Proposed Rule2022-16853
Airline Ticket Refunds and Consumer Protections
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 22, 2022
Issuing agencies
Transportation Department
Abstract
The U.S. Department of Transportation (Department or DOT) is proposing to codify its longstanding interpretation that it is an unfair business practice for a U.S. air carrier, a foreign air carrier, or a ticket agent to refuse to provide requested refunds to consumers when a carrier has cancelled or made a significant change to a scheduled flight to, from, or within the United States, and consumers found the alternative transportation offered by the carrier or the ticket agent to be unacceptable. The Department is also proposing to require that U.S. and foreign air carriers and ticket agents provide non-expiring travel vouchers or credits to consumers holding non- refundable tickets for scheduled flights to, from, or within the United States who are unable to travel as scheduled in certain circumstances related to a serious communicable disease. Furthermore, the Department is proposing to require U.S. and foreign air carriers and ticket agents provide refunds, in lieu of non-expiring travel vouchers or credits, if the carrier or ticket agent received significant financial assistance from the government as a result of a public health emergency. The NPRM proposes to allow carriers and ticket agents to require consumers provide evidence to support their assertion of entitlement to a travel voucher, credit, or refund.
Full Text
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<title>Federal Register, Volume 87 Issue 161 (Monday, August 22, 2022)</title>
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[Federal Register Volume 87, Number 161 (Monday, August 22, 2022)]
[Proposed Rules]
[Pages 51550-51581]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-16853]
[[Page 51549]]
Vol. 87
Monday,
No. 161
August 22, 2022
Part III
Department of Transportation
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Office of the Secretary
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14 CFR Parts 259, 260, and 399
Airline Ticket Refunds and Consumer Protections; Proposed Rule
Federal Register / Vol. 87, No. 161 / Monday, August 22, 2022 /
Proposed Rules
[[Page 51550]]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Parts 259, 260, 399
[Docket No. DOT-OST-2022-0089]
RIN No. 2105-AF04
Airline Ticket Refunds and Consumer Protections
AGENCY: Office of the Secretary (OST), Department of Transportation
(DOT or the Department).
ACTION: Notice of Proposed Rulemaking (NPRM).
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SUMMARY: The U.S. Department of Transportation (Department or DOT) is
proposing to codify its longstanding interpretation that it is an
unfair business practice for a U.S. air carrier, a foreign air carrier,
or a ticket agent to refuse to provide requested refunds to consumers
when a carrier has cancelled or made a significant change to a
scheduled flight to, from, or within the United States, and consumers
found the alternative transportation offered by the carrier or the
ticket agent to be unacceptable. The Department is also proposing to
require that U.S. and foreign air carriers and ticket agents provide
non-expiring travel vouchers or credits to consumers holding non-
refundable tickets for scheduled flights to, from, or within the United
States who are unable to travel as scheduled in certain circumstances
related to a serious communicable disease. Furthermore, the Department
is proposing to require U.S. and foreign air carriers and ticket agents
provide refunds, in lieu of non-expiring travel vouchers or credits, if
the carrier or ticket agent received significant financial assistance
from the government as a result of a public health emergency. The NPRM
proposes to allow carriers and ticket agents to require consumers
provide evidence to support their assertion of entitlement to a travel
voucher, credit, or refund.
DATES: Comments should be filed by November 21, 2022. Late-filed
comments will be considered to the extent practicable. Petitions for a
hearing pursuant to 14 CFR 399.75(b)(1) must also be filed by November
21, 2022.
ADDRESSES: You may file comments identified by the docket number DOT-
OST-2022-0089 by any of the following methods:
<bullet> Federal eRulemaking Portal: go to <a href="https://www.regulations.gov">https://www.regulations.gov</a> and follow the online instructions for submitting
comments.
<bullet> Mail: Docket Management Facility, U.S. Department of
Transportation, 1200 New Jersey Ave. SE, West Building Ground Floor,
Room W12-140, Washington, DC 20590-0001.
<bullet> Hand Delivery or Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Ave. SE, Washington, DC, between 9 a.m. and 5
p.m. ET, Monday through Friday, except Federal holidays.
<bullet> Fax: (202) 493-2251.
Instructions: You must include the agency name and docket number
DOT-OST-2022-0089 or the Regulatory Identification Number (RIN 2105-
AF04) for the rulemaking at the beginning of your comment. All comments
received will be posted without change to <a href="https://www.regulations.gov">https://www.regulations.gov</a>,
including any personal information provided.
Privacy Act: Anyone is able to search the electronic form of all
comments received in any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). For information on
DOT's compliance with the Privacy Act, please visit <a href="https://www.transportation.gov/privacy">https://www.transportation.gov/privacy</a>.
Docket: For access to the docket to read background documents and
comments received, go to <a href="https://www.regulations.gov">https://www.regulations.gov</a> or to the street
address listed above. Follow the online instructions for accessing the
docket.
