Claiming Refunds from Airlines Is Set to Become Much Simpler

On Wednesday, the U.S. Department of Transportation (DOT) took a significant step in safeguarding consumer rights for travelers. The agency announced new regulations requiring all airlines operating to, from, or within the United States to provide immediate cash refunds in cases of cancellations or major delays.

“Passengers have the right to get their money back from airlines without unnecessary hassle,” stated U.S. Transportation Secretary Pete Buttigieg. “Our new rule establishes a clear expectation for airlines to promptly issue cash refunds to passengers.”

Paul Hudson, president of FlyersRights, an advocacy group for airline passengers, pointed out that before this new regulation, airlines had voluntary guidelines that were not consistently followed. “Some complied, while others did not,” Hudson remarked. “Now, there’s a strict requirement stating that if your flight is canceled for any reason, or delayed by more than three hours domestically or six hours internationally, you are entitled to a refund automatically.”

As with any regulation from the DOT, Hudson noted, “if an airline breaches this rule, they could face fines,” stressing that this new refund policy applies to all flights canceled or significantly delayed for any reason.

“If inclement weather leads to a flight cancellation, you are still entitled to a refund unless you opt for an alternative,” he stated.

Here’s a detailed breakdown of the new airline refund regulations.

Overview of New Airline Refund Regulations

Starting in October 2024 (airlines have a six-month period to comply with the new DOT regulation), airline passengers will be eligible for a prompt refund for:

• Any canceled or significantly modified flight. If your flight is canceled or significantly delayed, you are entitled to a refund unless you accept a travel voucher or alternate transportation offered by the airline. A significant delay or change is defined as a departure or arrival time that is more than three hours later than originally scheduled for domestic flights, and six hours for international flights. This also includes changes in arrival or departure airports, an increase in the number of connections (like adding a layover to a previously nonstop flight), a downgrade in class of service, connections through a different airport, or a change to an aircraft that is less accessible for individuals with disabilities.
• Delayed luggage. You are entitled to a refund for your checked baggage fee if your luggage is not delivered within 12 hours of a domestic flight's arrival or within 15 to 30 hours of an international flight's arrival (the exact timeframe depends on the flight's duration).
• Unfulfilled services. A refund is required for any service that was paid for but not rendered, such as Wi-Fi, specific seat selection, and in-flight entertainment.

Prior to the DOT implementing this new regulation, airlines had the freedom to set their own rules regarding which flight schedule changes warranted a refund. As a result, “refund policies varied from one airline to another, making it challenging for passengers to understand or advocate for their refund rights. The DOT also received complaints about certain airlines modifying and applying less consumer-friendly refund policies during periods of high flight cancellations and changes,” according to the DOT.

Under the new regulation, the refunds that airlines are required to provide must be:

• Automatic: Airlines must issue refunds automatically, without requiring passengers to “explicitly request them or navigate through complicated processes,” stated the DOT.
• Prompt: Refunds are to be processed within 7 business days for credit card payments and within 20 calendar days for other payment methods.
• In cash or original payment method: Airlines are prohibited from substituting travel vouchers or future flight credits unless the passenger consents to this alternative payment form.
• For the total amount: The refund must cover the full payment, including taxes and fees, minus any part of the transportation that has already been utilized.

Additionally, airlines are required to promptly notify passengers affected by a canceled or significantly delayed flight about their right to a refund.

“The DOT’s new regulation marks a significant advancement for passenger rights in the airline industry, simplifying and making it more accessible for consumers to seek compensation,” stated William J. McGee, senior fellow for Aviation and Travel at the American Economic Liberties Project.

McGee remarked that this initiative represents a significant shift in the DOT’s enforcement practices, highlighting a recent effort to empower state attorneys general in handling consumer complaints.

Christopher Elliott, a consumer advocate and founder of the nonprofit advocacy group Elliott Report, affirmed to Dinogo that the new regulation was “long overdue. U.S. air travelers should not have to fret over their refunds or struggle to understand the total cost of their airline tickets. Airlines have profited immensely due to this confusion. We deserve better.”

New regulations on hidden fees

The DOT has also introduced a new regulation targeting hidden, ancillary, or “junk” fees.

“The rule mandates that airlines and ticket agents disclose all fees for checked bags, carry-on luggage, and any charges for canceling or modifying a reservation upfront. This transparency will help consumers avoid unnecessary or surprise fees that can accumulate rapidly, ultimately making a seemingly cheaper ticket much more expensive,” the DOT stated in a press release.

The agency projects that consumers will save over $500 million annually due to reduced hidden fees they have been previously overcharged. Data from the Bureau of Transportation Statistics indicates that airline revenue from baggage fees alone surged by more than 30 percent between 2018 and 2022.

Here’s what changes will be required. Airlines and ticket agents must:

• Reveal additional fees upfront. All essential fees need to be shown alongside the initial ticket price and schedule details right from the start of the flight search. The new regulation also prohibits airlines from promoting a “discounted” base fare that excludes necessary additional fees.
• Clearly outline all added charges. Fees for baggage, changes, and cancellations must be explicitly detailed before purchase.
• Ensure that seats are guaranteed. “To help travelers avoid unnecessary seat selection fees, airlines and ticket agents must inform consumers that their seats are guaranteed without requiring extra payment,” states the DOT.
• Clearly communicate fee exemptions. Travelers may qualify for exemptions from certain fees based on factors like airline status, military service, or credit card usage. This information needs to be disclosed beforehand.

The implementation of this rule will follow a staggered timeline. Airlines have 12 months to comply (around April 26, 2025), larger ticket agents will have an additional six months (until approximately October 26, 2025), while smaller ticket agents will have up to 24 months (until about April 26, 2026), according to a helpful guide from FlyersRights.

Airline industry response

Regarding how U.S. airlines may react to the new regulations, Hudson noted, “they essentially have three choices: they can accept the new rule and comply, they could challenge it in court claiming the agency has overstepped its authority, or they might appeal to Congress to overturn the regulation.”

In response to the new regulations, Airlines 4 America (A4A), which represents major U.S. airlines such as American, Delta, United, Southwest, Alaska, Hawaiian, and JetBlue, released a statement asserting that its members "follow—and often surpass—DOT regulations concerning consumer protections."

According to A4A, the 11 largest U.S. passenger airlines provided $43 billion in customer refunds from January 2020 to December 2023, along with other forms of compensation.

“U.S. airlines are offering more choices and enhanced services while ticket prices, including additional fees, remain at historic lows,” the organization claimed. “In real terms, average domestic round-trip fares, inclusive of ancillaries, were 14 percent lower in 2023 compared to 2010.”