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.
37 comments on “Airlines are Implementing DOT Auto-Refunds, and It’s Bad News for Travelers”
It could be worse, there could be no refunds at all if the airlines had their way.
Cranky,
1. Who asked that these policies be rewritten?
2. Who vetted these changes before they were implemented?
Angry Bob 1. You’ll have to ask DOT that question 2. No clue
It’s not entirely clear if you get cancelled or delayed whether the airline has to get you to your destination.
Do they?
In many instances like that I would not want a refund but just to get there reasonably.
If a refund also happens, great, but I bought the ticket cause I needed to travel.
Abcdefg – It’s your choice. You don’t get both. An airline can offer you alternative transportation, and you can accept it. But if you don’t accept it, only then will you get a refund… assuming that the guidelines were met.
I’m not sure this will cause this much blowback as you think it will.
When a consumer is entitled to a refund but doesn’t get one, the consumer will notice. But most people, unlike you, don’t have historical perspective on airline refund policies. So many people may not realize that this is a worse situation than before. That is, if their flight changes by 2 hours, they will not realize that in previous years they would have been entitled to a refund at all.
I’d like to play devils advocate here Cranky, and argue these are good in the long run.
1) Yes the delay time is lengthened, but it’s set in stone (or law) now, whereas before those policies were at the mercy of corporate decisions which could easily have changed tomorrow, and more importantly.
2) You are writing this from the perspective of an industry insider who a) knows exactly what each airline’s policy is, and b) knows exactly how to get a refund for yourself or clients when the time comes. The VAST majority of airline travelers, and certainly an even larger percentage of Americans, know neither of these, or that they are entitled to a refund for a delayed flight at all. The automatic refund is a fairer playing ground for the casual traveler (of which most flyers are) who shouldn’t need the knowledge of an insider to get a refund.
“The VAST majority of airline travelers, and certainly an even larger percentage of Americans, know neither of these, or that they are entitled to a refund for a delayed flight at all. The automatic refund is a fairer playing ground for the casual traveler (of which most flyers are) who shouldn’t need the knowledge of an insider to get a refund.”
I’m not so sure about this. Isn’t the terms for cancellation and disruption of service currently spelled as part of the agreement when you purchase a ticket? If this is the case, then the VAST majority of travelers are being neglectful of reading the T&C them.
The vast majority of people in all walks of life aren’t reading T&C for anything, including, probably, the T&C for posting on this board :).
That’s 100% on them. I don’t have much sympathy for people who don’t do their due diligence and then b***h and moan afterwards.
At some point in your life you need to take responsibility for your actions and not depend somebody else to bail you out whenever things don’t go your way.
100% disagree. Airline contracts of carriage are many, many pages of dense legalese. There literally are not enough hours in the day to read the terms and conditions for every web site we visit or item or service we purchase: it is actually impossible to do as you suggest unless you pretty much never visit a web site or purchase a plane ticket. And I’m sure that’s deliberate on the part of the companies whose lawyers write these rules.
I see two more ways in which this change could hurt customers.
First, if there is a significant delay, won’t airlines work to reaccommodate paid passengers on other airlines to get to their destination? I’ve certainly experienced that on United. Now, if it’s cheaper, they can just say that all we need to offer is a refund and you are on your own to purchase alternative tranportation (at last minute prices.)
Second, and this is a form of gamesmanship, let’s say that after selling a certain flight for 330 days, and having sold lots of discounted seats, there is a big event and high demand for a flight. Let’s say a concert of sporting event got scheduled. Airline could change the flight number and refund the discount tickets and sell the freed up seats at current prices. It’s the kind of thing that hotels and Airbnb will occasionally do when they realize that they could command much higher prices if they cancel old reservations. Not very ethical, but it may be lucrative, and this rule seems to allow the behavior and the airline could hide behind the rule. It would seem on brand for the ULCCs and AA to do this.
Carl 1) There’s nothing stopping them from doing that today. The airlines have always only been required to provide a refund and nothing more. They will presumably still try to get people to their destination if they can.
2) Again, this isn’t something they couldn’t do today. Airlines can cancel flights and offer refunds whenever they want. None of this is impacted.
And this folks, is why I have no issues with airlines lobbying.
