DOT Warns Airlines Are Legally Obligated to Give Refunds After CrowdStrike Outage

U.S. Department of Transportation Secretary Pete Buttigieg sent letters to CEOs of the 10 largest airlines in the country on Wednesday reminding them of their legal obligation to provide passengers with cash refunds following nationwide IT outages last month.

The letter, included in a DOT news release, outlines the following expectations as required by the FAA Reauthorization Act that took effect on May 16:

• Airlines must clearly and proactively inform passengers of their right to a refund whenever their flight is canceled or significantly changed.
• Cash refunds – not vouchers or credits – must be automatic for passengers when they are owed.
• Airlines should make it easy for passengers to get free rebooking, meals, hotels, and/or transportation to and from hotels as promised during controllable disruptions.
• If passengers opt for vouchers or credits after a canceled or significantly changed flight, they must be valid for at least five years.

The letter comes after a glitched update from CrowdStrike caused nationwide outages on July 19 that disrupted airlines for the week, costing Delta $500 million. Delta CEO Ed Bastian told CNBC that the company lost the money in revenue as well as tens of millions of dollars per day in hotel compensation for customers.

“We are concerned that some airlines may not be disclosing that travelers are entitled to refunds or, worse, misleading travelers into thinking they are not entitled to a refund,” the DOT letter states. “Any time you communicate to a passenger on a canceled or significantly changed flight, particularly about a voucher or credit, you must make it clear that they are entitled to a refund.”

Additionally, the news release states that the DOT has recently received a request from the airline industry for additional time to comply with various aspects of the FAA Reauthorization Act and the Department’s 2024 Final Rule on Refunds and Other Consumer Protections. The Department states it has found no basis for adjusting the compliance dates set forth in its rule.

“The provisions encoded in the FAA Reauthorization Act took effect upon its May enactment, and the law did not provide for extensions or delays,” the news release states. “Accordingly, we will be taking all appropriate steps to responsibly enforce these provisions using our investigative and enforcement powers.”

The release says that airlines are free to advise the Department of any extenuating circumstances affecting their compliance. However, since it’s been nearly three months since the law took effect, the Department states it expects airlines to have taken the necessary steps to comply.

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