Traveling by plane for Thanksgiving? How airline refund rules can help when flights are canceled, delayed

Over the next month, there will be millions of travelers passing through airports around the nation. Unfortunately, the holidays are synonymous with travel disruptions, including delayed or canceled flights.

But this year, before the 2024 holiday season kicked off, the Biden administration's new rules, which require automatic cash refunds for canceled or significantly delayed flights, took effect. 

The new automatic refund rule, first laid out in April by the Transportation Department, created a universal standard for when airline passengers on flights to, from or within the United States are owed refunds. 

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Prior to the rule taking effect, airlines set their own standards for what flight changes warranted a refund. Passengers then had to "navigate a patchwork of cumbersome processes to request refunds owed to them," the DOT said.

The rule was established to "address persistent issues reported by airline passengers who were trying to obtain refunds they were owed," the DOT said. 

For the first time, travelers will know the types of flight changes that warrant a refund if the passenger chooses not to continue with booked travel. 

The rules also specify that a canceled flight would entitle a passenger to a refund if the passenger does not continue with their booked trip. It will also require airlines to provide automatic refunds to passengers when refunds are owed. 

A passenger is entitled to a refund if: 

1. A flight is canceled for any reason and the airline does not rebook the passenger on another flight or the passenger does not proactively accept alternative compensation such as a flight voucher or miles. 

2. A flight is canceled and the passenger does not accept the airline's offer to rebook them or provide alternative compensation. 

3. A flight is "significantly changed" and the passenger does not accept the changed itinerary or any offers of rebooking or other types of compensation. 

According to the DOT, a "significant change" is defined as a situation where a flight's departure or arrival time is altered by more than three hours domestically and six hours internationally. 

This definition also includes changes in departure or arrival airports and an increase in the number of connections or connections at different airports. 

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It also applies in cases when a passenger is downgraded to a lower class of service or if flights are switched to planes that are less accessible or accommodating to a person with a disability.

Under the new DOT rules, passengers are also entitled to refunds if their baggage is significantly delayed or if they paid for extra services that were not provided. For instance, passengers that file a mishandled baggage report can get a refund of their checked bag fee if it is not delivered within 12 hours of their domestic flight arriving at the gate. 

For international flights, passengers will be refunded if the bag doesn't arrive between 15 and 30 hours of their flight arriving at the gate, depending on the length of the flight.

Passengers can be also be refunded if they paid for a service, such as Wi-Fi, seat selection or inflight entertainment that the airline failed to provide.

How airlines will refund a passenger

When passengers are entitled to a refund, the DOT said airlines must automatically issue refunds without passengers having to request them within seven business days of refunds becoming due for credit card purchases and 20 calendar days for other payment methods.

The refunds must be the full ticket purchase price, minus the cost of any portion of transportation already used. The refunds must include all government-imposed taxes and fees and airline-imposed fees. 

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The refunds must be returned in cash or in the form of the original payment that was used to make the purchase, such as credit card or airline miles. 

Airlines can't substitute cash refunds owed to consumers with vouchers, travel credits or other forms of compensation unless the passenger chooses to accept alternative compensation. 

If the passenger chooses alternative compensation, the travel voucher or credit offered must be valid for at least five years from the date of its issuance.

According to the DOT, passengers won't be refunded if they accept a rebooked flight with the airline or continue with a significantly changed itinerary. 

Most U.S. airlines have also promised to provide hotels for overnight delays or meals for passengers during significant delays and cancellations that are caused by issues within the airline’s control.