New Airline Rules Simplify Refunds

New airline rules issued by Department of Transportation requiring prompt automatic cash refunds to passengers took effect Oct. 28, 2024.

Last April, the Department of Transportation (DOT) announced new airline rules requiring prompt automatic cash refunds to passengers when owed. The final rule took effect on October 28 and should simplify and speed up the process of receiving your money back due to a canceled or significantly changed flight or delayed luggage.

“Passengers deserve to get their money back when an airline owes them — without headaches or haggling,” said Transportation Secretary Pete Buttigieg. “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”

According to the DOT, under the old rules, airlines were permitted to set their own standards for what kind of flight changes warranted a refund, which made receiving a refund for a canceled or delayed flight a complicated affair.

This was seen during the global technology outage in July that disrupted several major airlines and caused thousands of flight cancellations and delays. Many customers were left to wait hours in customer service lines to start the reimbursement process for their chosen airline.

The new rule clearly defines the circumstances in which airlines must provide refunds and how they should be administered, making the reimbursement process much easier if your trip goes awry.

According to the DOT, this is when customers are entitled to a refund:

Canceled or significantly changed flights: If your flight is canceled or significantly changed and you do not accept alternative transportation or travel credits offered, you will be refunded. According to the DOT, significant changes to a flight include departure or arrival times that are more than three hours domestically and six 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.

Significantly delayed baggage return: If you file a mishandled baggage report, you will be entitled to a refund of your checked bag fee if your luggage is not delivered within 12 hours of your domestic flight arriving at the gate or 15-30 hours of your international flight arriving at the gate.

Extra services not provided: If you pay for an additional service, like in-flight Wi-Fi or a specific seat selection, and you don’t receive this accommodation, you are entitled to a refund.

The DOT has also outlined several rules for how refunds will be processed:

• Automatic: Airlines must automatically issue refunds. Customers will no longer have to explicitly request a refund — which can be a complicated affair.
• Prompt: Refunds must be issued within seven business days of refunds becoming due for credit card purchases and 20 calendar days for other payment methods.
• Cash or original form of payment: Airlines must provide refunds in cash or whatever original payment method the individual used to make the purchase.
• Total amount: Airlines and ticket agents must provide full refunds of the ticket purchase price minus the value of any portion of transportation already used. This includes all taxes and fees.

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Erin Bendig is a staff writer at Kiplinger.com. For more on this and similar money topics, visit Kiplinger.com.

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