Biden administration makes it easier for flyers to get refunds

Passengers whose flights are canceled or “significantly” delayed won’t have to fight to get a cash refund from the airline under a new Biden administration rule issued Wednesday.

The rule comes after more than a year of promises by the administration to shore up protections for air passengers, who have suffered through a glut of delays, cancellations and other gridlock as aviation demand surged after the pandemic.

Under the new rule, airlines can’t simply give the passengers a voucher for a future flight.

The Transportation Department also issued a rule Wednesday intended to force airlines and third-party ticket bookers to disclose add-on fees for items such as checked bags. The actions cap off an effort that began following a tumultuous travel season awash with flight cancellations and delays, and further exacerbated by the 2022 winter holiday debacle on Southwest Airlines, in which almost 17,000 flights were canceled and over 2 million passengers were left stranded.

It’s a significant advance for the administration’s tough-cop approach to the airline industry, which has also included opposition to further consolidation among carriers.

“Passengers deserve to get their money back when an airline owes them — without headaches or haggling,” Transportation Secretary Pete Buttigieg said in a statement. “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”

In a statement responding to the rule, the industry trade group Airlines for America said its U.S. member carriers "abide by — and frequently exceed — DOT regulations regarding consumer protections," adding that the 11 largest U.S. passenger airlines issued $43 billion in customer refunds between January 2020 and December 2023, in addition to other forms of compensation.

Federal rules require airlines to refund tickets in cash if flights have been canceled for a range of reasons, but especially if an airline was at fault for a cancellation, such as a mechanical or crew problem. But for anything else — including customer cancellations or those delays driven by an uncontrollable factor like weather, airlines only had to follow their own corporate policies. Often, those policies only offered vouchers for future flights.

Wednesday’s rule will make passengers entitled to a cash refund if their flight is “significantly” delayed — more than 3 hours domestically and 6 hours internationally — or canceled for any reason.

Besides making the refunds mandatory, passengers will also see their money returned automatically in the form that they had paid for the ticket. Airlines will also have to provide a refund within seven business days if the ticket purchase was made with a credit card, and 20 calendar days for other payment methods, such as travel points or miles.

Though DOT’s efforts gained steam after the Southwest meltdown, consumers have been agitating for better refund policies since the pandemic era, when many people canceled flights out of fear for their health. At that time, consumer-initiated cancellations were not guaranteed a refund. Many instead received a voucher for a future flight that they weren’t comfortable using.

If a traveler cancels on their trip because they’re sick, DOT will also require that the airline provide a voucher or travel credit to that prospective passenger to use at a later time. Those vouchers, DOT said, must be transferable and valid for five years.

The new regulations also drastically expand the universe of expenses for which airlines must offer refunds, including all of a ticket’s taxes and fees, regardless of whether the airlines themselves can get refunds for the taxes or fees. The requirements also apply to situations in which passengers arrive at a different airport than they had intended, have to take added connections, or experience downgrades in service class.

Lawmakers and consumer protection groups have long expressed frustration with airlines' refusal to issue cash refunds. They’ve accused the companies of using liberal interpretations of their own policies, including what constitutes a “significant delay” and what caused it.

In the second rule issued Wednesday, DOT is requiring airlines and ticket agents to disclose their extra fees at the time of purchase, often called “fare transparency.”

In this case, airlines and ticket agents must share what fees they charge for a first or second checked bag, a carry-on bag, and for canceling or changing a reservation, DOT said. The department is still weighing a third rule that would require airlines to seat families together at no additional charge. A4A said carriers "are committed to providing the highest quality of service, which includes clarity regarding prices, fees and ticket terms."

Passengers will also be entitled to checked-bag fee refunds if they file a report that their bag was mishandled or misplaced and not delivered to them within 12 hours of arrival at their gate within the U.S.

They can also receive refunds on Wi-Fi or in-flight entertainment that was paid for ahead of time but wasn’t available once they boarded.