New Airline Compensation Rules Mandate ‘Prompt’ Cash Refunds for Travelers

The government has delivered some positive news for travelers on fly-cruise vacations. The Department of Transportation issued rules on customer compensation for disrupted airline passengers. It requires airlines to automatically give prompt cash refunds for canceled and significantly delayed flights.

Cash Refunds for Three-Hour Delays

The DOT rule gives more certainty to disrupted passengers as airlines can no longer decide what constitutes a “significant” delay.

Under the new rules, delay compensation kicks in if a domestic flight is more than three hours late. It is applicable for international flights delayed more than six hours. Airlines have seven days to issue refunds.

This means that passengers can expect “prompt refunds,” U.S. Secretary of Transportation Pete Buttigieg said. “Passengers deserve to get their money back when an airline owes them without headaches or haggling”.

Customers can still opt to receive a travel credit or an alternative flight or other transportation, but if they choose a cash refund, it must be honored.

“This is a big day for America’s flying public,” Buttigieg added. The rules apply for direct bookings with airlines as well as travel agencies and third-party booking sites. Additionally, the DOT laid out compensation rules for delayed checked bags in transit. Airlines are required to issue cash refunds if bags are delayed more than 12 hours.

Refund requirements are already part of airlines’ policy, but consumers have more certainty about when they will be compensated and can demand a cash refund. Airlines have six months to fully adopt the rules.

More Price Transparency When Booking

The US Administration also announced final rules on airline price transparency. These rules require airlines to fully disclose any fees for checked bags, change fees, and other extra charges upfront before the booking is made.

“Healthy competition requires that as a consumer you comparison shop, which means knowing the real price of a trip before, and not after you buy,” Buttigieg said.