New US regulations require airlines to automatically reimburse passengers for cancelled flights.

Under new regulations from the US Department of Transportation, airlines are now mandated to provide automatic refunds to passengers in the event of flight cancellations or significant alterations. The move comes as a response to the surge in complaints during the Covid-19 pandemic, with 87% of air travel service grievances in 2020 related to airlines and ticket agents rejecting or delaying refunds. US Transportation Secretary Pete Buttigieg emphasized the importance of ensuring passengers receive their rightful refunds promptly and without hassle, stating that "passengers deserve to get their money back when an airline owes them — without headaches or haggling."

The new rule stipulates that passengers are entitled to refunds in cases of "significant changes" to their flights. These changes include shifts in departure or arrival times exceeding three hours domestically or six hours for international flights, as well as downgrades to a lower class than originally purchased and alterations to departure or arrival airports. Additionally, passengers will receive refunds for checked bag fees if their bags are lost and not delivered within specific time frames after flight arrival.

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Furthermore, travelers who pay for services such as in-flight Wi-Fi or entertainment but do not receive them will also be eligible for refunds. The Department of Transportation has implemented measures to streamline the refund process, requiring prompt automatic refunds through the original form of payment, including cash.

While the Airlines for America trade group asserts that its member carriers already comply with and often surpass regulations on consumer protection, the Department of Transportation has introduced additional measures to enhance transparency and accountability. Airlines will now be required to clearly communicate extra fees upfront for services like checked luggage, carry-on bags, or reservation changes or cancellations. The aim is to prevent surprise fees and ensure that airlines compete based on service quality rather than hidden charges.

According to DOT, there has been a significant increase in revenue from baggage fees in recent years, prompting the need for greater transparency in fee disclosures. Buttigieg emphasized that the new rule will result in substantial savings for travelers, estimated to exceed half a billion dollars annually. Overall, these regulations signal a concerted effort by the US government to safeguard passenger rights, enhance transparency, and promote fair competition in the airline industry.

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