What fliers should know about new refund rules for airlines

New federal rules for airlines will go into effect later this year, giving travelers a better picture of the full cost of flights before they book—and getting them an easier refund if things go awry.

After a process that lasted more than a year, the Biden administration announced the rules on passenger protections Wednesday.

“This is a big day for America’s flying public,” Transportation Secretary Pete Buttigieg said in a news conference at Reagan National Airport.

While the trade group Airlines for America said its members “abide by—and frequently exceed—DOT regulations regarding consumer protections,” consumer advocates praised the administration’s move.

“These rules are not only critical but also common sense,” said William McGee, senior fellow for aviation and travel at the American Economic Liberties Project, who spoke at Wednesday’s event.

Most new rules go into effect in the fall

At the event Wednesday, Buttigieg said that “the bulk of these protections” will go into effect in about six months. Others will start in a year.

That means refund rules that get customers automatic cash refunds when airlines cancel or significantly change flights won’t be in place during the busy summer travel season. But they should be set in time for the Thanksgiving and winter holiday season rush.

Buttigieg said that the department expects airlines to take some time to develop the processes to return cash to travelers, but added that he doesn’t want them to drag their feet.

“They don’t have to wait the number of months that it’ll technically take for this to go into effect,” Buttigieg said Wednesday. “They could and should be doing this right now.”

You should get refunds without having to ask

Instead of first offering a voucher or credit, airlines “must automatically issue refunds without passengers having to explicitly request them or jump through hoops,” the Transportation Department says. The refunds need to be issued within seven business days for credit card purchases and 20 calendar days when bought through other methods.

However a traveler originally paid is the way the refund needs to be issued, the rule says, whether that’s by credit card or airline miles. Other types of compensation are allowed only if a passenger chooses one of those alternatives.

“No more defaulting to vouchers or credits when consumers may not even realize that they were entitled to cash,” Buttigieg said.

You can still choose to be rebooked

If travelers’ flights have been canceled or significantly changed, they can still continue with their trip. Passengers are only eligible for a refund if they have declined to accept alternative transportation.

Airlines will have to pay for delayed bags and broken WiFi

There are many ways for a trip to go awry, and the new rules cover more than just a late or canceled flight.

If a checked bag isn’t delivered within 12 hours of a domestic flight arriving at the gate, or within 15 to 30 hours of an international flight arriving, depending on how long that flight is, passengers will be entitled to a refund of their checked-bag fee. They will need to file a mishandled baggage report.

Refunds will also be given if passengers pay for a service such as WiFi, seat selection or in-flight entertainment and the airline fails to provide.

‘Significant’ changes will be the same for all airlines

Automatic cash refunds are due to passengers if their flight experiences a “significant change.” But what does that mean? Previously, the definition could vary from airline to airline.

The new rules provide some consistency. A change is considered significant if a departure or arrival is different by more than three hours for domestic flights or six hours for international trips.

Other changes considered significant: the departure or arrival is from a different airport; there are more connections; passengers are downgraded to a lower class; or service or flights are on planes that are less accessible for a person with a disability.

No more hidden fees for bags and seat selection

The rule on extra fees—what the Biden administration refers to as “surprise junk fees in air travel”—will require airlines and online travel booking sites to disclose up front the fees for a checked bag, carry-on bag, reservation change and reservation cancellation. Those fees must be clearly noted and not shown through a hyperlink, the rule says.

Consumers must also be informed that they don’t have to pay for a seat assignment to travel and that a seat will be provided without an additional price.

“Healthy competition requires that, as a consumer, you comparison shop, which means knowing the real price of a trip before and not after you buy,” Buttigieg said. “Airlines will now be required to show you these costs up front, so you have all the information you need to decide what travel option is best for you.”

Travelers can either search without providing their personal information to see standard fees or, after entering their information, see more tailored fees that might apply given their military status, frequent-flier membership or credit card use.

“The final rule puts an end to the bait-and-switch tactics some airlines use to disguise the true cost of discounted flights,” the Transportation Department said in a news release. “Prior to the rule, some airlines were offering deceptive discounts that consumers may have believed applied to the full fare that was being advertised but only applied to a small portion of the ticket price.”

You will still have to report complaints

Buttigieg said the main way for the department to find out about a violation of the rules is when people submit complaints through the site flightrights.gov. But he said he hopes that by making refunds automatic, there will be less need for complaints—and more flexibility for employees to perform audits or spot-checks of airline compliance.

Europe-style compensation is still not in the rules

Some travelers heading to or from Europe who experience delays under certain circumstances are entitled to compensation worth more than $600. That kind of system does not exist for domestic flights in the United States, but Buttigieg said it is on the agenda.

“On compensation, we continue to develop that—and to be clear, with this rule on the books, that does not stop or slow the progress that we’re driving in terms of a compensation rule,” he said.