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Travelers Are Owed Swift Refunds for Canceled Flights, Department of Transportation Warns Airlines

The Department of Transportation (DOT) just reminded everyone that travelers are entitled to a refund (not airline credits) for canceled flights. Why? Because some airlines have recently parted from longstanding U.S. regulations that require those refunds.

On April 3, the DOT of Aviation Enforcement and Proceedings issued an Enforcement Notice firmly supporting the federal requirement that airlines issue cash refunds when they cancel flights. The notice affirms that issuing a future credit or voucher does not satisfy the DOT requirement. Failure to comply, says the notice, “could subject the carrier to an enforcement action.”

Because there is an ongoing global health emergency, DOT says, the Aviation Enforcement Office will exercise “prosecutorial discretion” and allow airlines to become compliant before taking action. Presumably, however, DOT will take action against airlines if they continue to refuse required refunds. This is great news for travelers: If you’re arguing with an airline about a refund, be sure to cite this notice.

The House version of the most recent $2 trillion government stimulus bill initially included mention of some important consumer protections for travelers. But those contested protections didn’t make it into the final version, which ultimately awarded airlines and airports $50 billion in loans and grants for short-term costs. And that means some big problems for travelers remain, especially as certain airlines try to cling to bookings.

The U.S. / Domestic Flights and Airlines

Currently, the biggest problem in consumer rights is refunds for tickets on flights canceled by an airline: Some are simply refusing to do it. Department of Transportation (DOT) regulations require that when an airline cancels a flight for any reason, it owes you a full-money refund of any ticket—even “nonrefundable” ones—within seven business days for credit card transaction, 20 days if you paid by a cash card.

Instead, some airlines—most notably United, along with several giant international lines—are refusing to issue the refunds within the legally required period. Instead, they’re issuing only vouchers/credit toward future travel, which some lines say they will refund fully only if not used within one year. Still, refusal to make full refunds is a clear violation of longstanding rules. It’s also worth noting that customers who accept a voucher from an airline do risk that the airline could go bankrupt in one year’s time. The DOT told USA Today it is reviewing complaints about the offending airlines, and murmurs of any bailout money going to airline executives were denied this week by ranking senators.

International Flights / Airlines

But the problem is worse outside the U.S., and amounting to something similar to a bail out: Canada’s government has said that it will allow airlines to issue vouchers/credits, even where rules require cash refunds. The French government has announced the same policy for Air France, and possibly other French airlines. And European airlines, as a group, are asking that E.U. suspend its refund rules for the duration of the COVID-19 pandemic. It’s unclear if these foreign-government policies would affect U.S. rules for U.S. travelers.

For now, if you hold a ticket for a canceled flight you don’t want to reschedule, the first step is to check with the airline to see if it is complying with the refund law: You can check our sister site Airfarewatchdog’s guide to COVID-19 responses by airline here.

I just submitted a refund request on a canceled flight that Delta seems to be honoring; at least one SmarterTravel editor has been told by Turkish Air that it will refund her ticket for a canceled flight (though the refund hasn’t yet been made). But if your chosen airline is ignoring the law, you’re better off accepting a voucher you don’t really want than doing nothing and possibly losing your money completely. Whatever you do, though, you’ll have to act before the original departure date of the flight.

You can also prod DOT into possible action by filing a complaint here. The complaint needn’t be an extended dissertation on everything about your trip; DOT is mainly motivated by a large total number of complaints.

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Consumer advocate Ed Perkins has been writing about travel for more than three decades. The founding editor of the Consumer Reports Travel Letter, he continues to inform travelers and fight consumer abuse every day at SmarterTravel.

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