New automatic refund rule for flight disruptions - what you need to know

CHICAGO - A new rule is changing the game for airline passengers when it comes to ticket refunds.

Airlines are now required to automatically refund money when flights are canceled or significantly delayed.

In a Fox 32 money saver special report, Dawn Hasbrouck breaks down what you need to know about the change.

The new requirement is part of the Federal Aviation Administration (FAA) Reauthorization Act signed by President Joe Biden earlier this year.

"What you used to get by default was a trip credit," said Kevin Brasler, executive editor of Consumers Checkbook. "Now you’re entitled to a refund and the refund has to be automatic."

Brasler said that refund includes things like taxes and if you paid for extras like seat selection.

"I think this will, this is a big benefit. And it really does improve things in terms of it eliminates a lot of confusion about what happens when you’re entitled to a refund," he added.

"At the end of the day that’s money that belongs to consumers," said John Breyault of the National Consumers League. "And they paid it for a service that the airlines didn’t provide them. Then they need to provide a refund."

Breyault said the change is specifically for flights originating in the U.S. and notes that rules clearly define how long of a delay will trigger a refund.

"So a significantly delayed flight means a flight where the departure or arrival time is more than three hours domestically or six hours internationally. And so in addition to that, if a flight gets canceled - meaning if the airline scheduled it but then ended up not flying that flight - then you’re also entitled to a full refund if you choose not to be re-booked or take a voucher," Breyault said.

He said the refunds will be given in the same way you paid and that you should see the refund in a timely manner.

"So for airlines, and this also applies to both airlines and travel agents, the prompt refund needs to be within 7 business days. If in the past you paid by credit card or within 20 days if you’ve paid by cash or check," Breyault said.

An important note if you do decide to cancel your trip based on a delay make sure to notify your airline of your plans.

"Don’t just no-show. Make sure you tell the airline ‘I’m canceling my trip here.’ And the reason is if you no-show, different rules might apply," Brasler said.

Also changing for families, passengers traveling with small children can no longer be required to pay a fee to sit with their kids.

"If they want to sit together with their small children, you have to somehow accommodate them without charging the fee for the privilege of sitting next to their toddler," Brasler said.

"I’ve seen seats on international flights that are $95 or more. I’ve seen seats on domestic flights that are $35 or more," Brasler added.

Ultimately, the consumer advocates we spoke with said the change is about making sure your money is back with you and not left in potentially expiring travel credits.

"Now airlines have to do what any other business has to do and that is if we’re owed a refund to give us an actual refund," Brasler explained.

"Having the rules of the road will actually help consumers and help competitions. And so I think it’s a real win-win for both," Breyault said.

The new rules are expected to go into place sometime this fall, meaning they should apply once the holiday travel season starts.

You can learn more on the Department of Transportation’s website if you have any questions about how the refund system works.

Court blocks rule on airline ‘junk fee’ disclosure

A new rule proposed by the U.S. Department of Transportation aimed at increasing transparency for consumers is now in legal limbo after a U.S. appeals court blocked the requirement that would have made airlines disclose "junk fees" upfront. The court's decision delays the implementation of the regulation pending a full review.

The proposed rules were introduced earlier this year to ensure that consumers are informed about additional fees they might incur beyond the base airfare. However, several major airlines sued to block the rule, and the court ruled in their favor.

"They said that the Department of Transportation was overstepping its oversight," said Kevin Brasler, executive editor of Chicago Consumers’ Checkbook. "The airlines also argued that implementing such a change would be too onerous for them."

While the case continues to move through the courts, Brasler suggests there could be alternative ways to enforce fee disclosure.

"It's not over yet," he said. "I do think the first round definitely went to the airlines."

One potential avenue for the Department of Transportation and consumer advocates is to have the rules codified into law. Brasler noted that similar measures were taken for airline refund requirements as part of the recent FAA reauthorization bill. He emphasized that many times the fares shown in search results do not reflect the actual amount consumers end up paying due to added fees.

"It would be good to know in advance that you're going to have to pay this much extra, $50 extra, to check a bag," Brasler said. "Simply requiring airlines to tell us what our trip is really going to cost upfront is a pretty simple ask."