Travel credits and airline vouchers may soon be a thing of the past.
New rules announced Wednesday by the Department of Transportation will require airlines to give automatic cash refunds to passengers without passengers having to request them when such refunds are owed. Those include when a flight is canceled or significantly changed, checked bags are significantly delayed, or other services that passengers purchased are unavailable.
Refunds must be given to passengers within seven business days of a refund’s due date for credit card purchases, and within 20 calendar days for other payment methods, according to the new rules. The refunds also have to include all taxes and fees.
The new Biden administration rules are meant to prevent headaches associated with lengthy customer service calls and navigating multiple websites before being able to access refunds. They’re also meant to prevent airlines from giving out vouchers or credits to passengers, which prevent them from re-booking their canceled or delayed flights with another airline — unless the passenger explicitly requests a voucher.
Airlines will also be required to let consumers know upfront about fees for checked and carry-on bags, and reservation changes or cancellations. The agency estimates that consumers will save more than $500 million each year that they overpay in airline fees.
“Passengers deserve to know upfront what costs they are facing and should get their money back when an airline owes them — without having to ask,” Transportation Secretary Pete Buttigieg said in a statement.
The move is part of the Biden administration’s crackdown on sneaky fees that often cost consumers. In October, the White House announced a new proposed rule to prohibit so-called “junk fees” — hidden and misleading fees — and require companies to show full prices upfront. The Federal Trade Commission estimates that junk fees cost American consumers tens of billions of dollars each year in unexpected costs.
Over the last three years, the Transportation Department has helped return more than $3 billion in refunds and reimbursements owed to airline passengers, according to the agency. This includes more than $600 million in returns to passengers affected by the Southwest Airlines holiday meltdown in 2022, when a widespread system failure led to the cancellation of 16,900 flights and left two million passengers stranded.
The federal government has also proposed rules that would ban family seating fees to guarantee that parents can sit with their kids at no extra cost. Four airlines have already guaranteed family seating free of fees.