Flyers to or from US will soon get instant refunds if flights are cancelled

Traveling to or from the US? You will soon be entitled to an automatic refund if your flight is canceled or significantly altered, under new US Department of Transportation rules released on Wednesday.

"Passengers deserve to get their money back when an airline owes them—without headaches or haggling," US Transportation Secretary Pete Buttigieg said in a statement.

New rules for airlines:

Under the new rule, passengers will be entitled to refunds if there is a “significant change” to their flights. These include:

— Departure or arrival time that moves by more than three hours domestically or six hours for international flights

— Being downgraded to a lower class than originally purchased, as from first class to economy

— Change of departure or arrival airport

— Increase in number of connections

— Changes to connecting airports or planes flown if they are less accommodating for people with disabilities

Travellers will also get refunds for checked bag fees if the bag is lost and not delivered within 12 hours of a domestic flight’s gate arrival. International flights will have from 15 to 30 hours to return a lost bag, depending on their length.

Anyone who pays for a service, such as in-flight Wi-Fi or entertainment, and doesn’t receive it will also get their money back.

Complains on the rise

According to the department, complaints related to airlines and ticket agents rejecting or delaying refunds made up 87% of all air-travel service complaints at the height of the Covid-19 pandemic in 2020.

Airfare to rise?

The refund changes are poised to add significant costs across the airline industry, which could have a disproportionate impact on low-cost carriers, Bloomberg reported, quoting Seaport Research analyst Daniel McKenzie.

“To the extent low cost carriers have to add costs to comply, reduce growth and/or downsize, they become less competitive,” McKenzie said in a note.

The rules will be implemented in six months, Buttigieg said during a news conference.

With inputs from Bloomberg