For trips within the U.S., if your flight is canceled for any reason—weather, mechanical problems, air traffic control, staffing issues, computer glitches, volcanic eruptions, whatever—the airline is required by federal regulation to provide a full refund.

But airlines don’t make it convenient for their inconvenienced customers to get mandated refunds. Ticketholders must first file refund requests, with no guarantee of how quickly they’ll get their money back.

That will soon change. Last month, the U.S. Department of Transportation (DOT) issued a rule that will require airlines to “promptly provide passengers with automatic cash refunds when owed.”

The rule, which is scheduled to take effect in about six months, should speed up and simplify the process of getting refunds when airlines cancel or “significantly change” itineraries, “significantly delay” checked bags, or fail to provide extra services that were purchased.

“Passengers deserve to get their money back when an airline owes them—without headaches or haggling,” said Secretary of Transportation Pete Buttigieg. “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”

Without the new requirements, requesting a refund has been a “quite tedious process,” said Bill McGee, a senior fellow for aviation and travel at the American Economic Liberties Project. Some people give up and never get their refund.

“The airlines depend on that,” McGee told Checkbook. “They’re sitting on other people’s money.”

Once the new rule is implemented, the runarounds and delays should end. If not, the DOT could fine airlines.

Consumer advocates call the new rule “a big win” for airline passengers who have filed tens of thousands of complaints with the DOT about delays and the difficulties in getting refunds.

“The rule is long overdue and much welcome,” said John Breyault, a vice president at the National Consumers League and a member of DOT’s Aviation Consumer Protection Advisory Committee. “It puts the onus on the airline to make consumers whole when the airline doesn’t provide the service that the consumer has paid for.”

When Refunds Are Required for Delays

The new rule also creates more certainty for ticketholders by defining the term “significant” when applied to delays or rerouting. Until now, airlines have been allowed to set their own standards for which flight delays or itinerary changes warrant a refund.

This free-for-all made it difficult for passengers to know what to expect and how to assert their refund rights. Some airlines, DOT said, were “revising and applying less consumer-friendly refund policies during spikes in flight cancellations and changes.”

Starting this fall, passengers will be entitled to a refund for:

Canceled or significantly changed flights. Passengers can get a refund if their flight is canceled or significantly changed, and they do not accept alternative transportation or travel credits offered.

“Significant changes” to a flight include departure or arrival times that are different by more than three hours domestically and six hours internationally; departures or arrivals from a different airport; increases in the number of connections; instances where passengers are downgraded to a lower class of service; or connections at different airports or flights on different planes that are less accessible or accommodating to a person with a disability.
 
Significantly delayed baggage return. Passengers who file a mishandled baggage report will be entitled to a refund of their checked bag fee if the item is not delivered within 12 hours of their domestic flight arriving at the gate, or 15 to 30 hours of their international flight arriving at the gate, depending on the length of the flight.
 
Extra services not provided. If an airline fails to provide an extra service—such as Wi-Fi, seat selection, or in-flight entertainment—passengers will be entitled to a refund for the fee they paid.

How Refunds Must Be Handled

The new rule requires refunds to be:

• Automatic: Airlines must automatically issue refunds without passengers having to request them.
• Prompt: Airlines and ticket agents must issue refunds within seven business days of refunds becoming due for credit card purchases and 20 calendar days for other payment methods.
• Cash or original form of payment: Airlines and ticket agents must provide refunds in cash or whatever original payment method the individual used to make the purchase, such as credit card or airline miles. Airlines may not substitute vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation.
• Full amount: Airlines and ticket agents must provide full refunds of the ticket purchase price, minus the value of any portion of transportation already used. The refunds must include all government-imposed taxes and fees and airline-imposed fees, regardless of whether the taxes or fees are refundable to airlines.

You Have a Right to a Refund Even If the Airline Doesn’t Offer It

While most flights take off on time, there’s always the chance your flight will be delayed or canceled due to weather-related, equipment or staffing problems, a computer glitch, or even an unruly passenger. Last year, 1.2 percent of the 16.3 million scheduled flights departing from U.S. airports—about 195,600 flights—were canceled, according to the DOT.

When this happens, your airline will try to rebook you for free on another one of its flights. During peak travel times, that could take days.

If you do not accept the airline’s proposed new itinerary, you are legally entitled to a full refund for the unused portion of your ticket—even if you booked a “nonrefundable” fare. The airline must also refund any fees you prepaid, such as for baggage or seat assignment.

