New US Transportation Rules Mandate Automatic Flight Refunds and Fee Transparency

The US Department of Transportation has unveiled new regulations requiring airlines to provide automatic refunds to travelers in cases of flight cancellations or significant alterations. This policy overhaul aims to simplify the refund process for consumers and ensure consistency in refund policies across airlines.

Transportation Secretary Pete Buttigieg emphasized the importance of passengers receiving refunds promptly and without hassle. The new rules stipulate that passengers are entitled to refunds if their flights undergo significant changes, such as delays exceeding three hours for domestic flights or six hours for international flights, downgrades in seating class, changes in departure or arrival airports, increases in the number of connections, or modifications to connecting airports or planes that are less accommodating for individuals with disabilities.

Additionally, travelers will receive refunds for checked bag fees if their bags are lost and not delivered within specified timeframes after flight arrivals. Refunds will also be issued for services paid for but not received, such as in-flight Wi-Fi or entertainment.

To facilitate the refund process, the Department of Transportation has mandated prompt automatic refunds to passengers in cash or through their original form of payment. These regulations are expected to take effect in approximately six months.

While these changes aim to enhance consumer protection, they are likely to increase costs for the airline industry, potentially impacting low-cost carriers disproportionately. Analysts suggest that compliance with the new regulations may lead to reduced growth or downsizing among low-cost carriers, affecting their competitiveness.

In response to the new regulations, the Airlines for America trade group reiterated its commitment to consumer protection and highlighted the industry’s efforts to provide enhanced services at historically low prices.

Furthermore, the Department of Transportation released another final rule requiring airlines to transparently communicate extra fees upfront, including those for checked luggage, carry-on bags, or reservation changes. This initiative seeks to prevent surprise fees and save travelers hundreds of millions of dollars annually.

Buttigieg also announced forthcoming rules to expand rights for passengers with disabilities and to allow parents to sit with their children on flights without additional charges. Additionally, the Department intends to pursue more aggressive enforcement against airlines that violate regulations, citing a record fine imposed on Southwest Airlines for operational disruptions in December 2022.