Airlines must now automatically reimburse customers for canceled flights in the US under new regulations

Under new guidelines from the US Department of Transportation, airlines will now have to automatically compensate passengers if their flights are canceled or dramatically changed. This is a big shift for customers and might increase prices for the whole sector.

The final rules, which were made public on Wednesday, specify the conditions under which travelers are eligible for reimbursements for all travel to, from, and within the United States.

The aim is to streamline the return process and provide consistency throughout airline refund policies.
As to the government, 87% of all air travel service complaints at the peak of the Covid-19 outbreak in 2020 were about airlines and ticket agents refusing or postponing reimbursements.
Transport Secretary Pete Buttigieg said in a statement, “Passengers deserve to get their money back when an airline owes them — without headaches or haggling.”

In the event that there is a “significant change” to a passenger’s flight, reimbursements will be granted under the new regulation.
Among them are:
arrival or departure time that is altered by more than three hours for domestic travel and six hours for foreign travel
being demoted, such as from first class to economy, to a lesser class than what was first bought
Alteration of the airport of arrival or departure
An increase in the quantity of connections
alterations to connected airports or aircraft routes if they don’t provide enough accommodations for individuals with impairments
In addition, reimbursements for checked bags will be given to passengers if the luggage disappears and is not picked up within 12 hours of the domestic flight’s gate opening. Depending on their duration, international flights have between 15 and 30 hours to return a misplaced suitcase.
A refund will also be given to anybody who pays for a service—like entertainment or in-flight Wi-Fi—but does not get it.
Additionally, the DOT changed the rules to make it simpler for passengers to get the money they’re due by mandating automatic refunds that happen quickly and in cash or using the original method of payment. At a press conference on Wednesday at Ronald Reagan Washington National Airport, Buttigieg said that the majority of the new regulations would take effect in around six months.
Seaport Research analyst Daniel McKenzie predicts that the refund adjustments would result in considerable cost increases for the airline sector, with a potential disproportionate effect on low-cost airlines. According to McKenzie’s statement, “low-cost carriers become less competitive to the extent they have to add costs to comply, reduce growth, and/or downsize.”
In a statement, the trade association Airlines for America noted that its member airlines already follow and often go above and beyond consumer protection regulations.
The association said in a statement that “US airlines are offering more options and better services while ticket prices, including ancillary revenues, are at historic lows.”
The government also unveiled a final regulation on Wednesday that mandates airlines to disclose any additional costs up front for carry-on, checked baggage, reservation changes, and cancellations. DOT reports that between 2018 and 2022, airlines’ income from luggage fees increased by 30%.
Buttigieg said in a second statement that the regulation would save consumers more than half a billion dollars annually and that airlines should compete with one another to secure passengers’ business rather than to see who can charge the most in unexpected fees.
During the press conference, Buttigieg informed reporters that other regulations are in the works, such as extending the rights of wheelchair-using passengers and allowing parents to travel with their kids for free.
In addition, he said that DOT would keep up its more vigorous enforcement of airline regulations, citing the agency’s record $140 million fine against Southwest Airlines Co. for an operational collapse that left over two million customers stranded in December 2022.
Buttigieg said, “The level of toughness reflected in Southwest enforcement is not an exception, but the new standard.”