Transportation Department Proposes New Rules for Airline Refunds Amid Surge of Complaints

Passengers line up to check in at the Air Canada desk at Denver International Airport on Jan. 3, 2022. (David Zalubowski/AP Photo)

The Department of Transportation (DOT) has proposed a new rule aimed at strengthening protection for consumers seeking refunds for airline tickets.

For several years, the DOT has asked airlines and ticket agents to give refunds to travelers in cases of flight cancellations or significant changes to their flights. But the terms “significant change” and “cancellation” weren’t previously defined. This resulted in “inconsistency among carriers on when passengers are entitled to refunds,” according to an Aug. 3 DOT statement.

In addition, various airlines have questioned the department’s authority to require such refunds since the beginning of the COVID-19 pandemic.

As a result, the DOT’s latest proposal seeks to codify refund rules. The agency is defining a “canceled flight” as being a flight that was “published in a carrier’s Computer Reservation System at the time of the ticket sale but was not operated by the carrier.”

“Significant changes” to a flight would include circumstances that affect the departure or arrival times by three hours or more for a domestic flight or six hours or more for an international flight; increases in the number of connections in the itinerary; changes to the arrival or departure airport; or changes to the type of aircraft flown, provided the change results in a “significant downgrade” in amenities aboard the flight and the air travel experience of a customer.

Under the proposal, when passengers are unable to fly for pandemic-related reasons, or are advised to avoid flying to protect their health and the health of other people, airlines and ticket agents will be expected to provide flight vouchers or credits with indefinite validity.

The DOT’s Aviation Consumer Protection Advisory Committee has scheduled a virtual public meeting on Aug. 22 to discuss the proposal, and the department will accept public comments for 90 days after the proposed rule appears on the Federal Register.

Refund Complaints

In its statement, the DOT said it had received a flood of complaints from air travel consumers since early 2020 when the COVID-19 pandemic began. These consumers had nonrefundable tickets and couldn’t use them, as they either couldn’t travel because of the pandemic, or they had their flights canceled or changed by the airline.

The DOT received more than 169,000 complaints from travelers between 2020 and 2022, and the top complaint was an inability to get refunds.

In May 2022, the department received 4,344 complaints, which was 237 percent higher than the number of complaints received in May 2019 prior to the pandemic, the DOT said. Of those 4,344 complaints, 1,326, or 30.5 percent, were about refunds.

According to Airlines for America, which lobbies on behalf of major U.S. airlines, $21 billion in refunds have been handed out by airlines since the beginning of the COVID-19 pandemic.

Meanwhile, a group of senators recently introduced the Cash Refunds for Flight Cancellations Act to provide consumers an “enforceable right to a full cash refund for flight and ticket cancellations,” according to an Aug. 1 statement.

“Just as hotels often allow consumers to cancel their reservation and receive a full refund, the Cash Refunds for Flight Cancellations Act would extend a similar requirement for air travel,” Sen. Ed Markey (D-Mass.) said in the statement.

“These airlines must get their heads out of the clouds and deliver the effective and accountable service that travelers deserve.”