When the U.S. Department of Transportation announced on April 24 its final rule requiring full, automatic and prompt refunds for qualifying air passengers, airlines weren't exactly pleased. But DOT Secretary Pete Buttigieg didn't seem to mind.
"Passengers deserve to get their money back when an airline owes them—without headaches or haggling," Buttigieg said in a statement in April. "Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers."
The rule stipulates that passengers are owed a full refund in cash or via the original form of payment if their flight to, from or within the United States is canceled and the airline does not rebook them. Such passengers also are owed refunds if the flight is canceled and they don't accept the rebooking, or if a flight is "significantly changed" and they don't accept the changed itinerary nor any offers of rebooking or other compensation.
Under DOT regulations, "significantly changed" includes an arrival or departure delay of at least three hours for domestic flights, or six hours either way for international flights, the origination or destination airport is changed, the number of connections is increased or the passenger is downgraded to a lower class of service.
Airlines cannot substitute a refund with a travel credit unless the passenger chooses one, and then the travel voucher or credit offered must be valid for five years from its date of issuance. The refunds must be for the full amount of the ticket purchase price, minus any portion of transportation already used, and must include all government-imposed taxes and fees and airline-imposed fees, regardless of whether the taxes or fees are refundable to airlines.
At the time DOT introduced the rule in August 2022, airline lobbying group Airlines for America in a statement said its member carriers "abide by—and frequently exceed—DOT regulations regarding consumer protections."
In addition, in July 2024, A4A wrote to DOT with concerns that the new refund ruling "is going to result in significant unintended consequences for passengers, including increased prices for the processing of unintentional refunds when all the passenger wants is just simply to be rebooked on the next flight home."
At least one airline is addressing the ruling at the point of purchase. When viewing flights, American Airlines' flight search results now include for main cabin seats a default option: to receive a "full refund to travel credit" or an option to choose "full refund to original form of payment," which comes with a variable fee. For one sample trip from New York to the Dominican Republic, the fee was $118 in addition to the $825 fare. For another, to Los Angeles, it was $130 on top of a $477 fare.
The rule went into effect Oct. 28, but how long it will last is anyone's guess. A new administration comes into office Jan. 20, 2025, and could reverse it and other consumer protections Buttigieg has championed, such as greater transparency over fees—about which some carriers are suing the Transportation Department—and this month's rulemaking proposal for airlines to provide compensation on top of a refund for airline-caused cancellations or significant delays.
Some industry CEOs are looking forward to the new presidency. Delta Air Lines’ Ed Bastian said the Trump administration’s stance on regulation will be a “breath of fresh air” for airlines after what he called Biden-era “overreach.”