New DOT Refund Rule for Air Travelers Now in Effect – What Travelers Need to Know

The U.S. Department of Transportation’s (DOT) final rule on automatic airline refunds went into effect Monday, which is a big win for travelers, but a change that could cause quite a bit of confusion.

First announced in AprilUnder this rule, airlines must immediately provide passengers with automatic cash refunds when airlines cancel or significantly change their flights, delay passengers’ checked luggage, or fail to provide purchased additional services.

“Passengers deserve to get their money back when an airline owes them something — without the headaches or haggling,” U.S. Transportation Secretary Pete Buttigieg said in a statement last spring. “Our new rule sets a new standard to require airlines to provide immediate refunds to their passengers.”

The new regulations are expected to save American travelers more than $500 million annually.

Canceled or significantly changed flights

Passengers are now entitled to a refund if their flight is cancelled or significantly changed, as long as they do not accept a rebooked flight or offered travel credits.

A ‘significant change’ is defined as an adjustment that changes departure or arrival times domestically by more than three hours and internationally by six hours. That’s a marked improvement, as previous instances of “significant change” have varied dramatically.

Crowd of people waiting to board their flight (Photo Credit: Eric Bowman)

Other qualifications include “departure or arrival from a different airport; increase in the number of connections; cases where passengers are downgraded to a lower class of service; or connections at different airports or flights on different aircraft that are less accessible or suitable for a person with a disability,” DOT said.

Significantly delayed return of checked baggage

Passengers who submit a mishandled baggage report are now entitled to a refund of checked baggage fees if it is not delivered to the gate within 12 hours of the arrival of their domestic flight.

That time can be up to 15-30 hours for an international flight arriving at the gate, depending on the length of the flight.

Failure to provide support services

Passengers can request a refund for the fee they paid for an additional service, including Wi-Fi, seat selection or in-flight entertainment, if their airline does not provide it.

A Southwest Airlines plane at William P Hobby Airport in Houston. (Photo credit: Patrick Clarke)

What is a refund?

As part of the new rule, refunds must be made automatically, quickly, for the full amount and in cash or via the original payment method.

This means that passengers do not have to explicitly ask for a refund jump through all the hoops. Additionally, refunds must be made within seven business days of refunds being due for credit card purchases and within 20 calendar days for other payment methods.

Airlines are not permitted to substitute vouchers, travel credits or other forms of compensation unless the passenger expressly chooses to accept alternative compensation, DOT confirmed.

To properly comply with this new rule, airlines are also required to offer 24/7 live customer service communication channels, either via live chat or phone support.

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