Airlines will be required to automatically refund passengers for major flight changes under DOT rule

Airlines will be required to automatically issue cash refunds to passengers when flights are canceled or significantly delayed under a new Department of Transportation rule.

The new refund rule also will apply to significant wait times for checked bags and when extra flight purchases, such as Wi-Fi, aren’t provided on board.

Airlines have long been allowed to set their own standards for issuing refunds — an oftentimes lengthy process that typically forces passengers to make a refund request by phone or via website. Those policies sometimes shift when flight cancellations increase, the Department of Transportation said in a statement.

The new requirement establishes an airline-wide standard that puts the responsibility on the flight service to automatically offer money back without defaulting to a voucher or credit offer.

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“In theory, passengers are already supposed to be refunded for a cancellation or a major delay. In practice, it often doesn’t always work that way,” Department of Transportation Secretary Pete Buttigieg said at a recent press conference, adding that the rule will go into effect in roughly six months.

“Often, our consumer protections team has had to impose multimillion-dollar penalties on airlines just to get them to do what is already required,” he said.

Under the new rule, passengers would be entitled to an automatic refund for a variety of reasons, including if their domestic flight was delayed by more than three hours or their international flight was delayed by more than six hours; a plane change offered less accommodations for a person with a disability; a checked bag wasn’t delivered within 12 hours of filing a lost bag report in the U.S. or within 15 to 30 hours internationally; or an airline failed to provide an extra service that a passenger paid for, such as a seat selection.

Airlines would be expected to provide a full refund of the ticket price, minus the costs of connecting flights already completed.

As COVID-19 cases spiked across the country in May 2020, DOT received more than 20,000 complaints about airline refunds. That surge dropped considerably over the next three years, according to trade group Airlines for America.

“A4A member carriers abide by — and frequently exceed — DOT regulations regarding consumer protections,” the group said in a statement.

The 11 largest airlines issued $43 billion in customer refunds between January 2020 and December 2023, Airlines for America said in a statement. Nearly $11 billion was issued to customers last year.

Buttigieg said that “airlines are not enthusiastic” about the new rule, but he hopes airlines will “conform and comply.” The Department of Transportation will continue to rely on the complaint process to address violations after the rule takes effect.