New rules for US airlines to automate refunds to passengers for cancelled flights

The Joe Biden administration on Wednesday issued new rules that require airlines to provide automatic cash refunds to passengers when owed and protect consumers from costly surprise fees.

“Too often, airlines drag their feet on refunds or rip folks off with junk fees. It is time Americans got a better deal. Today, my administration is requiring that airlines provide automatic refunds to passengers when they are owed and protect them from surprise fees,” Biden said in a video statement.

“This is about airlines treating passengers better and it will save people more than half-a-billion dollars, avoiding unwanted, expensive, unnecessary surprise airline fees,” said Transportation Secretary Pete Buttigieg.

Biden said his administration is holding airlines accountable and bringing costs down for American families. “This is just one part of my administration’s plan to prevent companies from playing the American people for suckers. It matters,” he said.

The White House said these rules will significantly expand consumer protections in air travel, provide passengers an easier pathway to refunds when owed and save consumers more than half-a-billion dollars every year in hidden and surprise junk fees. The rules are part of the Biden-Harris administration’s work to lower costs for consumers and take on corporate rip-offs, it said.

The new rules require airlines to automatically issue refunds, without passengers having to explicitly request them or jump through hoops. Airlines and ticket agents must promptly issue refunds within seven business days of refunds becoming due for credit card purchases and 20 calendar days for other payment methods.

Further, 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.

Finally, airlines and ticket agents must provide full refunds of the ticket purchase price, minus the value of any portion of transportation already used.

The Department of Transportation is requiring airlines and ticket agents to tell consumers upfront what fees they charge for checked bags, a carry-on bag, for changing a reservation or cancelling a reservation. This ensures that consumers can avoid surprise fees when they purchase tickets from airlines or ticket agents, including both brick-and-mortar travel agencies or online travel agencies, the White House said.

Under the new rules, each fee must be disclosed the first time that fare and schedule information is provided on an airline’s online platform — and cannot be displayed through a hyperlink.

For each type of baggage, airlines and ticket agents must spell out the weight and dimension limitations that they impose. They must also describe any prohibitions or restrictions on changing or cancelling a flight, along with policies related to differences in fare when switching to a more or less expensive flight.

An airline must provide useable, current and accurate information regarding its baggage, change and cancellation fees and policies to any company that is required to disclose them to consumers and receives fare, schedule and availability information from that airline.

When offering an advance seat assignment for a fee, airlines and ticket agents must let consumers know that purchasing a seat is not necessary to travel, so consumers can avoid paying unwanted seat-selection fees.

Consumers can choose to view passenger-specific fee information based on their participation in an airline’s rewards programme, their military status or the credit card that they use — or they can decide to stay anonymous and get the standard fee information.

The final rule puts an end to the bait-and-switch tactics some airlines use to disguise the true cost of discounted flights. It prohibits airlines from advertising a promotional discount or a low base fare that does not include all mandatory carrier-imposed fees.

The Biden administration is also pursuing rulemakings that would propose to ban family-seating junk fees and guarantee that parents can sit with their children for no extra charge when they fly. It proposes to make passenger compensation and amenities mandatory so that travellers are taken care of when airlines cause flight delays or cancellations, the White House said.