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Airlines Must Give Cash Refunds for Canceled Flights Under New Rule
By Pete Grieve MONEY RESEARCH COLLECTIVE
The Biden administration also announced a separate rule Wednesday meant to prevent airlines from charging “junk fees.”
Make your vacation plans with confidence: Airline passengers will now be entitled to automatic refunds if their flights are canceled or significantly delayed.
The Biden administration announced Wednesday that airlines must provide cash refunds to your credit card within seven days, and customers won’t have to call their airlines or complete paperwork to get their money back.
The new rule, issued by the Department of Transportation, applies to any trip to or from the U.S. when the customer does not take an alternative flight or accept a travel voucher instead of the delayed or canceled flight. Airlines can still offer travel credits to make up for flight cancellations, but they must notify customers of the cash refund option.
The administration also announced a separate rule Wednesday meant to prevent airlines from charging “junk fees.” Officials said that airlines will now be required to disclose baggage fees as well as flight change and cancellation fees when customers are buying tickets so there are no surprises later on.
“Airlines should compete with one another to secure passengers’ business — not to see who can charge the most in surprise fees,” Transportation Secretary Pete Buttigieg said in a statement.
What the new airline rules mean for you
As the department’s changes go into effect over the next year, passengers will gain more clearly defined rights related to ticketing and airline refunds.
Notably, the Department of Transportation is laying out exactly what constitutes a “significant change” to a flight requiring a refund. Previously, airlines had their own refund policies for delayed flights, leading to confusion for customers.
Here are the situations included in the new definition of a significant change:
- Delays of three or more hours for domestic flights
- Delays of six or more hours for international flights
- Additional connections on the new route
- Changes to the departure or arrival airport
- Downgrades to a “lower class of service”
When flights are canceled or significantly delayed, airlines must now provide total refunds, including all taxes and fees, even if some of those taxes and fees are sunk costs for the airline (meaning they can’t be recovered).
Lastly, under the new rule, passengers will also be entitled to refunds for baggage fees if their bag isn’t delivered within 12 hours for domestic flights, or within 15 to 30 hours for international flights.
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Pete Grieve is a New York-based reporter who covers personal finance news. At Money, Pete covers trending stories that affect Americans’ wallets on topics including car buying, insurance, housing, credit cards, retirement and taxes. He studied political science and photography at the University of Chicago, where he was editor-in-chief of The Chicago Maroon. Pete began his career as a professional journalist in 2019. Prior to joining Money, he was a health reporter for Spectrum News in Ohio, where he wrote digital stories and appeared on TV to provide coverage to a statewide audience. He has also written for the San Francisco Chronicle, the Chicago Sun-Times and CNN Politics. Pete received extensive journalism training through Report for America, a nonprofit organization that places reporters in newsrooms to cover underreported issues and communities, and he attended the annual Investigative Reporters and Editors conference in 2021. Pete has discussed his reporting in interviews with outlets including the Columbia Journalism Review and WBEZ (Chicago's NPR station). He’s been a panelist at the Chicago Headline Club’s FOIA Fest and he received the Institute on Political Journalism’s $2,500 Award for Excellence in Collegiate Reporting in 2017. An essay he wrote for Grey City magazine was published in a 2020 book, Remembering J. Z. Smith: A Career and its Consequence.