The U.S. Department of Transportation on Wednesday issued two final rules related to airline refunds and ancillary fees, the agency announced.
The refund rule sets the terms for when and how an airline is required to provide a refund. The ancillary fee rule requires airlines and ticket agents to tell customers up front the fees they charge for first or second checked bags, carry-on bags, and for canceling or changing a reservation.
Corporate travel transactions made with business travel agencies are exempt from the new ancillary fee rule, according to DOT.
The refund rule requires airlines to "promptly provide passengers with automatic cash refunds when owed," according to DOT. The circumstances where the rule applies includes when a flight is canceled or significantly changed, when baggage is significantly delayed, and when extra services paid for are not provided, such as Wi-Fi, seat selection or in-flight entertainment.
Previously, airlines could set their own rules for which kinds of flights warranted refund and when a voucher would be offered instead of an actual refund.
The definition for "significantly changed flights" includes departure or arrival times that are more than three hours for domestic flights and six hours for international ones, departures or arrivals from a different airport, an increase in the number of connections, when a passenger is 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.
For baggage delays, passengers are entitled to a checked-bag fee refund if the baggage is not delivered within 12 hours of their domestic flight arriving at the gate, or within 15 to 30 hours of their international flight arriving at the gate, depending on the length of the flight, according to DOT.
The refunds also must be automatic, without the passenger having to request them or "jump through hoops," and 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, according to DOT. The refunds need to be in cash or in the original form of payment, and "airlines may not substitute vouchers, travel credits or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation."
Airlines and agencies also must provide full refunds of the ticket purchase price, minus the value of any portion of transportation already used, and must include all government-imposed taxes and fees, and airline-imposed fees.
Ancillary Fee Rule
A DOT rule already requires airlines and ticket agents to disclose a full airfare, which is the entire price to be paid by a consumer for an airline ticket including all mandatory carrier-imposed and government charges. The new rule, however, requires that airlines and ticket agents disclose the extra fees alongside the full fare, and that airlines provide information on all such fees to companies required to provide them. The individual fees must be disclosed on the airline's online platform, and not displayed through a hyperlink, according to DOT. Agencies also must disclose those fees when providing a fare quote.
For baggage fees, airlines and agencies must explain each type of baggage fee and "spell out" the weight and dimension limitations. Airlines and agencies also much describe any prohibitions or restrictions on changing or canceling a flight, including policies related to differences in fare.
Further, to "help consumers avoid unneeded seat selection fees," airlines and agencies must tell customers in language specified by DOT that they are guaranteed a seat and do not have to pay extra for one. Consumers entitled to discounted or waived extra fees, such as loyalty members, certain credit card holders or military personnel, have the option to receive their specific fee information or to receive the standard fee information, according to DOT.
In the most recent Airlines Reporting Corp. report, miscellaneous document sales in March increased 21.3 percent year over year to nearly $32.4 million for more than 534,000 transactions. Those sales represent fees for such ancillary products as upgraded seats and checked bags.