New rule will force US airlines to provide automatic, quick refunds for cancelled flights

To enhance consumer rights in air travel, the US Department of Transportation (DOT) issued a rule mandating airlines to quickly issue automatic cash refunds to passengers when owed.

This development is poised to streamline the refund process for passengers when "airlines cancel or significantly change their flights, significantly delay their checked bags, or fail to provide the extra services they purchased."

Transportation Secretary Pete Buttigieg while highlighting the importance of this rule, stated, “Passengers deserve to get their money back when an airline owes them - without headaches or haggling. Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”

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Before this ruling, airlines had varying refund policies which led to confusion among passengers regarding their rights. Moreover, some airlines implemented less consumer-friendly refund policies.

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Under the finalised rule, passengers are entitled to refunds in several scenarios -

- Cancelled or significantly changed flights: Refunds are due if flights are canceled or significantly altered, with specific criteria defined for what constitutes a significant change.

"Significant changes to a flight include departure or arrival times that are more than 3 hours domestically and 6 hours internationally; departures or arrivals from a different airport; increases in the number of connections; instances where passengers are 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," as per a DOT statement.

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- Baggage return: Passengers filing mishandled baggage reports are entitled to a refund of checked bag fees if their bags are not delivered "within 12 hours of their domestic flight arriving at the gate, or 15-30 hours of their international flight arriving at the gate, depending on the length of the flight."

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- Extra services not extended: Refunds must be issued for fees paid for additional services if the airline fails to deliver them.

The rule made it automatic, and prompt and ensured that refunds are issued in cash or the original form of payment. Airlines are now also required to notify passengers of their refund rights in the event of flight cancellations or significant changes.

The need for such regulations was underscored by a surge in refund-related complaints during the COVID-19 pandemic. The refund issues constituteda major portion of all air travel service complaints received by DOT.

(With inputs from agencies)