Airlines must refund cash, avoid surprise fees under new Biden rules

Travel credits and airline vouchers may soon be a thing of the past.

The new rules announced by the Ministry of Transport on Wednesday Requiring airlines to automatically return cash to passengers without passengers having to request it when these refunds are due. These situations include a flight being canceled or significantly changed, checked bags being significantly delayed, or other services purchased by travelers being unavailable.

Refunds must be made to passengers within seven business days of the refund due date for credit card purchases, and within 20 calendar days for other payment methods, according to the new rules. Refunds must also include all taxes and fees.

The Biden administration's new rules are intended to prevent problems associated with long customer service calls and navigating multiple websites before refunds can be accessed. It is also intended to prevent airlines from giving vouchers or credits to passengers, preventing them from rebooking their canceled or postponed flights with another airline – unless the passenger explicitly requests a voucher.

Airlines will also be required to let consumers know about checked and carry-on baggage fees and reservation changes or cancellations in advance. The agency estimates that consumers will save more than $500 million each year by overpaying in airline fees.

“Passengers deserve to know upfront what costs they face and should get their money back when the airline owes them — without having to ask,” Transportation Secretary Pete Buttigieg said in a statement.

The move is part of the Biden administration's crackdown on deceptive fees that often cost consumers. In October, the White House announced a new decision Proposed rule Ban so-called “junk fees” – hidden and misleading fees – and require companies to show full prices up front. The Federal Trade Commission estimates that unwanted fees cost American consumers tens of billions of dollars each year in unexpected costs.

Over the past three years, the Department of Transportation has helped return more than $3 billion in refunds and compensation owed to airline passengers, according to the agency. That includes more than $600 million in payouts to passengers affected by Southwest Airlines' holiday meltdown in 2022, when a widespread system failure occurred. It led to the cancellation of 16,900 flights It left two million passengers stranded.

The federal government has also proposed rules that would ban family seating fees to ensure parents can sit with their children at no additional cost. Four airlines have already guaranteed free family seats.