In April 2024, the U.S. Department of Transportation issued a final rule to address persistent issues reported by airline passengers who were trying to obtain refunds they were owed.
The DOT rule created universal standards for refunds owed to airline passengers traveling on flights to, from, or within the United States. It specified for the first time the types of flight changes deemed significant that entitle a passenger to a refund if the passenger chooses not to continue with booked travel.
It also made clear that a cancelled flight would entitle a passenger to a refund if the passenger does not continue with booked travel and required airlines provide automatic refunds to passengers when refunds are owed, rather than the passenger needing to initiate the process for a refund.
Prior to this rule, airlines were 1) permitted to set their own standards for what kind of flight changes warranted a refund; 2) alter those standards at their discretion; and 3) force passengers to navigate a patchwork of cumbersome processes to request refunds owed to them.
The final rule also requires airlines to provide prompt notifications to passengers affected by a cancelled or significantly changed flight of their right to a refund of the ticket and extra service fees. This allows passengers to be better informed when they have the right to a refund.
When Passengers Are Entitled to a Refund Under the Automatic Refund Rule
Your flight is cancelled and the airline does not rebook you: You are entitled to a refund if the airline cancels a flight, regardless of the reason, and does not rebook you on a new flight or you do not proactively accept alternative compensation, such as a flight voucher or miles.
Your flight is cancelled and you do not accept rebooking: If your flight is cancelled and the airline offers rebooking or alternative compensation, but you do not accept these offers, you are entitled to a refund.
Your flight is “significantly changed” and you do not accept the changed itinerary nor any offers of rebooking or other compensation: If your flight is significantly changed and you do not want to travel with the changed itinerary or a rebooked itinerary and you do not accept any other compensation offered in lieu of a refund, you are entitled to a refund. Under DOT regulations, a “significant change” includes:
A domestic flight departs 3+ hours earlier or arrives 3+ hours later than scheduled;
An international flight departs 6+ hours earlier or arrives 6+ hours later than scheduled;
The origination or destination airport is changed;
The number of connections is increased;
The passenger is downgraded to a lower class of service; and
Connections at different airports or flights on different planes that are less accessible or accommodating if you are a person with a disability.
Your baggage is significantly delayed: You are entitled to a refund for a checked bag fee if you file a mishandled baggage report and your bag is not delivered within 12 hours of a domestic flight arriving at the gate, or within 15 or 30 hours of an international flight arriving at the gate, depending on the length of the flight.
Extra services are not provided: You are entitled to a refund for the fee you paid for an ancillary service — such as Wi-Fi, seat selection, or inflight entertainment — if an airline fails to provide this service.
You are not entitled to a refund if you accept a rebooked flight with the airline or continue with a significantly changed itinerary. However, most U.S. airlines have committed to providing benefits such as hotels for overnight delays or meals for passengers during significant delays and cancellations that are caused by issues within the airline’s control. You can view those benefits at flightrights.gov.
How Refunds Must Be Provided Under the Automatic Refund Rule
DOT’s final rule created universal standards for how and when refunds must be provided to passengers.
Generally, the final rule moves the burden from passengers who previously had to navigate airline policies to determine whether they are entitled to a refund and then explicitly request a cash refund, back to airlines which now must provide prompt, automatic refunds in the same form of payment when owed.
Automatically: Airlines must automatically issue refunds without passengers having to explicitly request them or jump through hoops.
Promptly: 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 in the form of original payment used to make the purchase, such as credit card or airline miles. Airlines may not substitute cash refunds owed to consumers with vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation. The travel voucher or credit offered as an alternative to a refund must be valid for at least five years from the date of its issuance.
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.
Featured image credited to Mary Kirby
