US DOT Reminds Airlines Again About Refunds

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The US Department of Transportation, usually just referred to as the DOT, issued an Enforcement Notice back in April (read more here) reminding airlines that they are required to provide refunds for canceled flights to/from/via the United States.

British Airways

DOT has received more than 25,000 complaints and inquiries combined in March and April compared to 1,500 in a typical month back in 2019. The DOT has now issued a second notice to airlines about refunds. .

Here’s the notice:

1. What rights do passengers have if an airline cancels a flight or makes a significant schedule change? What is a “significant change” or “cancellation” requiring a refund?

As explained in the Department’s Enforcement Notice issued on April 3, 2020, airlines have an obligation to provide a refund to a ticketed passenger when the carrier cancels or significantly changes the passenger’s flight, and the passenger chooses not to accept an alternative offered by the carrier.3 However, neither the term “significant change” nor “cancellation” is defined in regulation or statute. Based on the Aviation Enforcement Office’s review of the refund policies and practices of U.S. and foreign air carriers, airlines define “significant change” and “cancellation” differently when fulfilling their obligation to provide refunds.

Because “cancellation” and “significant change” are not defined in the context of ticket refunds, airlines may develop reasonable interpretations of those terms. 4 However, the Aviation Enforcement Office expects carriers to honor those reasonable interpretations in implementing their refund obligations and will focus its enforcement actions on instances where a carrier has disregarded the requirement to offer refunds, failed to honor its refund policies, or where it is determined that the carrier’s refund policies or practices are otherwise “unfair or deceptive” within the meaning of 49 U.S.C. § 41712. 5

2. What rights do passengers have if they choose not to travel due to safety or health concerns related to the COVID-19 public health emergency?

Passengers who purchase a non-refundable ticket on a flight to, within, or from the United States that is still being operated without a significant change, but would like to change or cancel their reservation, are generally not entitled to a refund or a travel voucher for future use on the airline. This is true even if the passenger wishes to change or cancel due to concerns related to the COVID-19 public health emergency. Although not required, many airlines are providing travel credits or vouchers that can be used for future travel for those passengers electing to cancel their travel due to health or safety concerns related to COVID-19. In reviewing refund complaints against airlines, the Department will closely examine any allegation that an airline misled a passenger about the status of a flight to avoid having to offer a refund.

3. What rights do passengers have if they purchased their airline ticket from an online travel agency?

Ticket agents are required to make “proper” refunds when service cannot be performed as contracted on a flight to, within, or from the United States. 6 The Department interprets the requirement for ticket agents to provide “proper” refunds to include providing refunds in any instance when the following conditions are met: (i) an airline cancels or significantly changes a flight, (ii) an airline acknowledges that a consumer is entitled to a refund, and (iii) passenger funds are possessed by a ticket agent. In enforcing the requirement for ticket agents to make “proper” refunds, the Aviation Enforcement Office will focus on the totality of the circumstances.

4. May airlines and ticket agents retroactively apply new refund policies?

The Department interprets the statutory prohibition against unfair or deceptive practices to cover actions by airlines and ticket agents applying changes retroactively to their refund policies that affect consumers negatively. The refund policy in place at the time the passenger purchased the ticket is the policy that is applicable to that ticket. The Aviation Enforcement Office would consider the denial of refunds in contravention of the policies that were in effect at the time of the ticket purchase to be an unfair and deceptive practice.7

5. May airlines or ticket agents offer credits or vouchers to consumers in lieu of refunds?

Airlines and ticket agents can offer consumers alternatives to a refund, such as credits or vouchers, so long as the option of a refund is also offered and clearly disclosed if the passenger is entitled to a refund. Further, any restrictions that apply to the credits and vouchers, such as the period in which credits must be used or any fees charged for using the credit, must be clearly disclosed to consumers. If an airline, by representation or omission, engages in conduct that is likely to mislead consumers about their right to a refund, or the value of a voucher or credit that is offered, the Aviation Enforcement Office would deem such conduct to be a deceptive practice.8

6. How quickly must airlines and ticket agents process refunds?

Airlines and ticket agents are required to make refunds promptly. For airlines, prompt is defined as being within 7 business days if a passenger paid by credit card, and within 20 days if a passenger paid by cash or check. 9 For ticket agents, prompt is not defined.10 The Aviation Enforcement Office recognizes that, given the significant volume of refund requests resulting from the COVID-19 public health emergency, processing refunds may take longer than normal and will determine the timeliness of refund processing for ticket agents based on the totality of the circumstances, such as the volume of incoming refund requests and steps taken to address the increased volume. Also, the Aviation Enforcement Office will use its enforcement discretion and not take action against airlines for not processing refunds within the required timeframes if, under the totality of the circumstances, they are making good faith efforts to provide refunds in a timely manner

Enforcement Notice in PDF:

Download (PDF, 61KB)

Conclusion

Some U.S. based airlines such as American and United have tried to redefine what cancellation or delay means by updating their Contract of Carriages.

The airline may no longer consider flight cancellation a cancellation if they rebook you to another flight within six hours. Nonsense.

You have to keep in mind that you are not eligible for a refund on a non-refundable ticket for a flight that operates even if you are not allowed to enter the intended destination. Some airlines are doing a favor for you by issuing a voucher or an airline credit.

You do have a right to get a refund for a flight that an airline cancels or changes the schedule. I would say that overall U.S. based airlines have been quite good at refunding, but cannot say the same about the OTAs.

Expedia Group claims that they are not allowed to issue refunds for canceled flights to/from/via the United States (based on my personal experiences).

There are three or four complaints that I have filed against British Airways, Emirates, American Airlines, and KLM + Orbitz (an OTA I have used to ticket these purchases) over the past two months. I almost feel that Expedia Group gets paid by the airlines for all the refunds they don’t correctly process. There is so much nonsense that I have heard from their agents regarding refunds for flights that airlines have canceled.

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