Travel fees and shenanigans delivered by airlines are soon to become a thing of the past. The Biden administration has introduced two new rules aimed at improving the flying experience for millions of Americans who travel by air each year. These rules, revealed Wednesday, focus on enhancing transparency regarding extra travel fees and ensuring automatic cash refunds for passengers.
The first rule mandates that airlines provide clearer and more accurate information about additional travel fees. This move aims to address the issue of “surprise junk fees” that passengers often encounter when booking flights. Under the new regulation, airlines will be required to clearly list and explain all extra charges on their websites and when providing fare prices offline. Moreover, the rule seeks to eliminate deceptive tactics, such as “discount bait-and-switch,” where discounts appear to apply to the entire flight cost but only impact a portion of the ticket price.
Transportation Secretary Pete Buttigieg emphasized the importance of fair competition among airlines, stating, “Airlines should compete with one another to secure passengers’ business — not to see who can charge the most in surprise fees.” The aim is to provide passengers with a more transparent and reliable booking experience, promoting trust and confidence in air travel.
The second rule focuses on automatic cash refunds for passengers. Currently, customers often have to go through a lengthy process of requesting refunds from airlines. The new regulation aims to streamline this process, making it easier for passengers to receive their money back when airlines owe them. The rule requires airlines to automatically issue full refunds in cases of flight cancellations or significant changes, significant delays in baggage return, or when passengers do not receive paid in-flight amenities, such as Wi-Fi.
Secretary Buttigieg highlighted the Department of Transportation’s commitment to ensuring passenger protection and holding airlines accountable. In cases where airlines fail to provide the refunds owed to passengers, the DOT’s consumer protection team has previously imposed “multimillion-dollar penalties” on airlines.
The implementation of these new rules will be carried out over different timelines, ranging from six months to two years. Additionally, the White House is proposing further regulations, including a ban on travel fees for parents who want to sit next to their children. There are also plans to make certain amenities mandatory and expand accommodations for passengers who use wheelchairs.
These measures come as part of the current administration’s commitment to combating what are referred to as “corporate rip-offs.” The administration also aims to reduce or eliminate hidden fees across various sectors, including banking, cable, and financial products.
“Passengers deserve to get their money back when an airline owes them – without headaches or haggling,” said Buttigieg. “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”
Travel Fees: The Final Rule
The final rule creates certainty for consumers by defining the specific circumstances in which airlines must provide refunds. Prior to this rule, airlines were permitted to set their own standards for what kind of flight changes warranted a refund. As a result, refund policies differed from airline to airline, which made it difficult for passengers to know or assert their refund rights. DOT also received complaints of some airlines revising and applying less consumer-friendly refund policies during spikes in flight cancellations and changes.
Under that rule, passengers are entitled to a refund for:
+ Canceled or significantly changed flights: Passengers will be entitled to a refund if their flight is canceled or significantly changed, and they do not accept alternative transportation or travel credits offered. For the first time, the rule defines “significant change.” Significant changes to a flight include departure or arrival times that are more than 3 hours domestically and 6 hours internationally; departures or arrivals 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.
+ Significantly delayed baggage return: Passengers who file a mishandled baggage report will be entitled to a refund of their checked bag fee if 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.
+ Extra services not provided: Passengers will be entitled to a refund for the travel fee they paid for an extra service — such as Wi-Fi, seat selection, or inflight entertainment — if an airline fails to provide this service.
DOT’s final rule also makes it simple and straightforward for passengers to receive the money they are owed. 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 make the request, filling out extra “digital paperwork,” or at times waiting for hours on the phone. In addition, passengers would receive a travel credit or voucher by default from some 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.
The final rule improves the passenger experience by requiring 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 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, regardless of whether the taxes or fees are refundable to airlines.
The final rule also requires airlines to provide prompt notifications to consumers affected by a cancelled or significantly changed flight of their right to a refund of the ticket and extra service fees, as well as any related policies.
In addition, in instances where consumers are restricted by a government or advised by a medical professional not to travel to, from, or within the United States due to a serious communicable disease, the final rule requires that airlines must provide travel credits or vouchers. Consumers may be required to provide documentary evidence to support their request. Travel vouchers or credits provided by airlines must be transferrable and valid for at least five years from the date of issuance.
Travel Fees and Refunds: Deluge of Complaints
The Department received a significant number of complaints against airlines and ticket agents for refusing to provide a refund or for delaying processing of refunds during and after the COVID-19 pandemic. At the height of the pandemic in 2020, refund complaints peaked at 87 percent of all air travel service complaints received by DOT. Refund problems continue to make up a substantial share of the complaints that DOT receives.
Since President Biden took office, DOT has helped return more than $3 billion in refunds and reimbursements owed to airline passengers – including over $600 million to passengers affected by the Southwest Airlines holiday meltdown in 2022. Under Secretary Buttigieg, DOT has issued over $164 million in penalties against airlines for consumer protection violations. Between 1996 and 2020, DOT collectively issued less than $71 million in penalties against airlines for consumer protection violations.
In addition to finalizing the rules to require automatic refunds and protect against surprise fees, DOT is also pursuing rulemakings that would:
– Propose to ban family seating junk fees and guarantee that parents can sit with their children for no extra charge when they fly. Before President Biden and Secretary Buttigieg pressed airlines last year, no airline committed to guaranteeing fee-free family seating. Now, four airlines guarantee fee-free family seating, and the Department is working on its family seating junk fee ban proposal.
– Propose to make passenger compensation and amenities mandatory so that travelers are taken care of when airlines cause flight delays or cancellations.
– Expand the rights for passengers who use wheelchairs and ensure that they can travel safely and with dignity. The comment period on this proposed rule closes on May 13, 2024.
The final rule on refunds: https://www.transportation.gov/airconsumer/latest-news and at regulations.gov, docket number DOT-OST-2022-0089.
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