The US government has issued a new consumer-friendly rule on how and when airlines must refund travellers if their flight itineraries are “significantly” altered, their luggage is lost, or ancillary services are not delivered.

The new rule, announced on 24 April, requires that carriers “promptly provide passengers with automatic cash refunds… when airlines cancel or significantly change their flights, significantly delay their checked bags, or fail to provide the extra services they purchased”.


Source: Pittsburgh International airport

The US government has issued a final rule that requires airlines to promptly provide passengers with automatic cash refunds when owed

“Passengers deserve to get their money back when an airline owes them - without headaches or haggling,” US transportation secretary Pete Buttigieg says. “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”

For the first time, DOT has defined “significant”: For example, a 3hr delay to a domestic flight or 6hr delay for an international flight, if the departure or arrival involves a different airport (or additional, previously unplanned connections), or in instances where passengers are downgraded to a lower class of service.

Mishandled baggage is also covered under the new rule, as are ancillary services that are paid for but which the airline fails to provide, such as Wi-Fi connectivity, seat selection, or in-flight entertainment.

The rule states the refunds must be automatic, prompt, and the full amount must be returned in cash or original form of payment.

“Airlines may not substitute vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation,” DOT says.

In addition, in the case of travel restrictions - issued by a government or medical professional - due to a serious communicable disease such as were implemented during the Covid-19 pandemic, the rule requires airlines to provide travel credits or vouchers that must be transferable and valid for at least five years. 

The rule comes after numerous airlines declined to issue refunds – or deliberately delayed the process - for cancelled flights during the global pandemic, angering passengers. DOT says it received “a significant number of complaints” during and after the pandemic due to the refund issue.

“At the height of the pandemic in 2020, refund complaints peaked at 87% of all air travel service complaints received by DOT,” the agency says. And even today, refund problems continue to make up “a substantial share” of complaints to the DOT.