New Ruling Requires Airlines to Issue Automatic Cash Refunds

The Biden-Harris Administration announced last week, final rules that require airlines to provide automatic cash refunds to passengers whose flights are canceled or significantly delayed.  Additional consumer protections will save consumers over half a billion dollars every year in hidden and surprise “junk fees.”

“Today’s announcements will require airlines to both provide passengers better information about costs before ticket purchase, and promptly provide cash refunds to passengers when they are owed — not only saving passengers time and money, but also preventing headaches,” said Department of Transportation  Secretary Pete Buttigieg.

The rules are part of the Biden-Harris Administration’s work to lower costs for consumers and take on corporate rip-offs. President Biden signed an Executive Order on Promoting Competition in 2021 that encouraged DOT to take steps to promote fairer, more transparent, and competitive markets. 

Requiring Automatic Cash Airline Refunds
The first rule requires airlines to promptly provide passengers with automatic cash refunds when owed because their flights are cancelled or significantly changed, their checked bags are significantly delayed, or the ancillary services, like Wi-Fi, they purchased are not provided.

• Automatic: Airlines must automatically issue refunds without passengers having to explicitly request them or jump through hoops. 
   
• Prompt: Airlines and ticket agents must promptly 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 in cash or whatever original payment method the individual used to make the purchase, such as credit card or airline miles. Airlines may not substitute vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation. 
   
• Full amount: Airlines and ticket agents must provide full refunds of the ticket purchase price, minus the value of any portion of transportation already used. The refunds must include all government-imposed taxes and fees and airline-imposed fees.

Protecting Against Surprise Airline Junk Fees
Secondly, DOT is requiring airlines and ticket agents to tell consumers upfront what fees they charge for checked bags, a carry-on bag, for changing a reservation, or cancelling a reservation. This ensures that consumers can avoid surprise fees when they purchase tickets from airlines or ticket agents, including both brick-and-mortar travel agencies or online travel agencies.

DOT’s rule ensures that consumers have the information they need to better understand the true costs of air travel. Under the final rule, airlines are required to:

• Disclose baggage, change, and cancellation fees upfront: Each fee must be disclosed the first time that fare and schedule information is provided on the airline’s online platform — and cannot be displayed through a hyperlink.
   
• Explain fee policies before ticket purchase: For each type of baggage, airlines and ticket agents must spell out the weight and dimension limitations that they impose. They must also describe any prohibitions or restrictions on changing or cancelling a flight, along with policies related to differences in fare when switching to a more or less expensive flight.  
   
• Share fee information with third parties: An airline must provide useable, current, and accurate information regarding its baggage, change, and cancellation fees and policies to any company that is required to disclose them to consumers and receives fare, schedule, and availability information from that airline. 
   
• Inform consumers that seats are guaranteed: When offering an advance seat assignment for a fee, airlines and ticket agents must let consumers know that purchasing a seat is not necessary to travel, so consumers can avoid paying unwanted seat selection fees. 
   
• Provide both standard and passenger-specific fee information:  Consumers can choose to view passenger-specific fee information based on their participation in the airline’s rewards program, their military status, or the credit card that they use — or they can decide to stay anonymous and get the standard fee information.
   
• End discount bait-and-switch tactics: The final rule puts an end to the bait-and-switch tactics some airlines use to disguise the true cost of discounted flights. It prohibits airlines from advertising a promotional discount off a low base fare that does not include all mandatory carrier-imposed fees.

Travelers can learn more about their protections when they fly at FlightRights.gov. Consumers may file an airline complaint with the Department here.