New DOT Rules for Airline Refunds and Hidden Fees
The Department of Transportation (DOT) announced Wednesday new rules that target airline refunds and surprise fees late in the booking process.
These rules promise to significantly expand consumer protections in air travel, provide passengers an easier pathway to refunds when owed, and save consumers over half a billion dollars every year in hidden and surprise junk fees.
Refunds
The first rule requires airlines to promptly provide passengers with automatic cash refunds when owed because their flights are cancelled or significantly changed, their checked bags are significantly delayed, or the ancillary services, like Wi-Fi, they purchased are not provided.
Until now, airlines have been allowed to set their own definition for a “significant” delay and compensation has varied by carrier. Now, the DOT says that there will be one standard, which is when departure or arrival is delayed by three hours for domestic flights and six hours for international flights.
The final rule requires refunds to be:
- Automatic: Airlines must automatically issue refunds without passengers having to explicitly request them or jump through hoops.
- Prompt: Airlines and ticket agents must promptly issue refunds within seven business days of refunds becoming due for credit card purchases and 20 calendar days for other payment methods.
- Cash or original form of payment: Airlines and ticket agents must provide refunds in cash or whatever original payment method the individual used to make the purchase, such as credit card or airline miles. Airlines may not substitute vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation.
- Full amount: Airlines and ticket agents must provide full refunds of the ticket purchase price, minus the value of any portion of transportation already used. The refunds must include all government-imposed taxes and fees and airline-imposed fees.
Extra Fees
DOT is also requiring airlines and ticket agents to tell consumers upfront what fees they charge for checked bags, a carry-on bag, for changing a reservation, or cancelling a reservation.
DOT’s Bureau of Transportation Statistics data shows that airline revenue from baggage fees increased by more than 30 percent between 2018 and 2022, while their operating revenue grew at less than half that pace in the same period.
Under the final rule, airlines are required to:
- Disclose baggage, change, and cancellation fees upfront: Each fee must be disclosed the first time that fare and schedule information is provided on the airline’s online platform — and cannot be displayed through a hyperlink.
- Explain fee policies before ticket purchase: For each type of baggage, airlines and ticket agents must spell out the weight and dimension limitations that they impose. They must also describe any prohibitions or restrictions on changing or cancelling a flight, along with policies related to differences in fare when switching to a more or less expensive flight.
- Share fee information with third parties: An airline must provide useable, current, and accurate information regarding its baggage, change, and cancellation fees and policies to any company that is required to disclose them to consumers and receives fare, schedule, and availability information from that airline.
- Inform consumers that seats are guaranteed: When offering an advance seat assignment for a fee, airlines and ticket agents must let consumers know that purchasing a seat is not necessary to travel, so consumers can avoid paying unwanted seat selection fees.
- Provide both standard and passenger-specific fee information: Consumers can choose to view passenger-specific fee information based on their participation in the airline’s rewards program, their military status, or the credit card that they use — or they can decide to stay anonymous and get the standard fee information.
- End discount bait-and-switch tactics: The final rule puts an end to the bait-and-switch tactics some airlines use to disguise the true cost of discounted flights. It prohibits airlines from advertising a promotional discount off a low base fare that does not include all mandatory carrier-imposed fees.
