By Alex Miller
Air travel is a crucial component of modern life for millions of Americans each year who rely on it for business, leisure, and other commitments. Unfortunately, the experience can often be stressful, involving coordination of transportation to and from the airport, maneuvering through TSA checkpoints, and dealing with increasingly crowded airplanes. But the frustration is compounded when flights are delayed or canceled, forcing passengers to navigate an often complex and prolonged refund process.
In response to traveler frustrations, the U.S. Department of Transportation (DOT) implemented a new rule¹ for automatic refunds. This change aims to simplify the process and empower passengers by guaranteeing swift cost recovery without navigating complex airline policies or lengthy disputes. The rule mandates airlines to issue refunds in the original payment method for canceled or significantly changed flights (diverted or delayed for more than 3 hours), delayed baggage delivery, and undelivered services. Unless passengers explicitly opt for alternative compensation, airlines will no longer be allowed to issue refunds in the form of travel vouchers or credits — both of which often have expiration dates. Airlines have until October 28, 2024, to implement these changes.
While the new regulation provides some peace of mind for air travelers, its overall financial impact on airlines and customers is unclear. For example, Airlines for America — a trade association and lobbying group that advocates for several commercial airlines — says that the new regulations could reduce competition and ultimately drive up prices² for consumers.
Data from the U.S. Bureau of Transportation Statistics in 2023 indicates that around $5 billion in domestic airfares could have qualified for automatic refunds last year.
- Department of Transportation (DOT)
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