Buttigieg proposes stronger airline refund rules

The Department of Transportation (DOT) proposed a new rule on Wednesday that clarifies when airlines owe passengers refunds. The regulation is the department’s latest move to strengthen refund enforcement amid re-surging flight demand that has left the industry scrambling and sent passenger complaints soaring.

Existing regulations guarantee refunds if a flight is canceled or experiences a “significant delay” and the passenger chooses not to travel, and the proposal would define that threshold to include when the departure or arrival time changes by at least three hours for a domestic flight and at least six hours for an international flight.

Passengers would also be entitled to refunds if airlines change the departure or arrival airport, increase the number of connections or alter the type of aircraft if it causes a “significant downgrade” to the air travel experience.

“When Americans buy an airline ticket, they should get to their destination safely, reliably and affordably,” Transportation Secretary Pete Buttigieg said in a release. “This new proposed rule would protect the rights of travelers and help ensure they get the timely refunds they deserve from the airlines.”

The move comes as demands for flights surge higher than any other point since the start of the pandemic. 

But airlines have struggled to accommodate the growing number of passengers after downsizing their staffs near the start of the pandemic.

The problem has led to a chaotic summer travel season and increased industry scrutiny as passengers grapple with high levels of cancellations, delays and schedule changes.

Buttigieg’s department has made enforcing federal refund policies a cornerstone of DOT’s response, making Wednesday’s announcement the department’s latest move to increase airlines’ accountability.

DOT received more than 4,300 complaints about airline service in May, which was 237 percent above pre-pandemic levels, and complaints about refunds were the most frequent topic.

The federal government has blamed airlines for the snafus after they received billions of dollars in stimulus funds to keep employees on their payrolls and still cut staffing levels. Trade groups representing the airlines have said the funds weren’t sufficient to maintain their entire pre-pandemic staffs.

The proposal would require airlines and ticket agents to issue flight credits or vouchers that do not expire if passengers are unable to fly for pandemic-related reasons, like travel bans, closed borders or health advisories recommending against travel.

But for those airlines that receive significant government assistance related to a pandemic, the rule would require them to offer refunds rather than credits or vouchers.

The rule-making process allows 90 days for public comment.

When reached for comment, Airlines for America (A4A) — a trade group that represents major airlines — noted that U.S. airlines have issued $21 billion in cash refunds since the start of the pandemic.

“A4A member carriers comply with federal laws and regulations regarding cash refunds,” an A4A spokesperson said. “Carriers strive to provide the highest level of customer service and are committed to working with travelers to address their individual circumstances.”

Some lawmakers have put forth separate legislative proposals in response to consumers’ complaints.

A group of Democratic lawmakers on Monday introduced a bill that would codify DOT’s existing regulation mandating cash refunds. 

Sen. Bernie Sanders (I-Vt.) in late June proposed imposing fines on airlines for significant delays. Pennsylvania Democratic Senate nominee John Fetterman similarly called for the Biden administration to impose fines on airlines for scheduling flights they know they cannot staff.