Airlines will be forced to issue cash refunds for cancellations, "significant" delays under new DOT rule

WASHINGTON (Gray DC) - The Department of Transportation announced Wednesday airlines will be required to issue automatic cash refunds for cancelled flights.

“This is a big day for America’s flying public,” Transportation Secretary Pete Buttigieg said.

Buttigieg said at a press conference, in theory, airline customers are owed a refund for a cancelled or significantly delayed flight.

“In practice, it often doesn’t work that way. We here again and again from passengers who describe how hard they have to push, just to get the refunds that are owed to them.”

The new rule, is an airline must refund payment to the card that paid for the flight within 7 days, without requiring any action from the passenger.

The refund must be made to whatever payment was used and cannot be paid in miles or points unless the passenger requests that.

The rule applies to flights that are cancelled, domestic flights delayed at least three hours and international flights delayed at least six hours.

“The biggest expansion of passenger rights in the department’s history,” Buttigieg said.

The DOT believes the new rule will prevent some refunds from falling through the cracks, leading to a stronger financial incentive for airlines to avoid delays and cancellations.

The new rules also require price transparency, forcing airlines to disclose baggage, change and cancelation fees up front. Those fees must also be shared with third parties.

“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.

The refund rule will take effect in six months. The fee transparency rules will begin being phased in in six months. Buttigieg said he is confident the new rules will hold up in court against any potential legal action from airlines.

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