handled and when. According to the latest guidelines, airlines must provide refunds automatically without passengers having to specially request them. Airlines and ticket agents must process refunds within 7 days for credit card purchases and within 20 days for other payment methods.
Refunds must be issued in cash or through the original payment method and cannot be solely in airline vouchers or points. Additionally, refunds must cover the full unused value of the ticket. Airlines are not required to refund segments of a trip that were completed before the cancellation.
One significant change in this transportation policy is the clarification of what constitutes a “significant delay.” Previous policies were vague, but the new rule clearly states that passengers are eligible for refunds after a domestic flight delay of 3 hours or an international flight delay of 6 hours. These time limits apply to delays in both departure and arrival times.
The new rule also covers “significant changes” to flights, with the DOT explaining that this includes situations where “there are changes to departure or arrival airports; an increase in layover stops; a downgrade in passenger seating class; changes in layover airports, or changes in aircraft that are less accommodating for passengers with disabilities.”
All refund guidelines for flight cancellations apply equally to flight delays. This means refunds must be automatically issued and returned in full through the original payment method.
Since President Biden took office, the DOT has assisted airlines in refunding over $3 billion to passengers for refunds and reimbursements, including over $600 million to passengers affected by the 2022 Southwest Airlines holiday meltdown. Transportation Secretary Buttigieg has also imposed over $164 million in fines on airlines violating consumer protection regulations.
In a letter to airline industry executives in July, Buttigieg emphasized the significance of the new regulations for passengers and airlines. In 2023, the US flight cancellation rate hit a historic low of under 1.2%, the lowest in over a decade, despite record high air travel volumes.
Under the new DOT rules, if baggage does not arrive at the destination in a timely manner, passengers are now entitled to a refund of checked baggage fees. Specifically, passengers who do not receive their luggage within 12 hours for domestic flights or within 15 to 30 hours for international flights (depending on flight length) can claim a refund of baggage fees for mishandled luggage.
If passengers have paid for services such as onboard Wi-Fi, seat selection, or in-flight entertainment but these services are unavailable during the flight, the airline should refund passengers for these services.
Additionally, if consumers are restricted by the government or advised by medical professionals not to travel within or outside the US due to a serious infectious disease, the new regulations require airlines to provide travel credits or vouchers. Consumers may need to provide documentation to support their claims. The travel vouchers or points issued by airlines must be transferable and valid for at least five years from the date of issuance.
This portion of the policy is set to be fully implemented by May of next year.