New rule orders airlines to give prompt refunds for canceled, delayed flights

April 24 (UPI) -- The Transportation Department said on Wednesday issued a final rule requiring airline carriers to promptly give passengers cash refunds when owed for things like canceled or significantly delayed flights and delayed or lost baggage among other issues.

Transportation Secretary Pete Buttigieg said the new final rule was needed to make sure passengers were made whole for flight hiccups at or close to real-time so it can still be meaningful for them in their travels.

"Passengers deserve to get their money back when an airline owes them - without headaches or haggling," Buttigieg said in a statement. "Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers."

The new rule requires airlines to give prompt refunds for canceled or significantly delayed flights, when passengers do not accept alternative transportation or travel credits.

It defines a "significant change" in a flight as a delay of more than 3 hours domestically and 6 hours internationally, departures or arrivals from a different airport, increases in the number of connections or connections at different airports, downgrades to a lower class or service and flights on different planes that are less accessible or accommodating to people with disabilities.

It also mandates refunds for checked bag fees if the luggage is not delivered within 12 hours of a domestic flight arriving at the gate or 15-30 hours for an international flight and for charges paid for purchased extra services such as in-flight entertainment, Wi-Fi service and select seating if the airline fails to provide the service.

Under the rule, the refunds must be delivered in cash or the original form of payment, issued automatically without the passenger explicitly requesting it and within seven business days of refunds becoming due for credit card purchases and 20 days for other payment methods.

The White House also announced that it will also attack "junk fees" charged by airlines, costing customers a half-billion dollars annually, and will require airlines to break down their billing.

The new rule will require carriers to disclose baggage, change and cancelation fees upfront, explain fee policies before ticket purchase, share that information with third parties, and inform customers that seats are guaranteed.

It will also force airlines to provide standard and passenger-specific fee information along with ending a "bait-and-switch" tactic with discount pricing that lures customers to flights by displaying the promotional prices without disclosing all mandatory carrier-imposed fees.

"[The] DOT has advanced the largest expansion of airline passenger rights, issued the biggest fines against airlines for failing consumers and returned more money to passengers in refunds and reimbursements than ever before in the department's history," the White House said.