The Department of Transportation (DOT) in late April finalized rules requiring airlines to automatically issue refunds if there’s a disruption and no acceptable alternative exists. It sounds great in theory, but as airlines put it into effect this week, we find there is a dark side to this change. Several airlines are using this ruling to their full advantage and are now denying refunds to a slew of travelers who would have previously qualified for one.
The idea behind the rule was that if there was a significant change to an itinerary, airlines had to automatically process refunds instead of making people ask for them. In many if not most cases, that will be useful… but airlines have found a way to turn this into a weapon they can use to profit.
The general rule goes like this both for advance schedule changes and irregular operations during travel. If any of the following things happen, refunds must be automatically processed:
- A flight is canceled (even if it’s just a change of flight number, that counts)
- A flight is delayed or schedule-changed at least 3 hours within the 50 US states and US territories or 6 hours everywhere else
- An extra stop is added to an itinerary beyond what was originally booked
- Change in origin or destination airport
- Traveler is downgraded to a lower cabin
- Disabled customers have a change in connecting airport or a change in aircraft types regulating in accessibility features not being available
Now, in most of these cases, travelers were already eligible for refunds anyway. It’s just that they will now be processed automatically. The one big exception? A simple flight number change never required a refund — and still shouldn’t — but that’s on the DOT’s list for some inexplicable reason. Instead of creating a bunch of refund opportunities however, I expect this will just force airlines to stop making so many flight number changes.
The loophole that airlines found lies in that second bullet point. A “significant delay” wasn’t previously defined by the feds, so airlines made their own decisions. Some considered a delay as little asn hour to be significant. Others went as long as four hours. But now, airlines have decided to take advantage of DOT creating a standard policy by standardizing around it. In most cases, this means airlines are increasing the amount of time required in a schedule change and/or delay to be eligible for a refund.
Delta, JetBlue, and United were all at two hours. Southwest never seemed to really peg a specific time limit but just played it by ear. Now? They have all switched to allowing refunds only if there is a three hour change domestically and six hour change internationally as DOT requires. If the change is less, you can’t get your money back. (Note: All airlines have printed this info in the links above. Southwest doesn’t have a link but a spokesperson confirmed it.)
Here’s what that looks like visually.
As you can see, there is one good guy here. An Alaska spokesperson tells me that the airline will continue to allow refunds on delays of over one hour, but now that will be limited to only controllable delays. That would include schedule changes, so Alaska deserves a gold star.
That may not be a big surprise, but this is… American is also a good guy. Well, good-ish.
American has long had the most strict — and arguably unfair — refund rule for schedule changes of any airline requiring a change of 4+ hours. Domestic tickets that are impacted will now be refundable after a 3+ hours, but American will keep international at 4+ hours. That’s the good-ish part. At least, that’s what it’ll do until it realizes everyone else is matching the DOT rule. Then I’m sure we’ll see it slip to 6+ hours. But for now, hey, American is being more customer-friendly than the rest. You don’t see that happen every day.
This is undoubtedly NOT what DOT had in mind when it put this rule into place, but unintended consequences are a real thing. And with the election coming up next week, we probably won’t see DOT take any further action for some time, if ever. It sounds like people may just need to get used to this.
This is the headline about the change, but there is more not to like in here. First off, not all airlines have the same interpretation of how to implement the rule.
For example, a refund is required if there is a cabin downgrade. Does extra legroom to regular legroom count? It’s not a cabin, but United says it does count. American says it does not. On Delta, extra legroom coach is actually a separate cabin, so that leaves American as the laggard.
How long will the refund take? Well, the auto-refunds won’t happen until after the originally-scheduled departure. Delta says 72 hours after while United says five days. But if you have a schedule change six months in advance, the auto-refund won’t apply for a good six months. (You can always just ask for a refund as you could before… assuming the change meets the new more strict guidelines.)
Two more things to keep in mind…
If you prefer holding a credit for future use instead of getting a refund — something that can happen when the traveler doesn’t match the payer — that’s no longer an option. You either make a change proactively or you get a refund.
Further, if your outbound flight was canceled and your return was not, you better get in touch with the airline quickly. The entire ticket will be canceled if you don’t talk to them before the refund goes through the queue.
I expected there would be some consumer downsides to this rule, but I didn’t quite expect it to be like this. The airlines are collectively just asking to get smacked by doing this since many consumers will now be worse off than they were before.
