New Mandate: Airlines to Provide Automatic Cash Refunds for Canceled and Delayed Flights

New Mandate: Airlines to Provide Automatic Cash Refunds for Canceled and Delayed Flights
  • PublishedApril 27, 2024

On Wednesday, the Biden administration unveiled definitive regulations mandating that airlines promptly issue cash refunds for flight cancellations and substantial delays. These rules also entail enhanced transparency regarding baggage fees and reservation cancellation charges. 

The Transportation Department stipulated that airlines must automatically reimburse passengers within a short timeframe for flight cancellations and delays deemed “significant.” 

Unlike the current setup where airlines have discretion over refund triggers, the new guidelines specify that a significant delay constitutes a duration of at least three hours for domestic flights and six hours for international ones. 

While airlines retain the option to provide an alternative flight or travel credit, passengers hold the right to decline such offers.

Refunds will also be mandated for checked-bag fees if the luggage remains undelivered beyond 12 hours for domestic flights or 15 to 30 hours for international flights. Similarly, reimbursements will be enforced for fees associated with services such as seat selection or internet access in the event of airline service failure.

Amid the COVID-19 pandemic, refund grievances surged due to flight cancellations and passengers’ apprehensions about sharing cabin space. However, Airlines for America reported a significant decline in refund complaints to the Transportation Department since mid-2020. The group emphasizes airlines’ efforts to provide various options, including fully refundable fares, to accommodate diverse travel needs.

From 2020 to 2023, the 11 largest U.S. airlines collectively issued $43 billion in customer refunds, according to the group.

In a separate initiative, the Transportation Department mandated airlines and ticket agents to transparently disclose fees for checked and carry-on bags, as well as for reservation changes or cancellations. Airlines are required to display these fees upfront on their websites, ensuring customers have visibility into costs at the initial stage of booking.

Moreover, airlines will be obligated to inform passengers of guaranteed seat availability without additional charges, although the rule does not prohibit airlines from offering paid seat selection options. Many carriers presently charge extra for specific seat types, including those in exit rows or near the front of the aircraft.

The department projected that the implementation of the regulation would result in annual savings exceeding $500 million for consumers.

Highlighting their commitment to transparency and extensive consumer options, Airlines for America emphasized that its members prioritize providing clarity and choice right from the initial search phase.

Scheduled to be phased in over the next two years, these new regulations form a crucial component of the administration’s comprehensive campaign against what President Joe Biden has termed “junk fees.” Just last week, Transportation Secretary Pete Buttigieg unveiled plans to empower state authorities from 15 states to assist in enforcing federal airline consumer protection statutes.

Image Credits- William P. Hobby Airport

Written By
Shane Mathew

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