Newly finalized rules will mandate automatic, cash refunds for cancelled or significantly delayed flights and save consumers over half a billion dollars every year in airline fees
WASHINGTON - Building on a historic record of expanding consumer protections and standing up for airline passengers, the Biden-Harris Administration announced final rules that require airlines to provide automatic cash refunds to passengers when owed and protect consumers from costly surprise airline fees. These rules will significantly expand consumer protections in air travel, provide passengers an easier pathway to refunds when owed, and save consumers over half a billion dollars every year in hidden and surprise junk fees.
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.
Without this rule, consumers have to navigate a patchwork of cumbersome processes to request and receive a refund - searching through airline websites to figure out how to make the request, filling out extra "digital paperwork," or at times waiting for hours on the phone. Passengers would also receive a travel credit or voucher by default from many airlines instead of getting their money back, so they could not use their refund to rebook on another airline when their flight was changed or cancelled without navigating a cumbersome request process.
DOT's rule makes it simple and straightforward for passengers to receive the money they are owed. The final rule requires refunds to be:
- 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.
The rule will help consumers avoid unneeded or unexpected charges that can increase quickly and add significant cost to what may, at first, look like a cheap ticket. Extra fees, like checked baggage and change fees, have been a growing source of revenue for airlines, while also becoming more complex and confusing for passengers over time. In total, thanks to the final rule, consumers are expected to save over half a billion dollars every year that they are currently overpaying in airline fees.
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.
