New federal rule to guarantee hassle-free airline cash refunds, administration says

A federal rule announced Wednesday will require airlines to quickly give cash refunds — without lengthy arguments — to passengers whose flights have been canceled or seriously delayed, the Biden administration said.

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

The rule from the Department of Transportation says passengers who decline other reimbursement like travel credits are to get a cash refund.

It applies to canceled flights or when flights have a “significant change,” the administration said.

A “significant change” includes when departure or arrival times are three or more hours different than scheduled for domestic flights or six hours for international flights, and also cases where the airport is changed or connections added, it said.

Passengers are also to get a refund when their baggage is 12 hours late in delivery for domestic flights.

The new rule comes after promises to hold airlines accountable after major disruptions that made travel hell for passengers, including the 2022 Southwest Airlines meltdown that resulted in almost 17,000 significantly delayed or canceled flights and a missing baggage nightmare.

The Department of Transportation said that the new rule means refunds are automatic, and "airlines must automatically issue refunds without passengers having to explicitly request them or jump through hoops."

Also announced Wednesday was a rule requiring airlines to more clearly disclose so-called "junk fees" such as surprise baggage or other fees, up-front, the department said.

The department said that rule is expected to save fliers around $500 million a year.

The surprise fees are used so that tickets look cheaper than they really are, and then fliers get the unwelcome surprise of fees on checked bags, carry-on bags, or reservation changes — or even discounts that are advertised but the discount only applies to part of the ticket price, officials said.

Airlines will also have to tell fliers clearly that their seat is guaranteed, and they don't have to pay extra to ensure they have a seat for the flight, according to the department.

Airlines for America, an industry trade group, said that its member airlines “offer transparency and vast choice to consumers from first search to touchdown,” and that they do offer cash refunds.

The 11 largest U.S. airlines returned $10.9 billion in cash refunds last year, an increase over the $7.5 billion in 2019 but slightly down from the $11.2 billion in 2022, the group said.

“U.S. airlines are providing more options and better services while ticket prices, including ancillary revenues, are at historic lows,” Airlines for America said.

Left out of the federal changes announced Wednesday are those involving "family seating fees," but the Transportation Department said in a statement that "DOT is planning to propose a separate rule that bans airlines from charging these junk fees."

Travelers have complained to the DOT that children were not seated next to an accompanying adult, including in some cases young children, department officials said last year.

Fees on bags specifically have made up an increasing amount of airline revenues, the DOT said Wednesday in announcing the new rules.

A department analysis found that airline revenue from baggage fees increased 30 percent between 2018 and 2022, while operating revenue — which is from the flights themselves — increased by only half that amount, the DOT said.

This article was originally published on NBCNews.com