Major Change to Airline Refunds in US

Airline passengers will now be due refunds for long delays and cancellations, thanks to a major change in rules governing flight bookings.

The Department of Transportation (DOT) says the payments must be automatic and not at the discretion of carriers. Similarly, passengers hit by luggage loss will be refunded for missing items.

In order to be eligible for a refund, a passenger would have to be delayed by more than three hours while flying domestic and more than six hours for international flights. The rule would also apply to all customers, no matter if they purchased their ticket directly from the airline or through a third-party site such as Expedia or Travelocity.

A United Airlines plane lands at San Francisco International Airport. Airlines will now be required to give automatic refunds for delayed or canceled flights under a new DOT rule.

Tayfun Coskun/Anadolu via Getty Images

The new rules state that passengers whose luggage is lost and not delivered within 12 hours must also get a refund for their trouble.

“This is a big day for America’s flying public,” Transportation Secretary Pete Buttigieg said at a press conference Wednesday.

All airlines have six months to begin implementing the new rules.

Currently, airlines can decide when a refund is due to passengers experiencing major flight delays, and often the companies only offer travel credits, if anything.

“Passengers deserve to get their money back when an airline owes them, without headaches or haggling,” Buttigieg said in a statement.

Trade organization Airlines for America said the airlines it represents, including some of the top carriers such as Delta, American and United, already offer fully refundable tickets.

“A4A members offer a range of options—including fully refundable fares—to increase accessibility to air travel and to help customers make ticket selections that best fit their needs,” a spokesperson told Newsweek.

“Consumers are given the choice of refundable ticket options with terms and conditions that best fit their needs at first search results.”

The organization also pointed out that ticket prices have reached record lows, and round-trip domestic flights are 14 percent lower in 2023 than in 2010.

“U.S. airlines are providing more options and better services while ticket prices, including ancillary revenues, are at historic lows,” the A4A spokesperson added.

That’s not the only change coming to airlines this year. Along with its refund rule, the DOT is also looking to protect passengers from junk fees that pop up when purchasing a ticket.

Airlines will have to tell customers upfront what charges apply for a first or second checked bag, carry-on luggage as well as for canceling or changing a reservation. The DOT estimates this will save passengers more than $500 million each year.

“Airlines should compete with one another to secure passengers’ business—not to see who can charge the most in surprise fees,” Buttigieg said in a statement.

According to the DOT, airline revenue from baggage fees has soared more than 30 percent between 2018 and 2022.

Allen Michel, a business professor at Boston University and an airline economics expert, told Newsweek: “There are millions of disgruntled travelers each year. This is an easy fix for many issues. Most importantly, it’s an election year and the administration is looking for easy-to-understand benefits that they can deliver to the public. Travel is up so the new DOT rules get lots of bang for the buck.”