FOR FURTHER INFORMATION CONTACT: Clereece Kroha or Blane Workie, Office
of Aviation Consumer Protection, U.S. Department of Transportation,
1200 New Jersey Ave. SE, Washington, DC 20590, 202-366-9342 (phone),
<a href="/cdn-cgi/l/email-protection#56353a332433333533783d24393e371632392278313920"><span class="__cf_email__" data-cfemail="02616e6770676761672c69706d6a6342666d762c656d74">[email protected]</span></a> or <a href="/cdn-cgi/l/email-protection#57353b363932792038253c3e321733382379303821"><span class="__cf_email__" data-cfemail="e48688858a81ca938b968f8d81a4808b90ca838b92">[email protected]</span></a> (email).
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Purpose
This NPRM is intended to ensure that travelers are treated fairly
when airlines cancel flights to, from, or within the United States or
make significant changes to the scheduled itineraries to, from, or
within the United States that consumers purchased, which includes
significant changes to the quality of the air travel specified in the
itinerary. Currently, the Department's regulations at 14 CFR part 259
require that airlines provide prompt refunds ``when ticket refunds are
due.'' Further, the Department's regulations at 14 CFR part 399 require
that ticket agents ``make proper refunds promptly when service cannot
be performed as contracted.'' This NPRM proposes to clarify that when
carriers cancel flights or make significant changes to flight
itineraries and the contracted service was not provided, ticket refunds
are due if consumers do not accept the alternative transportation
offered by carriers or ticket agents. It also proposes to define
``significant change of flight itinerary'' and ``cancelled flight'' to
protect consumers and ensure consistency among carries and ticket
agents with regard to when passengers are entitled to refunds.
This NPRM is also designed to ensure consumers are treated fairly
by limiting their financial losses on forgone air travel when: (1) they
are restricted or prohibited from traveling by a governmental entity
due to a serious communicable disease (e.g., as a result of a stay at
home order, entry restriction, or border closure); (2) are advised by a
medical professional or determine consistent with public health
guidance issued by the Centers for Disease Control and Prevention
(CDC), comparable agencies in other countries, or the World Health
Organization (WHO) not to travel during a public health emergency to
protect themselves from a serious communicable disease); or (3) are
advised by a medical professional or determine consistent with public
health guidance issued by CDC, comparable agencies in other countries,
or WHO not to travel, irrespective of any declaration of a public
health emergency, because they have or may have contracted a serious
communicable disease and their condition would pose a threat to the
health of others. Under the Department's current regulation, there is
no requirement for an airline or a ticket agent to issue a refund or
travel credit to a passenger holding a non-refundable ticket when the
airline operated the flight and the passenger does not travel,
regardless of the reason that the passenger does not travel. It is the
Department's goal to protect consumers' financial interests when the
disruptions to their travel plans were caused by public health concerns
beyond their control. This financial protection would further
incentivize individuals to postpone travel when they are advised by a
medical professional or determine consistent with public health
guidance not to travel because they have or may have a serious
communicable disease that would pose a threat to others.
B. Statutory Authority
1. Unfair Practice
DOT issues this NPRM pursuant to the authority set forth in 49
U.S.C. 41712. This provision authorizes the Department to take action
to address
[[Page 51551]]
unfair or deceptive practices or unfair methods of competition by air
carriers, foreign air carriers, or ticket agents. On December 7, 2020,
the Department issued a final rule that, among other things, requires
the Department to provide its reasoning for concluding that a certain
practice is unfair or deceptive to consumers when issuing aviation
consumer protection rulemakings that are not specifically required by
statute and are based on the Department's general authority to prohibit
unfair or deceptive practices under section 41712. That final rule also
adopted definitions for the terms ``unfair'' and ``deceptive.'' \1\
This NPRM is based on the unfair component of 49 U.S.C. 41712. Under
the Department's final rule implementing section 41712, a practice is
``unfair'' to consumers if it causes or is likely to cause substantial
injury, which is not reasonably avoidable, and the harm is not
outweighed by benefits to consumers or competition. Proof of intent is
not necessary to establish unfairness.\2\
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\1\ On February 2, 2022, the Department published a final rule
title Procedures in Regulating Unfair or Deceptive Practices. See,
87 FR 5655. This final rule, among other things, simplifies the
hearing procedures set forth in 14 CFR 399.79 when the Department
proposes a discretionary aviation consumer protection rulemaking
declaring a practice to be unfair or deceptive. The procedures
finalized by this rule do not change the requirement that the
Department articulate the basis for concluding that a practice is
unfair or deceptive to consumers when issuing discretionary aviation
consumer protection rulemakings under the authority of 49 U.S.C.
41712.
\2\ See Final Rule, Defining Unfair or Deceptive Practices, 85
FR 78707, Dec. 7, 2020.
