Automatic Flight Refund Rule Takes Effect Across U.S. – Just in Time for the Holidays

October 31, 2024

The U.S. Department of Transportation (DOT) has enacted a new regulation requiring airlines to automatically issue refunds to passengers for canceled flights or flights that experience significant schedule changes.

Effective October 28, 2024, this rule aims to streamline the refund process for travelers and enhance consumer protection within the airline industry. Under the regulation, airlines are required to issue refunds promptly, with a seven-business-day window for payments made by credit card and a 20-calendar-day window for payments made by other methods.

This rule also provides clarity by defining “significant change” and “cancellation” to ensure consistency across airlines. According to the DOT, a significant change includes delays of three hours or more for domestic flights or six hours or more for international flights, shifts in departure or arrival airports, additional layovers, or downgrades in travel class. These guidelines mark the first time the DOT has standardized such definitions, reducing previous ambiguity about passengers’ rights to refunds.

Additionally, passengers are now entitled to refunds for checked baggage fees if their luggage is delayed by 12 hours or more on domestic flights or up to 30 hours for international flights. The rule also mandates refunds for ancillary services, such as in-flight Wi-Fi, seat selection, or other paid amenities, if these services are not delivered as promised. This comprehensive approach addresses multiple service issues and emphasizes the DOT’s commitment to upholding consumer rights in the airline industry.

The rule further stipulates that airlines must inform passengers of their right to a refund before offering travel credits or alternative compensation. This requirement enhances transparency, ensuring that passengers are aware of their options and are not pressured into accepting vouchers or credits instead of cash refunds.

Another key provision covers passengers affected by serious communicable diseases. The rule requires airlines to issue transferable travel credits or vouchers, valid for at least five years, to passengers advised against traveling due to a serious communicable disease. The DOT may waive documentation requirements for passengers if health authorities deem it in the public interest to do so.

In response to increased consumer complaints and feedback during the COVID-19 pandemic, the new regulation is part of a broader effort by the DOT to protect travelers from financial losses due to travel disruptions. Secretary of Transportation Pete Buttigieg emphasized that the regulation is designed to provide greater accountability within the airline industry, ensuring fair treatment for all passengers.

This automatic refund rule aligns with Executive Order 14036 on promoting competition in the American economy and addresses long-standing gaps in refund policies that were highlighted during the pandemic. The DOT estimates that the rule will save consumers millions in time and potential disputes with airlines, marking a significant advancement in consumer rights for air travel in the United States.