The U.S. Department of Transportation's (DOT) final rule on automatic airline refunds went into effect on Monday, which is a big win for travelers but a change that could produce quite a bit of confusion.
First announced in April, the rule requires airlines to promptly provide passengers with automatic cash refunds when carriers cancel or significantly change their flights, delay passengers' checked bags or fail to provide any ancillary services that were purchased.
"Passengers deserve to get their money back when an airline owes them—without headaches or haggling,” U.S. Transportation Secretary Pete Buttigieg said in a statement this past spring. "Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers."
The new regulations are expected save U.S. travelers more than $500 million annually.
Canceled or Significantly Altered Flights
Passengers will now be entitled to a refund if their flight is canceled or significantly changed so long as they do not accept a rebooked flight or travel credits that are offered.
A "significant change" is defined as an adjustment where departure or arrival times are changed by more than three hours domestically and six hours internationally. That's a marked improvement as previous times signaling a "significant change" varied dramatically.
Crowd of people waiting to board their flight (Photo Credit: Eric Bowman)
Other qualifications include "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," according to DOT.
Significantly Delayed Checked Baggage Return
Passengers who file a mishandled baggage report are now 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.
That time jumps up to 15-30 hours for an international flight arriving at the gate, depending on the length of the flight.
Failing to Provide Ancillary Services
Passengers can request a refund for the fee they paid for an extra service, including Wi-Fi, seat selection or inflight entertainment if their carrier fails to provide it.
A Southwest Airlines plane at Houston's William P Hobby Airport. (Photo Credit: Patrick Clarke)
What Constitutes a Refund?
As part of the new rule, refunds are required to be automatic, prompt, in the full amount and issued in cash or the original form of payment.
This means that passengers will not have to explicitly request refunds or jump through any hoops. What's more, refunds are required to be issued within seven business days of refunds becoming due for credit card purchases and 20 calendar days for any other payment methods.
Airlines are not permitted to substitute vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation, DOT confirmed.
To properly meet this new rule, airlines are also required to provide live customer service communication channels 24/7, whether through live chat or phone support.
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