Airlines can offer other enticements, such as miles or travel vouchers, but you don’t have to accept that. You are entitled to get your money back.

Many passengers don’t know their rights, so if the airline offers them a voucher or credit, they mistakenly assume it’s better than nothing.

“When it comes to refunds, we have ample evidence that airlines are not being completely truthful with passengers,” consumer advocate McGee told Checkbook. “If the airline says you have a choice between cash or a voucher or miles, then that’s fine, make your own choice. But passengers should not be told you’re getting a credit, without being offered the cash first.”

The new DOT rule will require airlines to provide “prompt notifications” to consumers affected by a canceled or significantly changed flight of their right to a refund of the ticket price and extra service fees, as well as any related policies.

“A cash refund is always a smart move,” said Charlie Leocha, president and founder of Travelers United, a consumer advocacy group. “Travel vouchers can expire, be subject to restrictions, and have blackout dates. And remember, that voucher can only be used with that airline. What if you want to fly another airline next time?”

What Airlines Promise to Do

Ten major U.S. airlines (and their regional operating partners) have voluntarily committed to help passengers in certain ways—if possible—when a delay or cancellation is the airline’s fault. This would include issues such as maintenance, equipment, or crew problems. Disruptions resulting from bad weather or air traffic control are not considered to be the airline’s responsibility.

The DOT’s Airline Customer Service Dashboard tracks these voluntary commitments, which could change at any time. Here are a few highlights of what the airlines have promised to do when a delay or cancellation is their fault:

• All 10 airlines promise to rebook passengers at no cost on other flights they operate.
• Some will try to rebook stranded passengers with partner airlines at no additional cost.
• Most will give passengers meals or meal vouchers—not just snacks—when they’ve waited three hours or more for a new flight.
• Most will provide complimentary hotel rooms for passengers affected by an overnight cancellation or delay.    

Note that these policies only apply to domestic flights. Airlines often have separate policies and operate under different rules for international flights.

When it comes to protecting airline passengers, Canada, the European Union, the United Kingdom, and some Asian countries have far more consumer-friendly regulations that spell out how airlines must compensate or accommodate passengers if a flight is delayed or canceled. In other words, when Americans fly on U.S. airlines to an international destination, they usually have better protections than when they fly domestically.

What If a Cancelation or Delay Costs Me Money?

A cancellation or delay can be costly in many ways. You may need to buy a more expensive ticket on another airline to make it to a wedding or business meeting on time. You could miss your cruise ship or lose nights for a prepaid vacation at a hotel or resort.

Don’t expect to get reimbursed for any monetary losses resulting from a canceled or delayed flight. The airlines are not required to provide compensation in these situations—and probably won’t. Many travel insurance policies provide protection against these types of losses. Click here for our advice on when and why to consider these plans.

What Happens If an Airline Loses or Damages My Bag?

Airlines are required to provide compensation (subject to depreciation and liability limits) and refund any baggage fees. Each airline has its own policy as to when a bag is officially lost. Typically, it’s between five and 14 days after the flight.

Domestic airlines often exclude liability for perishable and fragile items, as well as cash, electronics, and jewelry. If you must put valuables in your checked luggage (it’s best avoided) consider buying additional insurance.

Airlines must also compensate passengers for “reasonable, verifiable, and actual incidental expenses” that were incurred while their bags were delayed, up to the $3,800 per passenger liability limit. You may be required to produce receipts or other proof for valuable items.

Looking Ahead: More DOT Consumer Protections Possible

The process is already underway to create a rule that would require airlines to provide compensation and cover expenses for amenities (such as meals, hotels, and rebooking) when they are responsible for stranding passengers.

“When an airline causes a flight cancellation or delay, passengers should not foot the bill,” Buttigieg said last year when the rulemaking was announced. “This rule would, for the first time in U.S. history, propose to require airlines to compensate passengers and cover expenses such as meals, hotels, and rebooking in cases where the airline has caused a cancellation or significant delay.”

The DOT is also pursuing other rules that would:

• Ban family seating junk fees and guarantee that parents can sit with their children for no extra charge when they fly.
• Expand the rights of passengers who use wheelchairs and ensure that they can travel safely and with dignity.

If you’re having problems getting a refund or feel that you were misled about your right to a refund, file a complaint with the DOT.

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