5 Things You Need to Know About The New Airline Refund Rule

Monday, May 6th, 2024.

Gate Access

Happy Monday, Travel Friend! If you haven’t heard by now, The Biden-Harris Administration, by way of the DOT (Department of Transportation), has announced a final rule requiring automatic refunds of airline tickets and ancillary service fees. This is a huge win for passengers but still raises some concerns, in my opinion. Let’s get into it!

5 Things to Know About The Airline Refund Rule

1. What Does Automatic Refund Actually Mean?

Passengers are entitled to automatic refunds if their flight is canceled or significantly changed and the airline cannot provide an acceptable alternative. This simplifies the process of getting refunds, reducing the hassle for consumers.

The term "automatic refund" does not imply that passengers receive their cash refund on the day of the cancellation or significant change. Instead, it means that the refund process is initiated automatically by the airline without requiring the passenger to submit a refund request. The airline still adheres to specific timelines for processing these refunds: 7 business days for purchases made by credit card and 20 calendar days for other payment methods. This ensures that passengers don't need to follow up or submit additional information to receive their refunds, simplifying the overall process.

2. Remember These Clear Definitions

The rule clearly defines what constitutes a "significant change" and a "cancellation." This standardization helps passengers understand when they are eligible for refunds and ensures consistency across airlines.

After reviewing the over 200-page rule, I found that the definition of a "significant change" includes several criteria that can qualify a change as significant enough to entitle a passenger to a refund.

One of them is a change that results in the scheduled departure occurring three hours or more earlier or the scheduled arrival occurring three hours or more later than the original time for domestic itineraries. For international itineraries, these times are extended to six hours.

I include the full list in Gate Access Newsletter+. Upgrade your subscription here.

3. When Does This Rule Begin?

The new rule goes into effect on October 28th, 2024. However, it may face an issue due to the FAA Reauthorization Bill. Many travel enthusiasts, including me, have pointed out that if this bill becomes law, it’ll supersede the rule DOT has introduced. I’ll know more by or after May 10th, which is the deadline for this bill to pass or not.

4. Airlines Are Required to Tell You Your Rights

Airlines and ticket agents must proactively inform passengers of their rights to a refund before offering travel credits or vouchers. This means that travel credits or vouchers aren’t completely removed. Once this rule is implemented, every airline will update its Contract of Carriage to accommodate it. We have to wait for that update to highlight the exact language the airline will use. Once I see those updates, I’ll let you know!

5. You’re Now Entitled to Ancillary Service Refunds

This is a huge update that concerns me. First, let’s discuss what ancillary services are.

Ancillary services are additional services or products that passengers can purchase separately from their basic flight ticket. I include a list in Gate Access Newsletter+. You can upgrade your subscription here.

Here’s a real-life experience I had to give you more context. I recently flew first-class on an American Airlines aircraft that did not have a screen for entertainment. When you purchase a first-class ticket, you expect to have a screen at minimum to enjoy. Also, at booking, my ticket stated I would have one.

However, airlines often switch out planes as needed. The aircraft you saw at booking will most likely change. Screenshot the aircraft number next time you book to see what I mean.

When this happened to me, I was not accommodated at all. I was able to collect miles later, but they didn’t equate to what I actually paid for the flight. This new rule protects passengers in this situation.

Let me be clear: You will not receive a refund for the entire flight. Instead, under the new rule, you would be entitled to a refund specifically for the cost of the entertainment service you paid for and did not receive. The rule ensures that refunds are provided for these ancillary services when they are not delivered due to a cancellation or significant change in the flight, but it does not extend to refunding the entire cost of the flight ticket based solely on the absence of such services.

Why This Rule Concerns Me…

It puts the airline in a terrible predicament, decreasing the flexibility of switching out planes when needed. Under this rule, airlines will have to manage aircraft types to ensure the updated aircraft includes all the services passengers requested at booking.

This leads me to believe that we may soon see an increase in airfare or other fees to mitigate the risk.

Continued in Gate Access Newsletter+:

• Full List of What Constitutes a “Significant Change”

• Deeper Insights on What’s Eligible For a Refund

• Full List of What Constitutes an Ancillary Service

• Harmony Tip of The Week

• Invite to The Gate Access Community