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DOT Mandates Cash Refunds for Flight Delays and Cancellations

The agency will mandate cash refunds for significantly delayed flights, strengthening passenger rights.

Overlooking DFW Airport’s Terminal B (Photo: AirlineGeeks | William Derrickson)

In a landmark decision that it says bolsters passenger protections, the U.S. Department of Transportation (DOT) unveiled a comprehensive set of regulations on Wednesday. These new rules mandate airlines to automatically issue cash refunds for significantly delayed or canceled flights.

Transportation Secretary Pete Buttigieg hailed the reforms as a transformative moment, declaring during a press conference, “This is a big day for America’s flying public.” He emphasized that the regulations represent the most significant expansion of passenger rights in the DOT’s history, prioritizing prompt and guaranteed cash refunds.

Previously, airlines held discretionary power regarding the delay threshold that triggered a refund obligation. The newly established DOT framework mandates automatic cash refunds for domestic flights exceeding three hours in delay and international flights exceeding six hours. These protections apply to all tickets, regardless of purchase channel, encompassing direct airline purchases, travel agents, and online booking platforms.

The DOT’s rulings clearly stipulate that passengers “shall be entitled to a full cash refund if their flight is canceled or substantially altered, and they decline alternative transportation or travel vouchers proffered by the airline.”

Furthermore, the regulations require airlines to provide cash refunds for lost luggage not delivered within a 12-hour timeframe. As per the new framework, refunds must be issued within seven days and must be in the form of cash unless the passenger explicitly chooses an alternative form of compensation. Notably, airlines are prohibited from solely issuing vouchers or credits in scenarios where cash refunds are mandated. A grace period of six months has been granted to airlines to ensure compliance with the new regulations.

“Passengers deserve to get their money back when airlines fall short of their obligations, without any unnecessary hassle or haggling,” Secretary Buttigieg stated in an official press release.

Alignment with European Standards

The new DOT regulations bring the U.S. closer to existing passenger rights standards in Europe. For instance, the European Union (EU) Regulation 261/2004 mandates cash compensation for flight delays exceeding three hours for short-haul flights and 4 hours for long-haul flights. Similar to the new DOT regulations, the EU also requires airlines to offer passengers re-routing or a full refund if their flight is canceled.

However, some key differences remain. The EU offers compensation for delays exceeding 2 hours for some itineraries, while the DOT sets the threshold at three hours for domestic flights. Additionally, the EU offers tiered compensation based on the length of the delay, while the DOT focuses on a guaranteed refund for the inconvenience.

Empowering Passengers to Avoid Hidden Travel Expenses

The DOT also revealed ongoing efforts to develop additional regulations focused on eliminating hidden fees that disproportionately burden passengers, enhancing the rights of wheelchair-using passengers to guarantee dignified and safe travel experiences, and establishing mandatory compensation and amenities for airline-induced delays or cancellations.

Secretary Buttigieg emphasized the DOT’s commitment to protecting passengers from surprise fees, claiming these efforts will result in billions of dollars saved for American travelers annually.

The new DOT regulations encompass refunds for unused pre-paid services such as Wi-Fi access, seat selection, or in-flight entertainment.

Secretary Buttigieg declared that the Southwest fine establishes a “new standard” for airlines and passenger rights. “To be clear, we want the airline sector to thrive,” he elaborated. “It is precisely why we provided extensive support during the pandemic and honestly it’s why we’re being so rigorous on passenger protection.”

“Airlines are not enthusiastic about us holding them to a higher standard,” Secretary Buttigieg conceded. “But I know they will be able to adapt to this.”

The industry group Airlines for America, representing leading U.S. passenger and cargo airlines, responded to the news in a statement to ABC News. The statement noted that its members “already offer a range of options, including fully refundable fares,” according to the news outlet. It further claimed that consumers are “given the choice of refundable ticket options with terms and conditions that best suit their needs at first search results.”

The group also noted that the 11 largest U.S. airlines issued a combined $43 billion in customer refunds between 2020 and 2023, with nearly $11 billion in refunds issued in 2023 alone.

Tolga Karadeniz

Author

  • Tolga Karadeniz

    Tolga is a dedicated aviation enthusiast with years of experience in the industry. From an early age, his fascination with aviation went beyond a mere passion for travel, evolving into a deliberate exploration of the complex mechanics and engineering behind aircraft. As a writer, he aims to share insights , providing readers with a view into the complex inner workings of the aviation industry.

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