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Explore the implications of the new DOT rule on automatic cash refunds for airline cancellations and delays in 2024.

The Department of Transportation's new ruling, effective from April 2024, mandates automatic and prompt refunds for passengers facing cancellations or significant delays, enhancing transparency and consumer protection.

New Airline Refund Rules: Do I Still Need Travel Insurance?

In April 2024, the Department of Transportation (DOT) issued a new rule that requires automatic cash refunds for airline tickets when owed. This mandate is intended to make it easier for passengers to get money back for canceled or “significantly delayed” flights.  

In the past, it was up to each airline how they handled refunds—it was often a nebulous process to file a claim through a proprietary portal or website, over an extended period of time, and airlines were not required to provide a cash refund (instead they typically offered vouchers toward future flights). The new ruling mandates that passengers are refunded automatically for canceled flights, delayed flights, or delayed baggage, either in cash or by their method of payment. 

So, if the airline will refund me for cancellations, this has us wondering: do I still need travel insurance?  
 

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Refund Policy Overview 

As we’ll read, the new policy doesn’t quite replace the many benefits of travel insurance. The new DOT ruling states that airlines must issue passengers refunds that are: 

  • Automatic 
  • Prompt 
  • Cash or in the original form of payment 
  • And for the full amount 

For valid circumstances (see below). 

Previously, it was up to each airline’s discretion how they handled refunds—most were in the form of airline-specific vouchers, and only after customers applied explicitly for a refund request.  

The new ruling makes it so that passengers receive the full amount on their form of payment (cash reimbursement or whatever form was used, i.e., credit card) promptly. “Promptly” means within 7 days for credit card purchases, within 20 days for other modes of purchase. This rule is intended to make it easier to get money back and to increase transparency in fees through the refund process. 

Under this policy, passengers are entitled a full airline refund for:  

Canceled or significantly changed flights:  

Flight that is canceled or “significantly changed,” and they do not accept an alternative transportation (or travel credits) offered 

“Significantly changed” is defined as:  

  • Departure/travel times that are more than 3 hours domestically (6 hours internationally) 
  • Departure/arrivals from a different airport  
  • Increase in number of connections 
  • Downgraded to lower class of service 
  • Or connections at different airports that are less accessible for those with disabilities (dot, 2024) 
     

Delayed baggage return 

If you file a mishandled baggage report, you’re entitled to a refund for the checked bag fee if it’s not delivered within 12 hours of your domestic flight arriving at the gate (or 30 hours of international flight).  
 

Extra services not provided 

Passengers are entitled to a refund for the fee they paid for an extra service (Wi-Fi, seat selection, or in-flight entertainment) is not provided during the flight. 

Refunds are only available under certain conditions. For example, passengers are entitled to a refund only if they “do not accept alternative transportation or travel credits offered” (DOT, 2024). The intent of the ordinance was to make the refund process more streamlined, although passengers should still be aware of the fine print of the policy.  

Because this policy is still new, we recommend checking your consumer rights via Aviation Consumer Protection, as well as checking with your individual airline before booking. 
 

When Does New Airline Refund Rules Take Effect? 

More importantly, these changes are set to be phased in over the next 6-12 months, according to the DOT. So, the refund policy is not in effect overnight; for passengers traveling beforehand, airlines are not required to adhere to this ruling-- just yet.  

Lack of Enforcement 

In addition to being a slow roll-out, this new ruling does not replace the benefits of travel insurance for an additional reason: lack of enforcement currently. 

This new law makes airlines responsible for refunding passengers, but consumer advocacy groups noted that there is no enforcement policy yet set in place. As this is a brand new (as of April 30, 2024) mandate, there is still lots of room to see how it works out on paper vs. real life. 

In an AirAdvisor interview, consumer advocate Anton Radchenko said: “The regulation is a step in the right direction, but two critical components are missing for this to become an effective consumer protection mechanism: (1) Prescribed penalties for airlines that […] fail to comply, […] and (2) providing the right to recover attorneys and legal costs for consumers bringing a lawsuit against the airline” (Accesswire, 2024). 

Passengers are entitled to full refunds for canceled or delayed flights, but delays must meet certain criteria, and airlines are also currently operating on a “good faith” agreement to abide by this.  
 

Do I Still Need Travel Insurance? 

In short: this ruling does not replace the benefits offered by travel insurance plans.  

This rule provides refunds only for canceled/delayed flights and baggage that meet certain criteria, which may not always apply. It’s also important to note that because this ruling is so new, it’s still being rolled out, with provisions set to be implemented over the next 6-12 months. For passengers traveling beforehand, the refund ruling may not yet apply. 

For this reason, we still recommend purchasing travel insurance policies to cover your bases.  

Under AXA’s travel protection plans, all travelers receive Trip Cancellation Protection, with at least a 100% reimbursement of trip cost. AXA’s travel insurance also covers: 

The Platinum Plan offers additional protections for business travelers. 

Unlike the DOT ruling, which only issues refunds for canceled/delayed flights under a certain timeframe, AXA Travel Insurance offers a Cancel For Any Reason benefit, which provides partial reimbursement for non-refundable expenses (like airline tickets) for any reason. This takes the guesswork out of wondering if/when the airline will refund you, knowing that travel insurance plans have you covered, instead.  

It’s important to speak with a licensed professional about travel insurance. 
Click here to learn more about AXA Travel Insurance or Contact us and speak with a licensed travel agent. 

In Short 

While the 2024 refund ruling is an excellent step toward consumer protection, current evidence shows there is still a ways to go in order to implement and enforce it on a broad scale. It doesn’t quite replace the security of travel insurance, although we applaud the efforts to put more responsibility on airlines for passenger protection. Until more regulations follow, it is still recommended that travelers purchase travel protection from authorized travel insurance providers.  

To learn more about AXA’s travel plans, check out our Compare Plans guide or speak with a licensed agent today to get a quote for your next trip. 

References: 

Accesswire. (2024). “New DOT refund regulations lack the teeth for airline compliance according to airline experts.” Accesswire.com. https://www.accesswire.com/858192/new-dot-refund-regulations-lack-the-teeth-for-airline-compliance-according-to-airline-experts  

Department of Transportation (DOT). (2024, April 24). “Biden-Harris Administration Announces Final Rule Requiring Automatic Refunds of Airline Tickets and Ancillary Service Fees.” Transportation.gov. https://www.transportation.gov/briefing-room/biden-harris-administration-announces-final-rule-requiring-automatic-refunds-airline  

Fox, Alison. (2024, April 29). “A Guide to the Department of Transportation's Airline Refund Rules.” TravelAndLeisure.com. https://www.travelandleisure.com/us-airlines-refund-rules-dept-transportation-8640403  

Fox, Alison. (2024, April 24). “The Dept. Of Transportation Lays Out Exactly When an Airline Owes You a Refund.” TravelAndLeisure.com. https://www.travelandleisure.com/dot-junk-fees-airline-refunds-8638071  

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