New DOT rules for airlines require immediate refunds for canceled, delayed flights

WASHINGTON (TND) — The U.S. Department of Transportation announced new rules Wednesday requiring airlines to automatically provide passengers with cash refunds for canceled and significantly delayed flights.

"Passengers deserve to get their money back when an airline owes them - without headaches or haggling," U.S. Transportation Secretary Pete Buttigieg said in a news release. "Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers."

Before the change, airlines were permitted to set their own standards for what kind of flight changes warranted a refund and the final rule by the DOT creates more certainty for consumers.

Passengers will be entitled to a refund if a flight is canceled or significantly changed meaning departure or arrival times that are more than three hours domestically and six hours internationally, departures or arrival 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.

A refund may also be issued for a checked bag fee if a passenger files a mishandled baggage report and it 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.

Additionally, a passenger is entitled to a refund if they pay for an extra service such as Wi-Fi, seat selection, or inflight entertainment that is not provided.

Under the new DOT rules, airlines are required to issue refunds within seven business days and they must be in cash unless the passenger chooses another form of compensation.

"Airlines may not substitute vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation," the DOT explains.

According to the DOT, at the height of the pandemic in 2020, refund complaints peaked at 87% of all air travel service complaints received.

Airlines will have six months to comply with the new rules.

The DOT said rules are also being worked on for family seating fees, expanding rights for passengers who use wheelchairs and ensuring they can travel safely and with dignity and mandating compensation and amenities if flights are delayed or canceled by airlines.

The new rules also apply to tickets purchased directly from travel agents and third-party sites such as Expedia and Travelocity.

Buttigieg added DOT is working to protect passengers from being surprised by hidden fees.

Last week, the federal government said it was partnering with state authorities on a new fast-track system for addressing complaints from airline passengers.

The U.S. Department of Transportation has teamed with attorneys general from 15 states, the District of Columbia and two territories in an effort to expand passenger protections.

Under the new partnerships, states can investigate complaints they receive from airline passengers. If the state attorney general determines that the airline violated the law or if they believe that the airline is not cooperating with their investigation, they can refer those complaints to the Transportation Department through a newly established reporting process. Buttigieg said the Transportation Department will fast-track its review of potential violations.