Updated Apr 24, 2024 - Business

Delayed flyers can get automatic cash refunds under new federal rule

Passengers wait in a Transportation Security Administration (TSA) line at JFK airport

Passengers wait in a TSA line at JFK airport in New York City in January 2019. Photo: Spencer Platt/Getty Images

Airlines must issue automatic cash refunds to passengers whose flights have been canceled or significantly delayed under a new rule that the Biden administration issued Wednesday.

Why it matters: Post-pandemic air travel has at times verged on chaotic, as airlines have struggled to handle surging demand. It's the administration's latest effort to boost protections for passengers whose plans are upended by flight schedule setbacks.

  • "Passengers deserve to get their money back when an airline owes them — without headaches or haggling," Transportation Secretary Pete Buttigieg said in a press release.
  • The move is also the latest facet of the Transportation Department's effort to "deliver the biggest expansion of passenger rights in the department's history," Buttigieg said at a press conference Wednesday.

Driving the news: The new rule establishes that travelers are entitled to a cash refund if their flight is "significantly" delayed by "more than three hours domestically and six hours internationally," per the release.

  • Travelers will also be eligible for refunds for any changes to the number of flight connections in their route or downgrades to a lower class of service.
  • Refunds are also mandated if a customer's checked baggage is not delivered within 12 hours of their domestic flight's arrival or 15-30 hours of their international flight's arrival, depending on the flight's length.
  • Customers can also get a refund if they paid for an extra service — like WiFi — and it wasn't provided.

How it works: Airlines will be required to send an automatic refund to the credit card a customer used to book their flight, saving fliers from "having to call, or wait on hold, or sort through digital paperwork, or haggle with that airline," Buttigieg said at the press conference.

  • The new rule requires airlines to issue the refund within seven business days for flights booked with a credit card, and 20 calendar days for other payment methods, like travel points.
  • Currently, federal regulations allowed airlines to determine how long of a delay warranted a refund, leading to differing policies from airline to airline, per ABC News.
  • Many airlines simply offered vouchers for future flights. Now, while an airlines can still offer travel credit or a voucher, customers can decline the offer for a cash refund instead.

What's next: The Transportation Department is also proposing a rule requiring airlines to disclose what additional fees they charge, such as for checking a bag or changing a reservation, per a White House fact sheet.

  • These efforts to curb so-called "junk fees" that drive up consumers' costs are expected to save fliers around $500 million a year, Buttigieg said at the press conference.
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