Feds require airlines to automatically refund passengers for canceled or delayed flights

The U.S. Department of Transportation announced on Wednesday new rules that will put refunds quickly back into air travelers’ pockets for canceled or delayed flights.

The agency estimated that the new regulations will save consumers over a half billion dollars every year in airline fees.

Under the new rules, which will go into effect beginning in late October, airlines must issue full refunds including imposed taxes and fees within seven business days for credit card purchases, and within three weeks for other payment methods.

Virginia has nine major airports commonly used by consumers including Dulles International Airport, Ronald Reagan Washington National Airport and Richmond International Airport.

“Clearly our system is broken for consumers when it comes to so many issues around airline travel, and we depend on it,” said Irene Leech, president of the Virginia Citizens Consumer Council. “It’s great that the Department of Transportation is taking some steps to finally do some things for consumers.”

In 2022, Virginia Attorney General Jason Miyares joined his counterparts in other states in urging Congress to pass legislation that would authorize state attorneys general to enforce state and federal consumer protection laws governing the airline industry. That same year, the office said one of the complaints from passengers was that airlines failed to distribute required credits to passengers who could not travel during the pandemic.

In an effort to support consumers, DOT launched in 2023 a dashboard that provides consumers with details on the services airlines provide when flights are disrupted or canceled.

John Breyault, a native of Virginia and vice president of public policy, telecommunications and fraud with the National Consumers League, said the league, along with other consumer and passenger advocacy organizations, are pleased with the rules after advocating for them for several years.

“We think that it will provide relief to consumers who unfortunately have to jump through far too many hoops in order to exercise the rights that they already have,” Breyault said.

Under the new rules, airlines must provide automatic cash refunds to passengers when flights are canceled or significantly delayed. It defines a significant delay as three hours for flights within the U.S. and six hours for international flights. The refund rule will also cover fees for checked bags and other services, such as Wi-Fi, if the airline does not provide the service a passenger purchased.

The effort follows an executive order from President Joe Biden that directed  the transportation agency to promote fairer, more transparent and competitive markets.

“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, adding that the rules will save passengers time and money, and also prevent headaches.

The agency said the rule would eliminate the “patchwork of cumbersome processes” consumers now go through to request a refund online or by phone. The rule will also cut back on airlines giving passengers travel credits and vouchers eliminating a “cumbersome” process to rebook a flight, although passengers may still request such credits.

Airlines and ticket agents will also be required to tell consumers all the fees they are being charged for such items as bags and reservations. The agency said extra fees, like checked baggage and change fees, have been a growing source of revenue for airlines — and frustration for passengers.

“Anything that DOT can do to make it easier for consumers to do apples-to-apples comparisons will help,” Breyault said.

DOT is also considering rules that ban family seating junk fees, allowing parents to sit with their children for no additional cost.

The agency is also considering proposals to mandate airlines compensate passengers when flights are delayed or canceled with such things as snacks or places to stay and require airlines meet rigorous standards for accommodating passengers with disabilities safely and with dignity.

The proposal to expand the rights of wheelchair passengers will mandate enhanced training for airline employees and contractors who physically assist passengers with disabilities and handle passengers’ wheelchairs, and specify actions that airlines must take to protect passengers when a wheelchair is damaged during transport.

Leech said the agency’s actions mark a “good start for now” adding that she’s pleased with the progress and looks forward to what’s next in terms of protecting air travelers.

“If we can actually put this into play and actually benefit, then that would be wonderful and a step in the right direction,” Leech said.