DOT Introduces New Rules: Airlines Required to Offer Automatic Cash Refunds for Canceled and Delayed Flights

Feature and Cover DOT Introduces New Rules Airlines Required to Offer Automatic Cash Refunds for Canceled and Delayed Flights

The Department of Transportation has unveiled new regulations aimed at providing greater protection to airline passengers. Under these rules, airlines will now be required to automatically offer cash refunds to travelers for canceled or significantly delayed flights. Transportation Secretary Pete Buttigieg hailed this announcement as a landmark moment for air travelers, labeling it the most significant expansion of passenger rights in the department’s history.

In a press conference, Buttigieg emphasized the importance of prompt refunds, stating that airlines will no longer have the discretion to determine the duration of delays before issuing refunds. According to the Department of Transportation, refunds will be mandated for delays exceeding three hours for domestic flights and six hours for international flights. Importantly, these regulations apply to tickets purchased through various channels, including directly from airlines, travel agents, and third-party platforms such as Expedia and Travelocity.

The guidelines specify that passengers are entitled to refunds if their flight is canceled or substantially altered, and they decline alternative transportation or travel credits. Additionally, airlines will be obligated to provide cash refunds if checked bags are lost and not delivered within 12 hours. Refunds must be processed within seven days and issued in cash, unless passengers opt for an alternative form of compensation. The era of airlines issuing refunds in the form of vouchers or credits when cash is due is officially over.

Airlines have been given a grace period of six months to comply with these new regulations. Buttigieg stressed the importance of ensuring that passengers receive their rightful refunds without encountering unnecessary obstacles or negotiations. He underscored the DOT’s commitment to protecting consumers from hidden fees, estimating that these regulations could save Americans billions of dollars annually.

Furthermore, the Department of Transportation is working on additional regulations to address various issues affecting airline passengers. These include rules related to family seating fees, ensuring the rights of wheelchair-traveling passengers, and mandating compensation and amenities in the event of flight delays or cancellations by airlines.

The announcement of these regulations follows the imposition of a record $140 million fine on Southwest Airlines for its operational failures during the 2022 holiday travel season. Buttigieg characterized this fine as setting a new standard for airlines and passenger rights. He emphasized the department’s desire to see the airline industry prosper while ensuring rigorous protection for passengers.

Buttigieg reiterated that refund requirements are already standard practice for airlines, but these new DOT rules aim to hold airlines accountable and ensure that passengers receive the refunds owed to them. Despite potential resistance from airlines, Buttigieg expressed confidence that they would be able to adapt to these higher standards.

In response to these regulations, Airlines for America, the trade association representing major U.S. airlines, stated that its members offer a variety of options, including fully refundable fares. The association emphasized that consumers are presented with refundable ticket options with terms and conditions that align with their preferences from the outset of their search. According to the group, the 11 largest U.S. airlines issued $43 billion in customer refunds from 2020 through 2023, including nearly $11 billion in refunds in the previous year.

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