The U.S. Department of Transportation (“DOT”) has issued two new rules amending and adding various aviation consumer protection regulations. These rules mandate the automatic, prompt issuance of refunds for cancelled or changed flights and the upfront disclosure of fees and policies for ancillary services.
Rule Governing Refunds for Unused Tickets and Ancillary Services
Over the last fifteen years, the DOT has promulgated a comprehensive regulatory scheme aimed at promoting the rights, protections, and comfort of passengers in air transportation. One such regulation has required air carriers to provide prompt ticket refunds when due, i.e. within 20 days of receiving a request for cash and check purchases, and within 7 days for credit card purchases, if the carrier operates passenger service using aircraft with a capacity of 30 or more seats.
Last week, the DOT issued a new rule governing the timing of refunds for services a passenger does not receive.1 First, a carrier now must issue a “prompt and automatic refund” when it cancels or significantly changes a flight and does not offer alternative transportation or compensation, or the passenger does not accept the alternative flight or compensation within a reasonable deadline. Air carriers must inform consumers of their right to a refund before offering alternative compensation. An itinerary is now considered “significantly changed” if the passenger: (1) will arrive or depart a certain number of hours before or after the originally scheduled time of arrival or departure, depending on whether an itinerary is domestic or international2; (2) will depart from or arrive at a different airport than originally scheduled; (3) will travel on an itinerary with more connection points; (4) the passenger is downgraded to a lower class of service; or (5) has a disability and is scheduled to travel through one or more connecting airports that differ from the original itinerary, or is scheduled to travel on a substitute aircraft that lacks one or more accessibility features. Carriers are prohibited from retaining processing fees for the issuance of mandated refunds arising from their cancelling or significantly changing a flight.
Second, carriers must provide automatic refunds of checked baggage fees when baggage is not delivered in a timely manner, as defined by the regulation,3 so long as the passenger files a Mishandled Baggage Report. Similarly, air carriers must issue automatic refunds of fees paid for ancillary services that were not provided.
The timing for the issuance of refunds will now be based on the date the customer’s right to a refund is undisputed because the contracted service was not provided and either: (1) the customer rejected the alternative offer; or (2) no alternative was offered.
Notably, Congress has proposed language to be contained in the forthcoming Federal Aviation Administration Reauthorization Act that would revert the timing of the issuance of a refund back to that required in the previous rule, i.e. the timing of the refund would again be based on the date the consumer requested the refund.
The new DOT rule will now cover air carriers operating aircraft of any size and will apply to all tickets and itineraries to, from, or within the United States, regardless of the point of sale or residency of the consumer.4
Finally, air carriers must issue travel credits or vouchers when a passenger was unable to travel because of a serious communicable disease, either because of governmental restrictions or because the passenger’s treating medical professional(s) instructed the passenger not to travel. Carriers may require passengers to provide documentation to support their claim that they cannot travel. Carriers also may retain a processing fee associated with issuing the travel voucher or credit, so long as it is on a per-passenger basis and was disclosed at the time of purchase.
This rule takes effect on June 25, 2024.
Ancillary Fee Transparency
Another policy initiative that has been at the center of DOT rulemaking in recent years is the early and prominent disclosure of certain fees associated with the booking of air travel. In particular, the DOT has required air carriers to disclose: on their homepages, information about baggage fees and allowances; on the first screen that displays a fare quotation in response to a search by a passenger, any increase in the fees for passenger baggage or change in fee baggage allowance; a notice on the first screen to display a fare quote that additional baggage fees may apply, and where to access those fees; on e-ticket confirmations, the free baggage allowance and applicable fees for checked and carry-on baggage; in a central place on the carrier’s website, all fees for optional services.
In a new rule issued earlier this month, the DOT is now requiring air carriers to disclose certain fees in a more “upfront” manner.5 In particular, the new rule requires air carriers to disclose fees for “critical ancillary services” during the itinerary search process at the first webpage where a fare and schedule are provided in response to a request for a specific flight itinerary. The term “critical ancillary services” includes: (1) the transporting of a first checked bag, second checked bag, and carry-on bag; and (2) changing or cancelling a reservation. If the fare rules associated with the ticket do not permit changing or cancelling a reservation or transporting a checked or carry-on bag, then the disclosure must so state. If a passenger affirmatively provides information such as their participation in a rewards program or their military status, the fee information provided must be passenger-specific. If a passenger does not provide such information, the carrier must provide itinerary-specific fees.
Carriers must also disclose on their homepages a clear and conspicuous link containing all other non-critical ancillary services available for purchase, such as advance seat selection, access to inflight entertainment or beverage, lounge access, pillows, or seat upgrades. Such fees may be expressed in a range, but baggage fees must be expressed more specifically, taking into account factors such as frequent flyer status or advance purchase that may affect such charges.
The rule requires a number of other disclosures aimed at improving transparency of ancillary service fees. For instance, air carriers that offer advance seat selection for purchase must clearly and conspicuously inform a consumer that is offered the option to purchase a particular seat that a seat is already included in the fare.
This rule takes effect on April 30, 2025.
These new rules are meant to further the DOT’s goals of improving the consumer experience in air travel transparency and air carriers should ensure their websites and policies are updated so they are in accordance with these rules.
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1 Refunds and Other Consumer Protections, 89 Fed. Reg. 32760 (Apr. 26, 2024) (to be codified at 14 C.F.R. pts. 259, 260, 262, 399).
2 A “significant change” to a flight has been defined to occur when the original departure time is advanced or original arrival time delayed by more than 3 hours for domestic itineraries or more than 6 hours for international itineraries. The standard for international itineraries is intended to apply to the early departure or the late arrival of a domestic segment of itineraries where the domestic segment is the first or last segment and is on the same ticket as the international segment.
3 For domestic itineraries, air carriers must deliver the checked baggage within 12 hours from the consumer’s flight arriving at the gate. For international itineraries with a flight duration of less than 12 hours, air carriers must deliver the checked baggage within 15 hours of the consumer’s arrival. For international itineraries with a flight duration of over 12 hours, air carriers must deliver the checked baggage within 30 hours of the consumer’s arrival.
4 The DOT also clarified that the scope of “air transportation” includes flight segments between two foreign points if those segments are on a single ticket or itinerary to or from the United States without a significant break in the journey.
5 Enhancing Transparency of Airline Ancillary Service Fees, 89 Fed. Reg. 34620 (Apr. 30, 2024) (to be codified at 14 C.F.R. pts. 259, 399).