New Biden rules deliver automatic cash refunds for canceled flights, ban surprise fees

In the aftermath of a canceled or delayed flight, there’s nothing less appealing than spending hours on the phone waiting to speak with an airline representative in hopes of receiving a refund or flight voucher—often in vain. 

But thanks to new rules announced by the Biden administration last week, this experience and other air travel-related headaches could become a thing of the past for passengers traveling to, from, or within the United States. The new regulations, which promise to protect air travelers from hidden fees and enable automatic refunds in the case of disrupted flight plans, build on consumer rights protections implemented by the Department of Transportation (DOT) under Biden’s 2021 Executive Order on Promoting Competition.

So, how will last week’s announcement make air travel more seamless for passengers? Mandatory and automatic cash refunds are at the top of the list. Under this rule, airlines must promptly offer automatic cash refunds to customers when flights are “significantly” delayed or canceled entirely. The auto refund rule also applies to significantly delayed baggage and failure to provide promised services, like in-flight wifi access. 

While airlines could previously create their own limits for what defined a “significant” flight delay, Biden’s new rule concretely defines a “significant” delay as one lasting at least six hours for an international flight or three hours for a domestic flight. 

In these situations, passengers should no longer have to independently navigate a series of confusing phone calls or emails to customer service agents or fill out additional paperwork. 

Instead, airlines must automatically issue refunds when owed—in their full amount, not in the form of travel vouchers or coupons—via cash or the original payment method. Refunds must include all government fees and taxes and be returned within seven days for credit card payments and 20 days for other forms of payment. 

“Passengers deserve to get their money back when an airline owes them—without headaches or haggling,” US Transportation Secretary Pete Buttigieg said in a statement. “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”  

Banning hidden airline fees and requiring more transparency

Ever snagged what you believe to be a great flight deal, only to realize that you’ll owe hundreds of dollars extra in baggage fees and other charges? Biden and the DOT will now require upfront disclosure of these so-called hidden fees to increase transparency for consumers. 

A statement from the White House explains that baggage fees, cancellation charges, and change costs “must be disclosed the first time that fare and schedule information is provided on the airline’s online platform—and cannot be displayed through a hyperlink.”

Similarly, in an effort to eliminate “bait-and-switch” tactics, airlines cannot advertise ultra-low base fares without disclosing mandatory fees. 

Airlines must also make it clear that seating is guaranteed, even if specific seat selection costs more money. Under current regulations, consumers are sometimes “tricked” into paying extra for seat selection due to fear that there might not be enough space on the plane if they leave seating assignments to chance. 

The DOT says it has “advanced the largest expansion of airline passenger rights” thanks to actions from the Biden administration. This expansion includes the launch of flightrights.gov, a customer service dashboard where travelers can review individual airlines’ policies regarding refunds, meal and hotel vouchers after canceled flights, and family seating commitments. 

Since Biden took office, the DOT says, airline passengers have received upwards of $3 billion in refunds and reimbursements, while the US flight cancellation rate hit a ten-year low of 1.2% in 2023—despite record rates of air travel. 

Last week’s final rules take effect on June 25. In coming months, the DOT hopes to further expand on existing protections for airline consumers by requiring fee-free family seating across the board, doubling down on current policies to make passenger compensation mandatory when flights are canceled or delayed, and addressing challenges for passengers traveling in wheelchairs.