Airlines Now Must Refund Passengers Cash for Cancelled Flights

SAN ANGELO, TX – The U.S. The Department of Transportation has introduced a new rule requiring airlines to provide full cash refunds for canceled flights, significant delays, and other service disruptions. 

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

Under this rule, airlines must automatically refund passengers for any canceled flights and those with substantial schedule changes. 

The rule also covers extended delays—over three hours for domestic and six hours for international flights. It applies to airport changes, added connections, downgrades in service class, or less accessible aircraft changes for disabled passengers.

The new regulations stipulate that airlines must refund passengers for lost or significantly delayed luggage—over 12 hours for domestic and up to 30 hours for international travel. Moreover, the DOT is cracking down on hidden fees, including undisclosed baggage charges and other last-minute costs, requiring airlines to be transparent about all fees.

Airlines have a six-month compliance window to implement these regulations, including the automatic refund process. The rule defines "significant change" as a shift in departure or arrival times by more than three hours for domestic flights and six hours for international, changes in airports, more connections, or downgrades in service.

For mishandled baggage, airlines must refund the checked bag fee if not delivered within 12 hours after a domestic flight or up to 30 hours after an international one. The rule also mandates refunds for failed delivery of paid extras like Wi-Fi or seat selection.

The DOT's new regulation is part of broader efforts to enhance passenger rights and airline accountability, which have been under scrutiny, particularly after a surge in complaints during the COVID-19 pandemic when refund issues peaked.

Under the rule, refunds must be issued within seven business days for credit card purchases and 20 days for other payment methods, in cash or the original payment form. Airlines cannot offer travel credits or other compensation unless explicitly accepted by the passenger.