Last week, the U.S. Department of Transportation announced that it is proposing a new rule that sets forth specific standards that define when airlines must provide refunds in the event an airline cancels or significantly changes a flight itinerary. 

As part of the announcement of the proposed rule, Transportation Secretary Pete Buttigieg said, "When Americans buy an airline ticket, they should get to their destination safely, reliably, and affordably.  This new proposed rule would protect the rights of travelers and help ensure they get the timely refunds they deserve from the airlines." 

The DOT has long taken the position that an airline's failure to provide a refund when it "cancels" a flight or "significantly changes" a flight itinerary, and the passenger does not accept an alternative flight, violates the DOT's rules prohibiting unfair practices.  In the Notice of Proposed Rulemaking, the DOT is proposing to specifically define what those terms mean.  

Cancellation

Regarding "cancellation," the DOT is proposing to require airlines to provide refunds if a flight that was published in the airline's computer reservation system at the time of ticket sale was not, in fact, operated by the airline.  

This is significant because this means that a refund is required, regardless of the reason the flight was cancelled -- including because of weather or mechanical problems.  The proposed rule also requires refunds no matter when the flight is cancelled, including if the flight is cancelled months before the departure date. 

Significant Change

In the NPRM, the DOT is also proposing to require airlines to provide refunds when a "significant change" to a flight itinerary occurs, which includes any of the following: 

• A revised departure or arrival time that changed by more than three hours for domestic flights or six hours for international flights; 
• A change in airport; 
• An increase in the number of connections; 
• A downgrade in the class of service; and
• A change in the type of aircraft that "causes a significant downgrade of the available amenities and travel experience."

Pandemic-Related Credits and Refunds

The NPRM also proposes that airlines provide credits or vouchers for future travel, that don't expire, when passengers are unable to fly for certain pandemic-related reasons, such as because of government-mandated bans on travel, the closing of borders, or individual health issues.  And, for airlines that receive significant government assistance during a pandemic, they'd be required to issue full refunds instead. 

Next Steps

The DOT's Aviation Consumer Protection Advisory Committee is holding a meeting on August 22, 2022, in order to discuss the proposed rule.  Information about attending the meeting can be found here.  The DOT is also inviting public comment on the proposal.  Information about submitting comments can be found here.