The Department of Transportation (DOT) has announced a new final rule that will require airlines to provide automatic refunds to passengers in certain situations, highlighting the Biden Administration’s commitment to consumer rights in the skies. The policy change is expected to result in over $600 million in refunds for passengers in 2022 alone.

Under the new rule, airlines will be required to provide automatic refunds for canceled or significantly changed flights within seven days for credit card payments and within 20 days for other forms of payment. This applies not only to the cost of the flight, but also to any additional fees such as checked bag fees and charges for ancillary services like inflight WiFi.

The DOT defines a significant change as:

* A three-hour delay (or early departure) on domestic flights

* A six-hour delay (or early departure) on international flights

* A change of departure or arrival airport on an itinerary

* The addition of connection points on an itinerary

* A downgrade to a lower class of service

* A change in connection airports for passengers with a disability

* A substitution of aircraft that makes an accessibility feature unavailable for passengers with a disability

The refund is only required if the passenger rejects or isn’t offered alternative transportation or compensation, such as credits for another flight. This means that passengers will need to be knowledgeable enough to turn down alternatives in order to receive a refund.

Pete Buttigieg, the Secretary of Transportation, stated in a release that “passengers deserve to get their money back when an airline owes them – without headaches or haggling.” He added that the new rule sets a new standard for airlines to promptly provide cash refunds to their passengers.

The policy change is expected to have a significant impact on the airline industry, as refunds can eat into profits significantly. For example, Delta Air Lines issued $6 billion in refunds between January 2020 and August 2022. However, measures that force carriers to give out cash compensation also create an incentive for better service with fewer delays and cancellations.

Overall, the new rule is a win for consumers and highlights the Biden Administration’s commitment to protecting passenger rights. It’s a reminder that passengers have rights, and airlines must be held accountable for their actions. As Buttigieg stated, “our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”