New U.S. Regulation Mandates Automatic Refunds for Airline Disruptions

Empty airplane cabin with rows of seats.

Travelers will find some relief this holiday season as airlines are now required to issue automatic refunds for significant delays or cancellations.

At a Glance

  • New rule mandates automatic refunds for delayed or canceled flights.
  • Delay defined as 3 hours domestic, 6 hours international.
  • Refunds within 7 days for credit card, 20 days for other payments.
  • Rules also apply to baggage delays and onboard service issues.

Automatic Airline Refunds: A New Standard

The U.S. Department of Transportation (DOT) has implemented new regulations that require airlines to provide automatic refunds for flights that are significantly delayed or canceled, enhancing the efficiency of the refund process ahead of the holiday travel rush. The rule, announced in April and made law in May as part of the FAA Reauthorization Act, defines a significant delay as more than three hours for domestic flights and six hours for international flights.

The regulations require that refunds are offered proactively, rather than converting them into travel vouchers or credits, provided the affected passenger does not agree to alternative travel options. Refunds must be processed within seven days for credit card payments and within 20 days for other payment methods. These adjustments are aimed at resolving the complexities and hassles previously involved in the refund procedures.

Covered Scenarios and Additional Provisions

Beyond flight delays and cancellations, the new rule extends to cases involving baggage delivery delays and paid services not provided on board, such as Wi-Fi or seat selection. If checked baggage is not returned within 12 hours for domestic flights or 15 to 30 hours for international flights, passengers are entitled to a refund of checked bag fees.

“Passengers deserve to get their money back when an airline owes them — without headaches or haggling,” Transportation Secretary Pete Buttigieg remarked about the importance of the new policy.

The rule mandates airlines to automatically handle refunds for cancellations or significant changes to the flight, even if related to weather. A “significantly changed” flight involves changes to departure or arrival airports, added connections, or downgrades in service levels. Should any alteration affect the accessibility for disabled passengers, a refund is also due.

Guidelines for Passengers

The DOT emphasizes the need for airlines to streamline the refund process. Yet, if a passenger does not receive a refund within the stipulated seven business days, they are advised to contact the airline or file a complaint with the DOT. According to travel expert Katy Nastro, “Even though it should be automatic, if you haven’t seen that within seven business days, you can contact the airline.”

These regulations overhaul previous policies where refunds could be delayed for indefinite periods. The initiative, part of the broader DOT efforts, highlights a notable advancement in passenger rights and aims to minimize customer frustration. It urges airlines to comply with the new standards and provide due compensation to affected passengers promptly.

Sources

1. Airlines Must Now Refund Travelers for Canceled Flights—What To Know

2. New refund rule for air travelers is now in effect. Here’s what to know

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