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October 2024 Update: The new rule has gone into effect: airlines operating flights to or from the U.S. must automatically refund passengers for cancelled flights, as well as domestic flights where the schedule is changed or the flight delayed 3+ hours and international flights where the scheduled is changed or the flight delayed 6+ hours, if the passenger does not accept alternative transportation or a travel credit. See Pete Buttigieg's tweet:
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Unfortunately, the DoT failed to listen to advice to make the required domestic flight delay shorter–2 hours–to match the existing 2 hour schedule change policies of airlines such as United Airlines, Delta, and JetBlue. All three have changed their refund policy to only permit refunds when a domestic flight is changed by 3 hours or more or an international flight is changed by 6 hours or more, which is worse than their prior policies.
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New Department of Transportation Rules will mandate that airlines must automatically and promptly refund passengers for cancelled flights as well as domestic flights delayed 3+ hours and international flights delayed 6+ hours, if they do not accept alternative transportation or a travel credit. This refund rule and full disclosure of fees for changes, cancellation, and baggage, is expected to take effect by October 30, 2024, while other aspects of the rule will take effect on April 30, 2025.
Ironically, the rule may be of most use against foreign airlines operating flights to and from the U.S., since of the major U.S. airlines, American Airlines is the one with the most passenger-unfriendly refund policy when it comes to flight schedule changes: post-pandemic, AA has refused to refund passengers for schedule changes of less than 4 hours from the originally scheduled time of travel; only travel credit was permitted in these instances. United Airlines and Delta, by contrast, will typically offer a refund for a schedule change of 2 hours or more, and Alaska Airlines will refund you if there's no comparable routing available within 60 minutes of your originally booked flight (see Best and Worst U.S. Airline Refund Policies for Schedule Changes). So it's possible that with this ruling, United, Delta, and Alaska could make their current refund policies worse for passengers; we'll just have to wait and see.
That said, during the pandemic, United Airlines, Air Canada, and TAP Air Portugal received the most complaints regarding ticket refunds, followed by AA, Frontier, Delta, El Al, and Lufthansa (see Best and Worst Airlines for Refunds from Cancelled Flights in 2020), and since the U.S. doesn't have EU-level passenger protections such as EC 261/2004, the rule could be helpful to passengers in getting refunds from airlines that drag their feet or try to only provide a travel voucher or credit.
Specifically, a passenger will be entitled to a refund if an airline cancels a flight or makes one of the following significant changes compared to the originally booked flight:
- Delays a domestic flight by 3+ hours or an international flight by 6+ hours;
- Departs or arrives from a different airport;
- Increases the number of connections;
- Downgrades the passenger to a lower class of service; or
- Reduces accessibility or accommodation to a passenger with a disability by connecting at different airports or flying on planes that are less accessible or accommodating to the disability
The refund must be provided to the passenger's original form of payment within 7 business days for credit cards and within 20 calendar days for other payment methods (such as frequent flyer miles). Airlines may NOT substitute travel vouchers or travel credits for a refund unless the passenger affirmatively chooses to accept this instead of a full refund, and airlines must provide prompt notifications to passengers who are affected by a cancelled or significantly changed flight of their right to receive a refund to their original form of payment.
While the rule also includes other aspects, such as a refund of passengers' checked bag fee if their luggage isn't delivered within 12 hours of their domestic flight arrival or within 15-30 hours of their international flight arrival, depending on the flight duration, these time delays are excessively long, in our view, so not of great value.
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