Skift Take

The new rules would require airlines to disclose the fees of certain service upfront and streamline the process for providing passengers with refunds.

The Biden administration released a set of rules on Wednesday that would require airlines to confront “junk fees.”

“Passengers deserve to know upfront what costs they are facing and should get their money back when an airline owes them — without having to ask,” said Transportation Secretary Pete Buttigieg.

President Joe Biden has previously vowed to go after “junk fees” during his State of the Union speech in 2023. A hallmark of his administration has been cracking down on consumer protections in the airline industry.

The Department of Justice took a hawkish stance against consolidation in the airline industry when it blocked a merger between JetBlue and Spirit Airlines. And the DOT has released a passenger rights dashboard that tracks which airlines offer refunds under specific circumstances, along with free family seating.

Automatic Refunds

These rules include requiring airlines to provide automatic cash refunds in instances where flights are significantly delayed or canceled, checked baggage is delayed or when ancillary services that were paid for are not provided.

The Department of Transportation said without this rule, consumers are left navigating a “cumbersome” process to receive a refund from an airline. The rule would mandate airlines to automatically issue refunds within seven business days of the refunds becoming due for credit card purchases or 20 calendar days for other payment methods.

Airlines would also need to provide these refunds in cash or the original form of payment. The DOT said airlines cannot use vouchers, travel credits or other forms of compensation unless the passenger requests it. The refunds would also need to include government-imposed taxes and airline fees.

Consumers are eligible to receive these refunds if departures or arrivals for domestic flights are delayed by three hours and six hours for international flights.

Disclosing All Fees Upfront

The DOT is also requiring airlines to disclose “junk fees” upfront. So, airlines and ticketing agencies have to inform customers of the prices for checked baggage, carry-ons, changing a reservation or canceling one.

Through this rule, airlines would need to share all information on fees with third party sites. The DOT also wants airlines to tell customers their seats will be guaranteed even if they don’t pay a seat selection fee.

Airlines would also need to end “bait-and-switch” discount tactics, the DOT said. Airlines would be prohibited from advertising a discount that’s based solely off low airfare and doesn’t disclose the other mandatory fees.

Airlines for America, a trade group that represents some of the largest U.S. airlines, said that the industry already offers consumers a range of options.

“A4A passenger airlines—which are fierce competitors—offer transparency and vast choice to consumers from first search to touchdown. U.S. airlines are committed to providing the highest quality of service, which includes clarity regarding prices, fees and ticket terms,” A4A said in a statement.

The trade group also said that ancillary revenue were at “historic lows.” The U.S. airline industry made approximately $5.5 billion in ancillary fees during the first nine months of 2023, according to DOT data.

“A4A member carriers abide by—and frequently exceed—DOT regulations regarding consumer protections,” A4A added.

Airlines Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more airlines sector financial performance

Read the full methodology behind the Skift Travel 200.


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Tags: airlines for america, alaska airlines, american, delta, Department of Transportation, jetblue, joe biden, pete buttigieg, united

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