The U.S. Transportation Department recently announced the finalization of two new rules that should make air travel slightly more pleasant … or at least less aggressively unpleasant than it is today.

The new rules are the latest in the Biden Administration’s work to lower consumer costs by introducing regulations aimed at ending “corporate rip-offs” such as hidden fees and unfair business practices. The Administration has already taken aim at junk fees, credit card late fees, unfair and illegal pricing, and high internet costs. Now, they’re aiming higher — a lot higher.

A Money-Back Guarantee

DOT Secretary Pete Buttigieg outlined two of the new rules and what they hoped to accomplish in a press conference on April 24. He briefly touched on a third in a Facebook post. Public discussion has largely focused on the first new rule, which requires airlines to issue automatic refunds to eligible passengers.

Before the new rule was announced, airlines were largely left to their own devices when it came to their refund policies. There were no common standards surrounding refund eligibility, how long it should take to process them, or whether eligible passengers should be refunded in cash, credit, or vouchers.

No two airlines had the same policies, making it very difficult for passengers to know whether or when they were eligible for refunds. Some airlines’ policies were relatively straightforward, but others were more restrictive or seemingly arbitrary. To top it off, the Department of Transportation even notes that they received complaints of “some airlines revising and applying less consumer-friendly refund policies during spikes in flight cancellations and changes.”

As if it wasn’t hard enough to navigate the disparate refund policies, airlines also had little to no reason to provide refunds in the amount, form, or time frame that their passengers preferred. In theory, airlines were already supposed to give out refunds to eligible passengers, but in practice, it often fell on the wronged passengers to chase down the money they were owed.

Airlines employed a number of strategies to prevent passengers from getting their money back. They would try to get passengers to accept vouchers or miles without letting them know they were entitled to a cash refund, make passengers fight their way through labyrinths of call centers and chatbots, and wait for weeks to pay out successful refunds, just to name a few.  

The new rule aims to address all of those issues.

Eligibility

According the U.S. Department of Transportation’s website, customers will now be entitled to a refund for:

  • Canceled or significantly changed flights: Passengers will be entitled to a refund if their flight is canceled or significantly changed, and the passenger does not accept alternative transportation or travel credits offered. Significant changes to a flight include “departure or arrival times that are more than 3 hours domestically and 6 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: If a passenger who files a mishandled baggage report does not receive their bags within 12 or 15-30 hours of their domestic or international flights, respectively, they will be entitled to a refund of their checked bag fee — which isn’t as good as getting your bags back, but it’s something.
  • Extra services not provided: Passengers will be entitled to a refund if they pay for a service and don’t receive it, which would be a no-brainer in almost any other industry. Now, when you pay for a better seat, inflight entertainment, Wi-Fi, or any other extra services, you’ll know you’ll either get the service or your money back.

Refund Criteria

The rule stipulates that refunds must now meet a set of criteria that include:

  • Airlines must automatically issue refunds without passengers having to explicitly request them.
  • Airlines and ticket agents must issue refunds within seven business days for credit card purchases and 20 calendar days for other payment options.
  • Refunds must be issued in cash or whatever original payment method the passenger used to make their purchase. No more substituting vouchers, travel credits, or any other form of compensation unless the passenger explicitly chooses to accept them.

Airlines have to provide full refunds of the ticket price, minus the value of any transportation already used, including taxes and fees.

Maybe Flying Doesn’t Have to be Terrible

The Biden Administration’s new pro-consumer rules may irritate airlines, but they’ll help make flying a little less awful for passengers who experience cancellations, extreme delays, lost bags, and paying for extra services they don’t receive.

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