A recent rule spells out when airlines must issue refunds for flights that don’t depart when scheduled.

Just the mention of flight cancellations and delays fills travelers with dread. Whether traveling for business or pleasure, a change in flight plans can cascade into an array of problems—from missed connections and meetings to lost luggage and vacation time. Before the U.S. Department of Transportation (DOT) issued a new rule on compensation earlier this year there was no industry standard for passenger compensation. The new DOT rule spells out when airlines are required to provide refunds if the delay is caused by something within the airline’s control.

What are controllable delays and cancellations?

Delays and cancellations caused by the airlines are considered controllable. Examples include maintenance, crew short-staffing, cabin cleaning and refueling.

If an airline delays or cancels a flight because of weather, a security-related event or air traffic control reasons, the compensation rule doesn’t apply because these factors are not under an airline’s control.

When passengers are entitled to a refund

There are three situations when airlines are required to issue a refund to passengers The DOT spells out each:

• Canceled or significantly changed flights: Passengers will be entitled to a refund if their flight is canceled or significantly changed, and they do not accept alternative transportation or travel credits offered.
• Significantly delayed baggage return: Passengers who file a mishandled baggage report will be entitled to a refund of their checked bag fee if it is not delivered within 12 hours of their domestic flight arriving at the gate, or 15-30 hours of their international flight arriving at the gate, depending on the length of the flight.
• Extra services not provided: Passengers will be entitled to a refund for the fee they paid for an extra service—such as Wi-Fi, seat selection or inflight entertainment—if an airline fails to provide this service.

Plus, for the first time the rule defines what qualifies as a significant change: “Significant changes to a flight include departure or arrival times that are more than 3 hours domestically and 6 hours internationally; departures or arrivals from a different airport; increases in the number of connections; instances where passengers are downgraded to a lower class of service; or connections at different airports or flights on different planes that are less accessible or accommodating to a person with a disability.”

For air travelers, the new rule is a welcome change because it clarifies when compensation is owed and helps consumers save money because they get refunds rather than vouchers.

The rules for the refund process

In addition to requiring refunds for cancellations and delays, the DOT rule requires that refunds be automatic, prompt, for the full amount, and in cash or the original form of payment. In short, there should be no refund run-arounds and no defaulting to a travel credit that expires.

Airlines the rule applies to

Both U.S. and foreign air carriers must provide prompt automatic refunds and ticket agents must provide prompt refunds upon request when airlines cancel or significantly change their flights and consumers do not accept the alternatives offered.

Another passenger benefit of the rule

The rule also provides relief for passengers holding a non-refundable ticket (to, from or within the U.S.) and who are restricted by a government or advised by a medical professional not to travel due to a serious communicable disease. For a passenger in this situation, U.S. and foreign air carriers are required to provide transferrable travel vouchers or credits valid for at least five years to consumers.
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