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Biden administration unveils stricter rules for airline refunds, upfront pricing


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Airlines will soon face far stricter rules for issuing refunds, the Biden administration said Wednesday.

Among the changes, the White House defined what kinds of long delays or cancellations entitle passengers to refunds.

Eligible travelers must receive refunds automatically to their original form of payment within seven to 20 days, depending on how they paid, the U.S. Department of Transportation announced as part of a series of new regulations.

Meanwhile, the DOT will also require airlines to more clearly disclose fees for ancillary charges like seat selection and baggage upfront.

They’ll also face stricter rules for refunding late bags and faulty Wi-Fi.

It’s the latest set of new rules the Biden administration has imposed on airlines in the name of consumer protection. These rules, the DOT said Wednesday, are expected to save travelers an estimated half-billion dollars annually.

The new rules are likely to take effect by October.

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“Passengers deserve to know upfront what costs they are facing and should get their money back when an airline owes them — without having to ask,” U.S. Transportation Secretary Pete Buttigieg said in a statement announcing the changes.

Here’s what to know about the new policies unveiled by the DOT.

Automatic refunds required (no more asking for one)

The DOT will require airlines to issue automatic refunds to passengers when flights are canceled or when itineraries are significantly delayed or changed; this is the case if the passenger ultimately chooses not to travel and doesn’t accept rebooking or other forms of compensation.

The DOT already mandates that passengers are owed a refund for any unused portion of their itinerary in these situations. That applies regardless of the reason for the disruption. (It doesn’t matter if the cancellation is due to maintenance, weather or some other reason.)

rainy plane windowSEAN CUDAHY/THE POINTS GUY

However, many travelers have found they typically have to ask for a refund. This often involves filing a request by email, online or over the phone. The DOT wants that to end.

“Without this rule, consumers have to navigate a patchwork of cumbersome processes to request and receive a refund,” the DOT said in a statement.

Related: Here are airline passenger rights to know during a travel meltdown

How soon should you get a refund after a flight?

Going forward, airlines will be required to automatically issue refunds — when owed — within seven days for passengers who booked their flight with a credit card and within 20 days for those who used alternative payment methods.

The airline won’t be allowed to substitute vouchers, travel credits or other forms of compensation like frequent flyer miles unless the passengers agree.

But what’s a ‘significant change’?

An ambiguous part of current federal regulations involves the “significant change” provision mentioned above.

Along with canceled flights, passengers are entitled to refunds when their flight is significantly changed or delayed (if they choose not to accept rebooking).

What exactly constitutes a “significant” change, you might ask? Until now, the DOT has decided that on a case-by-case basis.

The new rule spells it out:

  • A domestic itinerary’s departure or arrival is pushed back (including delays) by three hours or more
  • An international flight’s departure or arrival is pushed back (including delays) by six hours or more
  • An itinerary moved up by six hours or more
  • A traveler’s origin or destination is altered
  • An itinerary in which the traveler ends up with more connections than the original itinerary
  • When a traveler is downgraded to a lower class of service
  • When a disabled passenger ends up being scheduled to travel through one or more connecting airports that differ from the original itinerary
  • When a disabled passenger ends up being scheduled to fly on a different aircraft than planned, which results in one or more required accessibility features being unavailable

Airlines will also be required to inform consumers that they are entitled to a refund before offering an alternative flight, travel credits, vouchers or other compensation.

Cases where you’re not due a refund

Again, remember that these rule changes do not entitle you to a refund if your flight is delayed or canceled and you end up accepting the airline’s offer to rebook on a later flight.

The DOT did, last spring, propose compensating passengers for delays and cancellations that are within the airline’s control — even when a passenger receives rebooking accommodation. However, this proposal, which would bring U.S. policy more in line with European Union provisions, has not been finalized.

Refunds for add-on fees

Airlines will also be required to issue refunds for ancillary fees paid when services aren’t received. This applies to “extras” like baggage and Wi-Fi.

That means if your Wi-Fi doesn’t work, you should be able to claim a refund.

Airline bag fee refunds

That includes baggage: Airlines will be required to refund baggage fees when customers’ luggage is significantly delayed.

This applies to bags delayed by 12 hours or more for domestic flights and 15 or 30 hours or more for international flights, depending on the length of the itinerary.

baggage claimSEAN CUDAHY/THE POINTS GUY

Displaying charges upfront

Under a second rule unveiled by the Biden administration Wednesday, airlines will be required to be more overt about displaying all ancillary fees upfront.

The DOT will require both airlines and third-party sellers like online travel agencies to include costs for add-ons like checked bags and carry-on bags when a fare and schedule information is first shown on the airline’s platform.

Airlines will also be required to alert passengers that they’ll still receive a seat on the plane even if they don’t pay to select one.

The DOT argues these changes will end “bait-and-switch” tactics that, it says, some airlines use to disguise costs.

Several major hotel chains, including Hyatt and Marriott, have had to make similar changes over the past year following recent court rulings.

Airlines respond

airplanes on tarmacSEAN CUDAHY/THE POINTS GUY

Airlines argue they provide consumers with a wide range of ticket types, are already diligent about issuing refunds and offer transparency “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,” Airlines for America, a trade group for the largest U.S. carriers, said in a statement to TPG on Wednesday.

The group notes average domestic round-trip fares combined with ancillary fees — adjusted for inflation — are cheaper now than in 2010.

Airlines often go above and beyond DOT guidelines, the organization said, noting the largest 11 U.S. carriers issued $43 billion in refunds between the height of pandemic shutdowns in May 2020 and December 2023.

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