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Transportation Department proposes stricter rules for airline refunds after complaints surge

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Travelers at LaGuardia Airport in Recent York on June 30, 2022.

Leslie Josephs | CNBC

The Transportation Department on Wednesday proposed stricter rules on when airlines would must compensate passengers for canceled or delayed flights, a move that follows a surge in traveler complaints after Covid-19 roiled air travel.

Air travelers are currently entitled to a refund if their flights are canceled or “significantly” modified or delayed they usually select to not travel. However the agency had not defined what constitutes a big change.

The Transportation Department is now proposing to define that as a departure or arrival time that is off by at the least three hours for domestic flights, or at the least six hours for international flights. Travelers would even be entitled to a refund if the routing changes or if a connection is added, in addition to if a change in aircraft causes a “significant downgrade” in amenities or other features.

Transportation Secretary Pete Buttigieg has publicly admonished airlines in recent weeks over an uptick in flight cancellations and delays, while industry executives and the Federal Aviation Administration have pointed fingers over who’s responsible.

Some Democratic lawmakers have called for higher consumer protections for air travelers.

Complaints about airline refunds accounted for 87% of the 102,560 complaints the DOT logged in 2020 and about 60% of the 49,958 complaints in 2021.

The DOT also proposed requiring airlines to provide flight credits or vouchers without expiration dates if passengers cannot fly due to Covid-19, including lockdowns, travel restrictions or personal health reasons.

“When Americans buy an airline ticket, they need to get to their destination safely, reliably, and affordably,” Buttigieg said in a news release.

Airlines for America, which represents large airlines like American, United, Delta, Southwest, JetBlue and others, declined to comment.

The pandemic and plunge in air travel demand prompted some airlines to make their tickets more flexible. For instance, American, United and Delta, removed ticket change fees for normal economy tickets in 2020.

And last week, Southwest, which didn’t charge ticket change fees before the pandemic either, said the vouchers it issues won’t ever expire.

The DOT’s proposed rules are open to public comment for 90 days.

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