You’ve probably seen some coverage of last week’s big “New Rules” announcements from the Department of Transportation (DoT). Some of the coverage has been a bit over the top, but overall the new rules are good rather than great news for consumers.
Refunds. Probably the most important new rule requires airlines that owe you a cash refund to make that refund fully, promptly, and automatically. For years, a fundamental rule has been that when an airline cancels a flight or delays it significantly, the airline owes you its next available seat or some other voluntary accommodation. But if you don’t like the airline’s offer, for any reason, it owes you a full refund.
Typically, that principle applies regardless of the reason for the cancellation or delay: The line didn’t deliver what you paid for so you get your money back. That principle has been in airline contracts of carriage forever, and I suspect it dates from common law in times before there were airlines. The new rule doesn’t change that principle.
What it adds is a clear definition of a substantial or “significant” delay. Many contracts are vague about this point, and DoT says that the new-seat-or refund rule will now kick in if the new schedule is three hours or more before your original departure or gets you to your destination three hours or more after your original schedule for domestic flights, six hours in both cases for international flights. That’s actually a bit looser than some lines’ contracts specify, but it clarifies the situation for all lines. The refund rule also specifically includes ancillary fees paid along with airfares. And it includes some new protections when airlines or travelers have to cancel because of communicable diseases, contracted by passengers, or rife in a destination.
A second part of the new rule requires airlines to make refunds promptly—within seven days for tickets bought with a credit card, 30 days with cash or check. When an airline faces a refund requirement, and you don’t like the next seat offer, the airline is free to negotiate some other arrangement with you. But once you say “no” to the airline’s final offer, it should initiate a refund without any further action on your part.
The rule also requires airlines to refund fees for checked baggage that is delayed: specifically, if an airline doesn’t deliver your mishandled bag within 12 hours after your arrival for a domestic flight; 15 to 30 hours for international flights depending on length. To me, this misses the mark. Whenever your checked bag doesn’t arrive on the same flight you do, your hassle starts immediately, not after 12 hours. DoT could have done better.
Overall, this new rule is an improvement. It will be implemented within six months.
This rule includes an interesting requirement. If you’re entitled to “free” checked bag through your airline credit card or some other fee exemption based on frequent flyer or military status, airlines will be required to include your fee exemptions in their fare quotes and to pass that information to online ticket agencies. You can opt out of such notifications on privacy grounds, but if you agree, airlines have to include them and pass them along.
This requirement imposes a substantial burden on airline data handling and software architecture. Despite a long lead time to implementation—six months to two years—I can foresee some glitches. We shall see.
Airlines are also prohibited from advertising “discounts” based on low-ball fare quotes that omit stiff airline-imposed fees—fees that are really part of the fare: This rule is a no-brainer.
DoT’s releases crow about the administration’s record on consumer protection, which is, in general, pretty good. Some key issues remain on the table, but these rules are steps in the right direction. DoT: Keep up the good work!
