DOT Proposes New Rule To Make it Easier To Refund Canceled Flights

For decades, it has been notoriously difficult for travelers to get a refund from an airline if their flight is canceled. In many cases, carriers will simply issue a voucher for the money the passenger already spent. However, the voucher can only be used towards a future flight on that airline, essentially giving the airline an interest-free loan and leaving the customer without their cash.

On Wednesday, the U.S. Department of Transportation published a new proposal that, among other things, would allow for a major expansion of consumer rights when it comes to cancelations and refunds for both domestic and international flights — and great peace of mind for those who are purchasing tickets.

Below, Select outlines the story behind the new proposal, how it would affect your future travels and how you can best protect yourself as a traveler.

The new proposal comes straight from the desk of Secretary of Transportation Pete Buttigieg on the heels of what has so far been a pretty rough year for airlines. Recent headlines have been flooded with stories of lost luggage and carriers simply not having enough employees to fly their customers.

According to the Bureau of Transportation Statistics, out of the more than 2.73 million flights so far in 2022, roughly 20% have been delayed while another 3% have been outright canceled. In June, Buttigieg himself urged airline CEOs to fix the problems at hand before a busy Fourth of July weekend.

It’s also worth noting that current frustrations with airlines have been building from both the public and lawmakers since the onset of the Covid-19 pandemic. After taxpayer-funded bailouts were issued in 2020 to help save U.S. carriers from bankruptcy, there were hopes that things would return to normal. Now, with an abundance of travelers and a lack of employees to handle the summer rush, flying has been a mess.

Bearing all that in mind, the proposal comes at a good time, offering travelers some hope of change to come. Here’s a look at how this could end up affecting your future travels.

In the DOT’s press release, Buttigieg says, “This new proposed rule would protect the rights of travelers and help ensure they get the timely refunds they deserve from the airlines.”

As of now, airlines aren’t legally bound to give customers any sort of compensation for delayed or canceled flights, as well as if you miss your flight due to illness. However, many airlines will accommodate passengers as best as possible. The only case where they are required to provide assistance is when a passenger is “bumped” from a flight due to it being oversold.

The 116-page proposal, which is reminiscent of the EU’s Air Passenger Rights, puts forward that consumers flying domestically or internationally should be given a full refund based on their original payment method, whether that’s cash, credit or airline miles. Airline passengers will be eligible for a refund in any of the following circumstances, as long as they don’t accept alternative transportation from the airline:

• If your flight is canceled
• Whenever departure or arrival times are delayed by at least three hours for domestic flights or by at least six hours for international flights, if flyers opt-out of taking the flight
• Anytime the departure or arrival airport changes or the number of connections is increased on an itinerary
• If the original aircraft has to be replaced by another but there’s a major difference in the onboard amenities offered and overall travel experience as a result

The proposal also states that airlines would be required to issue vouchers with no expiration date whenever passengers are “unable to fly for certain pandemic-related reasons, such as government-mandated bans on travel, closed borders, or passengers advised not to travel to protect their health or the health of other passengers.”

Additionally, if the airline or ticket agent involved has received pandemic-related government assistance, refunds to the original method of payment would have to be provided, rather than travel credits or vouchers.

While it’s exciting to think about, the proposal is still just that, and has not been signed into law just yet. Members of the public are invited to attend a virtual meeting hosted by the Aviation Consumer Protection Advisory Committee that’s scheduled for Aug. 22, 2022.

Any comments you wish to make regarding the proposal can be submitted here under docket number DOT-OST-2022-0089. From there, the committee will examine its findings and adjust the proposal as needed.

As for the likelihood that the proposal will be enacted, it seems airlines are at least somewhat supportive of making these changes. The document states, “They [the airlines] expressed support for the Department’s effort to codify its longstanding policy regarding refunds.”

Henry Harteveldt, travel industry analyst at Atmosphere Research Group, tells Select “this has a decent chance of getting through” as there has been compounding frustration from flyers and those on Capitol Hill. However, he notes there may be adjustments to the current proposal before it’s confirmed as the standard rule for airlines.

Thankfully, in my case, the included travel insurance protections from my Chase Sapphire Preferred® Card covered these additional expenses. Travel insurance from a travel rewards credit card can also provide peace of mind when you’re dealing with other problems that may arise during your trip, including medical emergencies and rental car issues, among other stressful scenarios.

If you’re in the market for a new travel rewards credit card, consider signing up for one that includes complimentary travel insurance to protect you in case things go awry. Here are a few credit cards that offer comprehensive coverage for all your upcoming travels.

In the meantime, if you’re a regular flyer who may have been given a travel credit or voucher recently instead of a full refund, sign up for the public webinar on Aug. 22 to voice your frustrations. If you’re planning a vacation for the fall or winter, it might be a good idea to sign up for a travel rewards credit card that comes with travel insurance to ensure you’re protected from additional flight cancelation-related expenses.

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