“Lobbying” is a constitutionally protected right we all have. In the words of the First Amendment, “Congress shall make no law … abridging the right of the people … to petition the government for a redress of grievances.” Any time we speak with or write to a public official, we’re “lobbying”. But we usually aren’t in the lobby of the appropriate public building – which is how the term “lobbying” got coined. The main difference between a paid lobbyist and ourselves is that paid lobbyists represent others. We represent ourselves.
Simple reason why flight numbers are on the list: To get off the DOT’s perpetually delayed shame list, you change the flight number. Many airlines do this… change the time by 5 minutes and change the flight number and voila – that PHL-EWR flight that’s always delayed 3 hours and being publicly shamed gets a reboot as if it never happened.
NedsKid – That’s not true. DOT considers any flight operated by an airline within 30 minutes on the same city pair to be the same flight. Flight number changes do nothing.
Maybe I’m off on the 5 minutes, but move it by 31 minutes and change the flight number and it’s a new flight. If you just change the time but keep the flight number it’s the same flight. According to part 234…
Ex-NK – No airline is changing flight times by 30+ minutes and changing the flight number just to avoid an irrelevant DOT list. It’s definitely not worth it.
They have and do.
It seems like your argument is more that the specific time intervals are badly picked? (For example, perhaps 90 minutes would result in an across-the-board better outcome of every airline’s policy — vs the chosen 3 hours, etc). It still seems to me that backed-by-law automatic refunds would generally be very helpful to the vast majority of infrequent flyers.
Wait, can you explain like I am 5. How and when is this automatic refund working? If I have a vacation planned to Barcalona, from SLC, and its delayed 7 hours, I still want to go to Barcalona. Especially if I bought a round trip ticket.
Is it automatically cancelled and refunded?
Sorry if this is a dumb question.
That’s not a dumb question at all; it’s exactly the issue I have with the new rule. Offering the option of a refund is one thing (which the airlines already did), but requiring a refund is heavy-handed and frankly ignores the desires of the customer.
Slc-bcn – Sure, so here are the scenarios if your flight is delayed/canceled/etc based on the DOT rules that I outlined in the post.
1) The airline can offer you alternate transportation and you can proactively accept it. Then there is no refund, and you can travel as normal.
2) The airline can offer you alternate transportation and you don’t accept it. You will get a refund automatically within a few days after the originally scheduled departure.
3) The airline can’t offer you alternate transportation. You will get a refund automatically within a few days after the originally scheduled departure.
4) If this is a roundtrip or multi-city ticket, and the first flights are impacted but you still want to keep the return, you must contact the airline to do that or the entire ticket will be automatically refunded.
That was my reaction, but at the end of the post Cranky says the refund doesn’t get processed until 48-72 hours after the originally scheduled departure. That seems right: the airline retains your money and thus you retain the right to travel until a suitable time after departure so you can get rebooked if you prefer.
What exactly should the airlines get smacked for? If the DOT wanted a rule different from 3 and 6 hours they should have proposed one. The other customer downsides are direct results from how the rule was written, and the airlines don’t have much choice.
This is a very edge-case thing here but now that airlines are charging for every possible differentiation in types of seats – even within the same cabin – the flight number thing actually mattered to me once recently. I booked my family of 3 on American’s CLT-HNL last year and selected, for no extra charge, a main-cabin row of 3 in the back of the 777 (window – middle – aisle)… not bad even if we were clinging to the tail.
But, then the flight number changed a couple months before departure, so we had to reselect seats. On the new flight (which departed within the same hour, on the same aircraft type, and remained the only CLT – HNL that day), every window/middle/aisle was considered “preferred” so $80+ per seat to select. I had an enrAAging conversAAtion with an AAgent who kept repeating the line “this is a different flight so the seat pricing may be different and your seats don’t automatically transfer from your original flight.” IT. WAS. THE. SAME. DAMN. FLIGHT.
So yeah… gimmie that AAuto-refund for changing flight numbers… I hope it costs them millions.
Cranky, did I read what you wrote correctly and are? Are you saying this DOT rule says that if an extra stop is added that is not a part of the itinerary, the customer has to get a refund? For example, in winter, a non-stop flight from BOS-LAX, now day of operation, has to make a fuel tech stop in SLC. Does this now mean the airline has to refund automatically?
CoolBlue – No, if you take the trip then you don’t get a refund. If you don’t travel, then you will get a refund. I would be curious to know how a tech stop is treated, but this is mostly meant for when a nonstop is canceled and now you have to take a connection, or something like that.
