Biden admin's new airline rules to require cash refunds for canceled flights, fees disclosed up front

White House says new DOT rules aim to save consumers half a billion dollars a year in junk air travel fees

The Biden administration announced new rules that mandate automatic cash refunds for canceled or significantly delayed flights and protect consumers from surprise junk fees in air travel. 

"These rules will significantly expand consumer protections in air travel, provide passengers an easier pathway to refunds when owed, and save consumers over half a billion dollars every year in hidden and surprise junk fees," the White House said in a statement released early Wednesday. 

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

The first rule requires airlines "to promptly provide passengers with automatic cash refunds when owed because their flights are cancelled or significantly changed, their checked bags are significantly delayed, or the ancillary services, like Wi-Fi, they purchased are not provided."

Newly required by the Department of Transportation (DOT), the change is supposed to prevent consumers from having to "navigate a patchwork of cumbersome processes to request and receive a refund — searching through airline websites to figure out how to make the request, filling out extra ‘digital paperwork,’ or at times waiting for hours on the phone," the White House said. 

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American Airlines planes at JFK airport

American Airlines Boeing jets are seen at John F. Kennedy Airport on Jan. 8, 2024. (CHARLY TRIBALLEAU/AFP via Getty Images / Getty Images)

Without the new rule, the White House noted how passengers often received a travel credit or voucher by default from many airlines instead of getting their money back, so they could not use their refund to rebook on another airline when their flight was changed or canceled "without navigating a cumbersome request process." 

The DOT is also now requiring airlines and ticket agents to tell consumers upfront what fees they charge for checked bags, a carry-on bag, for changing a reservation or canceling a reservation. The White House said the second new rule "ensures that consumers can avoid surprise fees when they purchase tickets from airlines or ticket agents, including both brick-and-mortar travel agencies or online travel agencies." 

Biden and Buttigieg

President Biden, left, and Transportation Secretary Pete Buttigieg during an event at the White House in Washington, D.C., on Monday, Nov. 27, 2023. (Michael Reynolds/EPA/Bloomberg via Getty Images / Getty Images)

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It requires airlines to disclose baggage, change and cancelation fees upfront, explain fee policies before ticket purchase, share fee information with third parties, inform consumers that seats are guaranteed, provide both standard and passenger-specific fee information and end discount bait-and-switch tactics "that some airlines use to disguise the true cost of discounted flights." The White House estimates that this rule will save consumers "over half a billion dollars every year that they are currently overpaying in airline fees." 

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UAL UNITED AIRLINES HOLDINGS INC. 44.72 -0.92 -2.02%
DAL DELTA AIR LINES INC. 43.62 -1.42 -3.14%
AAL AMERICAN AIRLINES GROUP INC. 10.68 -0.05 -0.47%
LUV SOUTHWEST AIRLINES CO. 27.52 +0.57 +2.13%
SAVE SPIRIT AIRLINES INC. 3.19 +0.11 +3.57%
ALK ALASKA AIR GROUP INC. 38.42 +0.52 +1.37%
Planes land, take off at San Francisco airport

A United Airlines plane is taxiing for takeoff as a Lufthansa Airlines plane takes off at San Francisco International Airport on April 22, 2024. (Tayfun Coskun/Anadolu via Getty Images / Getty Images)

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Since President Biden took office, the DOT has helped return more than $3 billion in refunds and reimbursements owed to airline passengers – including over $600 million to passengers affected by the Southwest Airlines holiday meltdown in 2022, the White House said. The department also has issued over $164 million in penalties against airlines for consumer protection violations. Between 1996 and 2020, DOT collectively issued less than $71 million in penalties against airlines for consumer protection violations.

Fox News' Caroline McKee contributed to this report.