The U.S. Department of Transportation (USDOT) issued a press release on August 3 announcing a new proposed regulation that would significantly strengthen consumer protections during flight disruptions and require airlines to provide full refunds in specified situations. The regulation still needs to go through public comment before the Department of Transportation publishes a final rule and announces its effective date, so this will still take some time.

Airfare Refunds

Passengers would be entitled to a full ticket refund for the following significant itinerary changes:

  1. A departure moved up by 3 hours (domestic) or 6 hours (international), or an arrival delay of 3 hours (domestic) or 6 hours (international)
  2. A change in the departure or arrival airport
  3. An increase in the number of connections
  4. A downgrade in cabin class
  5. A change of aircraft that results in a significant reduction in onboard services or amenities

In addition, the new rule would require airlines to notify passengers that they are entitled to a refund in these situations, rather than simply offering them a travel credit.

Refunded Travel Credits That Never Expire

During COVID, many airlines proactively converted nonrefundable tickets into travel credits. Under the new rule, airlines would be required to issue travel credits, and those credits could not have an expiration date, in the following situations:

  1. The passenger is prohibited from traveling due to restrictions imposed by the U.S. or a foreign government, such as stay-at-home orders or entry restrictions
  2. During a public health emergency, based on guidance from the CDC (or a similar agency in another country or the WHO), a doctor advises the passenger not to travel or the passenger decides not to travel
  3. Because the passenger may have, or has, a serious communicable disease that could pose a public health risk, and based on guidance from the CDC (or a similar agency in another country or the WHO), a doctor advises the passenger not to travel or the passenger decides not to travel

However, airlines or travel agencies may charge a fee for issuing the refund, as long as the fee is charged per passenger and is reasonable.

What’s the Impact?

The new refund standards would codify many policies that major airlines already follow, even if they are not always clearly spelled out, so the impact on traditional carriers may not be especially large. For low-cost carriers, though, this would be a meaningful improvement. Budget airlines would no longer be able to rely on their contracts of carriage to deny refunds to passengers whose flights are delayed by as much as 1 day. Non-expiring travel credits would also be a major improvement, since travelers would no longer have to worry about being unable to use them up within a limited period.

Finally, this rulemaking is still in the middle of the regulatory process. It will take at least a few more months before it becomes a final rule and can take effect. So if you want to benefit from it, you’ll still need to be patient.