New DOT Rule Requires Automatic Airline Refunds for Delays and Cancellations

Jimmy Williams

Airline passengers will now receive automatic refunds for flight cancellations, significant delays, and baggage issues, thanks to a new Department of Transportation (DOT) rule that went into effect this week. Under the rule, airlines must issue prompt, automatic refunds in the event of major flight disruptions, without requiring passengers to fill out forms or navigate complicated procedures.

Transportation Secretary Pete Buttigieg explained that the rule incentivizes airlines to reduce disruptions. “When an airline knows that all — instead of just a few of the passengers on a canceled flight — are likely to actually get their money back, it gives them a different set of reasons to put in the investment, and the realistic scheduling that makes those cancellations less likely to happen to begin with,” Buttigieg said. So far, flight cancellations this year are below the traditional average of 2%, according to DOT data.

What Counts as a “Significant” Delay?

The DOT rule also standardizes what qualifies as a “significant change” to a flight, removing the previously inconsistent definitions across airlines. A “significant” delay is now defined as any domestic flight delayed by three hours or more, or any international flight delayed by six hours or more. Additional criteria include:

  • Departure or arrival airport changes: Any modification that changes the passenger’s original airport.
  • Adding connections: If a non-stop flight is altered to include layovers.
  • Class downgrade: If passengers are moved to a lower class of service, they’re entitled to a full refund.

Baggage Delays and Refunds for Non-Working Wi-Fi

The rule also requires airlines to refund baggage fees when checked luggage is delayed beyond reasonable limits. Passengers must file a mishandled baggage report, and refunds are owed if baggage is not returned within 12 hours of a domestic flight’s arrival or 15-30 hours for international flights, depending on the flight length.

For passengers who pay for onboard Wi-Fi or a specific seat but experience service disruptions, the rule guarantees refunds for these costs as well. This includes passengers forced to sit in a different seat than originally selected or who face non-working Wi-Fi.

Simplified Refund Process

The DOT’s final rule aims to simplify the refund process, which previously left many passengers navigating airline websites, filling out digital forms, or spending hours on the phone. Previously, some airlines issued travel credits by default, making it difficult for passengers to rebook on another airline. Under the new regulation, refunds will be issued automatically, without extra steps, in cash or to the original form of payment, and for the full ticket purchase price.

The DOT’s website provides further guidance, encouraging consumers to report any difficulties in receiving refunds from airlines. The rule, aimed at supporting travelers and ensuring fair treatment, is expected to improve the reliability of air travel while protecting passengers’ rights.

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