U.S DOT Orders Airlines To ‘Promptly’ Refund Customers For Cancellations

WASHINGTON—The U.S. Transportation Department (DOT) has put airlines on notice that customers must be “refunded promptly” for all flights canceled due to the COVID-19 pandemic.

In an April 3 enforcement notice, the DOT said there has been an outpouring of complaints recently from customers who describe having been denied refunds for flights that were either canceled or significantly delayed by the carrier. While many travelers had been offered vouchers or credits for future travel, the DOT noted that severe capacity cuts made across the industry mean those vouchers and credits “are not readily usable.”

DOT guidelines require cash refunds be offered for all flights canceled by airlines if the passenger chooses not to be rebooked on a new flight. In situations when airlines make “significant delays” to flights, however, passengers may not be entitled to a refund. DOT does not offer guidance on what constitutes a “significant delay,” leaving interpretation to airlines and evaluating complaints on a case-by-case basis.

In its enforcement notice, the DOT said the obligation to provide refunds “does not cease” when flight disruptions are caused by factors outside a carrier’s control, including government travel restrictions. “The focus is not on whether the flight disruptions are within or outside the carrier’s control, but rather on the fact that the cancellation is through no fault of the passenger,” the department stated. 

Recognizing the “major impacts” of the COVID-19 emergency on the airline industry, the DOT said its Aviation Enforcement Office will “exercise its prosecutorial discretion” by providing carriers in violation of the regulation an opportunity to become compliant before pursuing any enforcement actions. The department added it will refrain from pursuing enforcement actions against carriers that: contact customers who received vouchers; notify them about the opportunity for refunds; and update their websites to “make clear” the refund policy.

The enforcement notice means that United Airlines, for example, will likely have to revise its current guidelines, which do not offer refunds for passengers whose flights are delayed between two and six hours. The Chicago-based carrier is also reportedly making customers wait up to a year to receive refunds for canceled international flights, which flies in the face of the requirement that customers be “refunded promptly.”

United spokeswoman Leslie Scott said in an emailed message that the company has “implemented new policies to give our customers flexibility during these extraordinary times by allowing them to change their travel plans without a fee,” adding that passengers on domestic and international flights can request refunds for flights that have been canceled or “severely adjusted” by the airline.

Representatives from American Airlines and Delta Air Lines said those carriers would not need to adjust their policies because they were already in compliance with the requirement. Both companies emailed language from their websites that explain how customers can obtain cash refunds for canceled flights. 

The DOT’s refusal to bend on the refund requirement comes despite recent pleas from IATA director general and CEO Alexandre de Juniac for relief from customer refunds, which he said could lead to cash-outflows of up to $35 billion in the second quarter alone.