Airlines must report fees, issue prompt refunds, new rules say

WASHINGTON — The Transportation Department on Wednesday finalized a rule requiring airlines to automatically refund consumers for canceled or significantly delayed flights, and another that mandates disclosure of extra fees, like checked bag charges.

The rules, flowing from the Biden administration’s promises to crack down on so-called junk fees, have been heavily criticized by the airline industry as unnecessary and potentially costly to travelers.

Transportation Secretary Pete Buttigieg, who is expected to speak further about the rules on Wednesday at Ronald Reagan Washington National Airport, said in a statement that the extra fee disclosure rule is expected to save consumers more than $500 million annually.

“Passengers deserve to know upfront what costs they are facing and should get their money back when an airline owes them — without having to ask,” he said. “Today’s announcements will require airlines to both provide passengers better information about costs before ticket purchase, and promptly provide cash refunds to passengers when they are owed — not only saving passengers time and money, but also preventing headaches.”

The extra fee disclosure rule directs airlines and ticket agents to display service fees “upfront clearly, conspicuously, and accurately” the first time the airfare is provided, according to a White House fact sheet. Airlines must explain their baggage, flight change and cancelation policies before ticket purchase, and — to crack down on deceptive seat selection fees — inform consumers that a seat is guaranteed without having to pay extra.

The refund rule would require airlines to “promptly” administer full, cash refunds without the passenger having to request one.

The refunds would apply to flights that are canceled or “significantly changed” — defined as instances in which a flight is delayed more than 3 hours domestically and 6 hours internationally. It would also apply in cases of increased connections or changing of a departure or arrival airport, among other conditions.

The rules mirror some of the language in the Senate Federal Aviation Administration reauthorization bill, including a statutory definition of “significantly changed” as well as fee disclosures for checking a bag prior to booking.

Those provisions have received backlash from some Republican lawmakers and the airline industry.

Airlines for America, the industry group representing air carriers, has argued that airlines already provide price breakdowns on their websites and that federal regulations on ticket pricing threaten to decrease competition. In comments on the extra fee rule when it was first proposed in 2022, the group called it “unnecessary, arbitrary and capricious, and beyond DOT’s statutory authority because there is no market failure to regulate.”

An Airlines for America spokesperson said in an email earlier this year that its members abide by and “frequently exceed” DOT consumer protection regulations, adding that the 11 largest U.S. passenger airlines issued $43 billion in customer refunds between January 2020 and December 2023.

Senate Republicans have also expressed hesitation about moving too fast on consumer regulations that they say could indirectly hurt passengers. If airlines are forced to incur additional costs or jump through hoops to meet federal regulations, that could translate into higher ticket prices.

Other concerns include these provisions detracting from the FAA’s main function to oversee airline safety, congressional staff members said.

“I know there are concerns that some of the consumer-focused provisions, while well-intentioned, may have the opposite effect if not implemented carefully and systematically,” Senate Commerce ranking member Ted Cruz, R-Texas, said in February. “We should give these provisions due consideration.”