Transportation Secretary Pete Buttigieg has been talking tough over the last few months, telling airlines to get their acts together or risk the government taking action. The Department of Transportation (DOT) has taken its first step at forcing the airlines’ hands, but all this does is clarify existing rules and in most cases, it doesn’t have a practical impact for travelers.
The proposed rule — Airline Ticket Refunds and Consumer Protections — was announced previously, but yesterday it was published in the Federal Register. It has several goals, but the primary one is to require airlines refund travelers if there are cancellations or “significant changes of flight itinerary.” What exactly does that mean? I’m glad you asked.
See, up until now, the federal rules simply say that airlines have to provide prompt refunds “when ticket refunds are due” and that ticketing agents “make proper refunds promptly when service cannot be performed as contracted.” There are a lot of ways to interpret that, so DOT is getting very specific.
A canceled flight would be one that “was published in a carrier’s Computer Reservation System (CRS) at the time of the ticket sale but was not operated by the carrier.” I’d say this should require some further clarification, but we’ll see if that happens. Specifically, what if the airline changes the flight number in a schedule change but the times don’t move? That happens a lot. Would it be considered a canceled flight? It might be under the current proposal, but it shouldn’t be.
The bigger question is around what constitutes a significant change in itinerary. This is what DOT is proposing.
- The departure moves earlier by 3 hours (domestic) or 6 hours (international)
- The arrival moves back by 3 hours (domestic) or 6 hours (international)
- The airline moves the origin or destination to a different airport
- The airline adds connections compared to what was originally booked
- The travelers is downgraded to a lower class of service
- The aircraft is changed and that results in a “significant downgrade of the available amenities and travel experiences”
All of these are straightforward with the exception of the last one. The reason that one is vague is because DOT is asking for comment on how to define it in the final rulemaking. It gives an example of a person traveling with a wheelchair and a new aircraft doesn’t have the room to properly store the wheelchair as the original aircraft did. But it’s unclear what else should fall under that. That’s why it’s asking for comments.
Codifying these rules is not a bad thing at all, but I think it’s important to note that this won’t have much of a practical impact. Here’s a look at how several airlines operate today. Is a refund allowed?
| Airline | Time change for refund | Airport change | Add Stop | Downgrade |
|---|---|---|---|---|
| Air Canada | 3 hours | Yes | Yes | No |
| Alaska | 1 hour | Not Stated | Yes | Not Stated |
| American | 4 hours | Yes | Yes | Yes |
| British Airways | 4 hours | Not Stated | Not Stated | First Class only |
| Delta | 2 hours | Not Stated | Yes | Not Stated |
| JetBlue | 2 hours | Not Stated | Yes | Not Stated |
| Southwest | No minimum | Yes | Yes | N/A |
| United | 2 hours | Not Stated | Yes | Not Stated |
This is just a sampling from published policies that are out there. In most cases where it says “Not Stated,” that just means that it’s not in the official policy, but I’ve found that it is generally allowed for a refund. Something like an airport change is so rare for an airline that it’s not really something they feel the need to point out.
Where consumers will benefit here is on domestic schedule changes on American. Today American sets that at a 4 hour change required to allow a refund, but the new rule would force them down to 3 hours. And I guess it would also force British Airways and Air Canada to allow refunds in downgauges.
You’ll notice I didn’t include ultra low cost carriers in here, and that’s because they don’t really have public-facing travel agent policies that I can find. But in most cases I’ve seen, they do refund for any even half-significant change. It’s often much easier to get a refund on them than it is to get them to put you on another airline.
Of course, these policies are out there now, but during COVID, they were changing a lot. Air Canada has been the posterchild for bad behavior. That airline refused all refunds even though it was specifically against US law. It only changed when the Canadian government finally bailed them out. But I imagine Air Canada’s bad behavior — the airline was fined heavily — has led to the government feeling the need to clarify. United and JetBlue also changed their rules on the fly during the pandemic, so this is certainly aimed at them as well.
My only real concern here is… will the airlines all coalesce around the DOT rules? That would be bad, because it would result in policies become worse than they are today. I don’t think any of us would be surprised to see airlines like United and Delta slip down from 2 hours to 3 hours if DOT says it’s ok. Let’s hope that doesn’t happen.