US issues rules to force airlines to give cash refunds for delayed flights

The U.S. government issued final rules Wednesday to force airlines to automatically issue cash refunds for issues such as delayed flights and to better inform fees for baggage or cancellation of a reservation.

The Department of Transportation announced that airlines will be required to provide automatic cash refunds, within days, for canceled flights and “significant” delays.

Under current regulations, airlines decide how long a delay should be to trigger refunds. The government is removing that leeway by defining what is a significant delay, as one that lasts at least three hours for domestic flights and six for international flights.

Airlines will still be able to offer another flight or travel credit, but consumers can decline the offer.

The rule also applies to refunds of checked baggage fees if the suitcase is not delivered within the first 12 hours on domestic flights or 15 to 30 hours for international flights. And that also covers fees for things like seat selection or an internet connection if the airline doesn’t provide the service.

Complaints about refunds rose significantly during the Covid-19 pandemic, after airlines canceled flights and, even when they didn’t, many people did not feel safe sharing the plane cabin with other passengers.

Airlines for America, a trade group for major U.S. airlines, said refund claims to the Department of Transportation have dropped sharply since mid-2020. A spokesperson for the group said airlines “offer a variety of options — including fully refundable fares — to increase accessibility to air travel and help consumers choose the seat that best meets their needs.”

The group said the top 11 U.S. airlines issued $43 billion in refunds to customers from 2020 to 2023.

The Department of Transportation issued a separate rule requiring airlines and ticket agencies to clearly disclose what they charge for checked bags and carry-on bags and for canceling or changing a reservation. On airline websites, fares should be displayed the first time customers see the price and schedules.

The rule will also force airlines to inform passengers that they have a guaranteed seat and that they should not have to pay more money for it, although it does not prohibit airlines from charging people to choose specific seats. Many airlines currently charge extra for some seats, including those in the exit row and those close to the cabin.

The agency said the rule will save consumers more than $500 million a year.