Last week, the U.S. Department of Transportation (DOT) issued enforcement actions against three airlines for their delayed refunds to passengers in instances where the flights were impacted by COVID-19.  The DOT orders provide that the airlines refund passengers over $900 million for flights that were either cancelled or significantly delayed, according to DOT. In addition to the $900 million in refunds, the DOT is issuing penalties against the airlines in the cumulative amount of $2.5 million. 

This most recent measure is another action in the DOT’s consumer protection campaign, which we have followed closely with rulemaking and enforcement action alerts.  As we have discussed, the current presidential administration has issued the largest airline fines and refund orders in the Department’s history.  Additional details about the most recent refund and civil penalty orders can be viewed on the DOT’s website.

Laws and regulations 

The effectiveness of these actions remains to be seen, despite continued rulemaking and legislative efforts.  In April 2024, DOT finalized rules requiring automatic refunds of airline tickets and ancillary service fees.  In our alert relating to this rule, we noted that airlines abide by—and frequently exceed—DOT regulations.  In fact, airlines issued over $32 billion in customer refunds between 2020 and 2022, before the aforementioned enforcements and rulemakings took place. 

Nevertheless, in its $105 billion Reauthorization of FAA, Congress took measures to codify certain provisions of the rule above relating to airline refunds.  Generally speaking, the 2024 Reauthorization Act (Act) requires airlines to “automatically” issue passengers full refunds when a flight is canceled, delayed or significantly changed.  It also requires that any travel credit issued by an airline in lieu of a refund must be valid for at least five years.  Additional provisions of the Act relate to fee-free family seating, which many airlines already provide. 

The duplication of provisions between DOT’s rulemaking and the Reauthorization Act has the potential to provide unnecessary roadblocks and hurdles for many airlines already acting in the best interests of their passengers.  Despite this risk, additional upcoming DOT rulemakings may require airlines to make policies to reimburse passengers for lodging, transportation and meal costs incurred during a flight cancellation or significant delay.