New federal rules on airline refunds require cash instead of vouchers

(CNN) — Airline canceled your flight? The plane arrived hours late after a maintenance issue? The inflight Wi-Fi didn’t work?

New federal rules say travelers deserve cash refunds when inconvenienced by their airline – not vouchers or travel credits.

“From now on when your flight is canceled for any reason, you are entitled to an automatic cash refund and it has to be prompt,” Transportation Secretary Pete Buttigieg told CNN’s John Berman on Wednesday.

“If you get delayed significantly, that means three hours domestically, six hours internationally, or if there’s another significant change to your itinerary — like maybe you were going to go into one airport, they actually changed the airport on you or something like that — you’re going to get your money back.”

The rules, announced by the Transportation Department on Wednesday, also require airlines to provide upfront information about fees for baggage and changing flights.

Although many airlines have done away with change fees and disclose fees on their websites, Buttigieg estimated more transparency with some airlines and websites would make it easier for travelers to shop around – ultimately saving consumers millions every year.

The rule would formalize the requirement he referred to that passengers receive refunds if a domestic flight is delayed by more than three hours or if an international flight is delayed by more than six hours.

It would also require a refund of any baggage fees for bags that arrive more than 12 hours late, and a refund of the fee for a purchased service like Wi-Fi or upgraded seating if the airline doesn’t deliver.

‘Without headaches or haggling’

“Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers,” Buttigieg said in a statement, saying the refunds were due “without headaches or haggling.”

Buttigieg gave the example Wednesday morning of travelers who have been forced to buy an additional ticket on a different airline in order to make it on time to events happening in their destinations.

“But then you go back to your original airline, and they say, ‘Well, look, we didn’t cancel the flight, so you’re not getting your money back.’ Now you’re out the original airfare and the extra money it cost to get this new ticket,” Buttigieg said.

“That’s just one example of the kinds of scenarios that we hear from passengers time and time again. We’re putting a stop to it now,” he said.

There’s also a provision for travelers frustrated with call center hold times or filling out online claim forms.  The rules require the fees to be automatic and prompt: Within seven days for a credit card refund and 20 days for other forms of payment.

Airlines for America, which represents the country’s largest passenger carriers, said its airline members “offer transparency and vast choice to consumers from first search to touchdown.”

“U.S. airlines are committed to providing the highest quality of service, which includes clarity regarding prices, fees and ticket terms,” the group said in a statement.

Surge in complaints in 2022

The Biden Administration proposed its change to the refund rules in 2022 after a surge in complaints about refunds when the coronavirus brought air travel to a standstill.  That year, DOT received nearly 47,600 complaints, more than double the number of complaints received in 2021.  More than half of the complaints involved flight disruptions or refunds.

Many travelers complained at that time that airlines pushed noncash flight credit or required extended time on customer service phone lines to request a refund.  Some of those credits expired long before the effects of the virus receded and travel returned to more normal levels.

This spring, DOT and other executive branch agencies are finalizing key rule changes from Biden’s term in office in case Republicans take control of Washington in November’s election.  A federal law allows Congress to unravel recently implemented executive branch rules.

The cutoff date depends on the House and Senate legislative calendar but is likely to fall in May, meaning rules finalized before that date are not eligible for review under the Congressional Review Act.

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