But I would think a tech stop would allow a traveler to get a refund if they choose not to travel.
I would be curious to know, too, how tech stops are treated because, based on how the rule is written, a “stop” is being added to a non-stop flight. Therefore, in theory, someone could say they are entitled to a refund, even though I think that would be ridiculous. However, the rule doesn’t make the distinction of what classifies as a non-stop flight that now has a stop.
CoolBlue – My guess is they would indeed be entitled to a refund based on how the rule is written. But if they take a refund, then they don’t get to actually fly. I wouldn’t expect this would be a big issue.
The big 3 airlines are doing this specifically to show consumer groups how government intervention which has to be kept generic because the DOT has not been given the authority to do what they are doing will backfire and harm the very consumers the feds are trying to act like they are protecting.
CF accurately notes that leisure passengers will be the most impacted; they book further in advance and are less likely to have their travel managed to a company or agent that understands these rules. Business travel is booked closer in so less subject to schedule changes and businesses can absorb some of these cost increases if a flight refund results in higher cost.
This is yet another example of feds trying to impress consumers while not understanding what they are doing and acting without Congressional authority and counter to the Deregulation Act of 1978 with the result that consumers will be worse off than they are today.
“This is yet another example of feds trying to impress consumers while not understanding what they are doing and acting without Congressional authority and counter to the Deregulation Act of 1978 with the result that consumers will be worse off than they are today.”
Yes -Tim gets it. This regulation sounds like nothing more than an election year “consumer promise” to me.
Virtually every time a law is passed or a regulation is issued, there are two things that inevitably happen as a result. One is the result of the law or regulation itself – and the other is the enactment of “the law of unintended consequences”. Laws and regulations can never be perfect because people aren’t perfect.
Love the Christmas themed color selection
Luv you Cranky. I will never be able to out-argue you on anything in this fascinating industry, or same with Tim Dunn, when it comes to an airline vs. its dear customers.
Airlines love to publish seemingly a hundred fares is a market. But you don’t just get the lowest fare. “Oh, it wasn’t AVAILABLE,” or “The burden for getting the lowest fare is yours, you didn’t ask for that low fare, and besides, you didn’t tell us cost was very important to you.” Oh, silly me!
I once worked for a federal agency responsible for auditing government employees’ airline tickets, and when that responsibility went to another agency, that agency decided to hire contractors to do the work.
The contractors started to file claims based on the fact that the government didn’t get the lowest fare, typically some government contract fare, which had a capacity-control clause.
They filed millions of claims and set-off the “overcharges. and argued that burden was not the government’s to show that lowest fare was not available, but rather it was the airline.
The contractors argued that the airlines had to prove that the capacity control feature was valid. “Prove that capacity control feature was real and not arbitrary. and therefore, without merit.
The airlines went crazy as they were out a lot of money on nearly every government ticket they sold. The court case (I recall it being in the 80s, or 90s) in the DC District Court (Judge Stanley Sporkin presiding) was one of the most hilarious cases I have ever read and followed. I loved it! But it made you wonder if the airlines really were lying when they said this or that fare, though published is sold out.
Reminds me also of the airlines’ hutzpah marketing flights as “direct flights.” UA, the king of change-of-gauge flight marketing loves to list any and all change-of gauge flights as “direct flights.” If the flight number stays the same throughout, it’s DIRECT and lists them as such in OAG’s Pocket Flight Guide.
Southwest doesn’t market change-of-gauge flights, per se. but it is the king of “with stops” “direct flights.” Every so often, it runs WN2011 in that 27-mile hot BWI to Washington National market, with 2 stops (6:40a lv, 4:10p ar.). It was still being listed as “direct” in this past May OAG Pocket Flight Guide. (Trying to figure out where those 2 stops are, is not something most of us can solve.
Only the airlines!!!
> Every so often, it runs WN2011 in that 27-mile hot BWI to Washington National market, with 2 stops (6:40a lv, 4:10p ar.). It was still being listed as “direct” in this past May OAG Pocket Flight Guide. (Trying to figure out where those 2 stops are, is not something most of us can solve.
That sounds like a fun trip for Cranky, perhaps to celebrate the blog’s 20th anniversary. Might as well tack on a redeye to get to BWI from his home in southern California as well, just for fun.
Long time readers will recall that Cranky celebrated the blog’s 10th anniversary by doing 8 WN flights in one day, touching 9 different airports, all within California.