Earlier this year, the U.S. Department of Transportation (DOT) introduced a new rule requiring U.S. airlines to issue flight refunds and outlines how those refunds should be processed. The rule is set to take effect soon on October 28.
Under the new requirements, travelers are entitled to automatic refunds by the airline if their flights are canceled or significantly altered. This includes instances where the airline fails to provide additional services, such as checked baggage or seat selection, which were paid for separately.
However, refunds are only available when a traveler chooses not to accept an alternative flight or travel credit. Refunds must be made to the original form of payment, including cash, credit card or miles.
Airlines are also required to promptly notify customers of their right to a refund if their flight is canceled or significantly changed, with DOT requiring the carrier to act within five days of the qualifying disruption. If no action is taken within five days, the airline must refund the ticket.
Other key aspects of the refund rule, include:
- DOT’S Definition of a “Significant Change”:
- Departure or arrival time differs by more than three hours for domestic flights or six hours for international flights.
- Changes to the departure or arrival airport.
- An increase in the number of connections or a downgrade to a lower ticket class.
- A connection at a different airport or flights on a different plane that are less accessible to a person with a disability.
- Baggage Delays: Passengers who file a report for mishandled baggage are entitled to a refund of the checked bag fee if their bag is not delivered within 12 hours of their arrival for domestic flights or 15 to 30 hours of their arrival for international flights, depending on the length of that flight.
- Refund Processing: Airlines are required to issue refunds automatically, with credit card purchases processed within seven business days and other payment methods within 20 calendar days.
- Travel Agencies' Role: Travel agencies must act promptly to address schedule changes or irregular operations. Failure to do so may result in automatic refunds, which can be avoided if customers are rebooked or their travel arrangements are modified. However, the agency is only responsible for issuing refunds if they are the merchant of record for the transaction.
