Have you ever had your flight canceled at the last minute leaving you stranded at the airport? Have you and your kids been trying to get away on vacation only to spend hours and hours stuck at the airport because your flight was delayed? Have you rented a car in desperation to get home because there was no hope of your flight taking off in any reasonable timeframe?
There are times when the government does something helpful, and the United States S Department of Transportation (DOT) has done just that. DOT issued a new rule that addresses refunds for canceled or significantly delayed or changed flights.
The new DOT rule aims to simplify passenger refunds by requiring airlines to automatically issue them for significantly delayed or canceled flights, baggage issues, and undelivered services.
Airlines must be prepared to meet the requirements of the new DOT rule by Oct. 28, 2024. Upgraded Points studied how this new rule will affect passengers and airlines across the country. They estimate the new rule will add up to $5 billion in refunds nationwide with $168 million at JFK airport, $134 million at LaGuardia, and $201 million at Newark, NJ airport.
The old rule left some questions, and plenty of argument, as to what “substantial” delay meant. Of course, airlines and passengers often had different points of view of what a ‘significant’ delay was. The new rule takes the arguments away and clearly defines ‘substantial’ and ‘significant’ delays.
The rule defines a “significantly changed or delayed flight” as “a flight to include, at a minimum, a flight where the passenger arrives at the passenger’s destination airport 3 or more hours after the originally scheduled arrival time for a domestic flight and 6 or more hours after the originally scheduled arrival time for an international flight.”
Additionally, domestic air carriers and foreign air carriers must issue refunds not later than 7 business days after the earliest date of the refund request for tickets purchased with a credit card, and 20 days for tickets purchased with cash or another form of payment.
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.
Upgraded Points says, “Airlines may need to adjust operations and raise ticket prices to manage the increased cost of automatic refunds. However, these changes come at a time when significantly changed or canceled flights have declined below pre-pandemic levels, which may help airlines adapt to the new DOT rules with less economic disruption. Even so, data suggests major carriers could face billions in refunds, with even budget airlines feeling the burden.”