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Pursuant to its authority under section 41712, the Department in
this NPRM proposes to require that airlines and ticket agents provide
prompt ticket refunds to consumers for flights cancelled or
significantly changed by carriers. The Department also proposes to
require, under its authority in section 41712, in concert with 49
U.S.C. 40101(a) and 41702, that carriers and ticket agents provide non-
expiring travel credits or vouchers, and--under certain circumstances--
refunds, to consumers who are restricted or prohibited from traveling
by a governmental entity or are advised by a medical professional or
determine consistent with public health guidance not to travel to
protect themselves or others from a serious communicable disease. The
Department's tentative basis for concluding that the practices this
NPRM would prohibit are ``unfair'' is articulated in the paragraphs
that follow.
An airline's or ticket agent's practice of not providing a prompt
refund to a ticketed passenger when the carrier cancels or
significantly changes the passenger's flight and the passenger does not
accept the alternative offered is ``unfair'' to consumers as it causes
substantial harm to consumers, the harm is not reasonably avoidable,
and the harm is not outweighed by benefits to consumers or competition.
Consumers are substantially harmed when they pay money for a service
that the airline does not provide, and the airline or ticket agent
refuses to provide a refund or unduly delays issuance of the refund.
According to the Department's data, the average cost for a domestic
one-way ticket was $292 for calendar year 2020 and $307 for 2021.\3\
The Department does not publish data on the average cost of
international airline tickets. According to Sabre Global Demand Data,
however, the average one-way fare between the United States and a
foreign point is $513 in 2020. It is not sufficient for carriers or
ticket agents to only offer vouchers to passengers instead of the money
paid for a service the airline did not provide. This is particularly
true in certain situations, e.g., the consumer bought the airfare for a
specific event and the cancelled flight or significantly changed flight
itinerary prevents the consumer from attending or significantly impacts
the consumer's ability to attend the event. Regardless of the reason,
consumers may reasonably prefer and are entitled to refunds. The
availability of a voucher does not sufficiently mitigate the
substantial harm of failing to provide a prompt refund.
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\3\ Bureau of Transportation Statistics, <a href="https://www.transtats.bts.gov/AverageFare/">https://www.transtats.bts.gov/AverageFare/</a>.
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This harm is also not reasonably avoidable by consumers. Consumers
are unable to avoid these injuries because cancellations or significant
changes to their flights are outside of their control. An airline
association has asserted that consumers who paid a lower fare for
``non-refundable'' flights could have avoided the harm by paying a
higher fare for fully refundable tickets.\4\ In DOT's view, however,
the term ``non-refundable'' does not apply in cases where the airline
cancels the flight or makes a significant change in the service
provided. A reasonable consumer would not expect that he or she must
pay more to purchase a refundable ticket in order to be able to recoup
the ticket price when the airline fails to provide the service paid for
through no action or fault of the consumer.
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\4\ See, e.g., Airline Ticket Refunds, Presentation by Airlines
for America to the Advisory Committee for Aviation Consumer
Protection (ACPAC), Dec. 2, 2021, <a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0030">https://www.regulations.gov/document/DOT-OST-2018-0190-0030</a>.
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It is also the Department's view that the tangible and significant
harm to consumers of not receiving a refund is not outweighed by
countervailing benefits to consumers or competition. While the
Department recognizes that a nonrefundable ticket allows consumers to
pay a lower price for an airline ticket, the Department does not expect
that this proposed requirement would result in airlines no longer
offering a nonrefundable ticket category as the term nonrefundable has
generally been understood not to apply in cases where the airline
cancels the flight or makes a significant change in the service
provided. Indeed, for decades, the Department's Office of Aviation
Consumer Protection has made clear that it interpreted the prohibition
against unfair practice to mean airlines cannot refuse to refund
passengers holding non-refundable tickets when the carrier cancels or
makes a significant change to a flight. This has not resulted in
airlines no longer offering nonrefundable tickets to consumers.
Similarly, it is an ``unfair practice'' by an airline or a ticket
agent to not provide non-expiring travel credits or vouchers, and--
under certain circumstances--refunds, to consumers who are restricted
or prohibited from traveling by a governmental entity due to a serious
communicable disease (e.g., as a result of a stay at home order, entry
restriction, or border closure) or are advised by a medical
professional or determine consistent with public health guidance (e.g.,
CDC guidance) not to travel to protect themselves or others from a
serious communicable disease. Consumers are substantially harmed when
they pay money for a service that they are unable to use because they
were directed or advised by governmental entities or medical
professionals not to travel to protect themselves or others from a
serious communicable disease, and the airline or ticket agent does not
provide a non-expiring credit or voucher or a refund. This loss of the
value of their tickets is a substantial harm that is not reasonably
avoidable because the only way to avoid it is to disregard direction
from governmental entities or medical professionals not to travel and
risk inflicting serious health consequences on themselves or others.
Consumers who decide to travel even if they are particularly vulnerable
to contracting a serious communicable disease due to age or a health
condition would be putting themselves at risk. Consumers who will lose
the entire value of their tickets may choose to travel even when
[[Page 51552]]
they have been advised not to travel because they have or may have
contracted a serious communicable disease, even though they would be
risking harm to others to avoid financial loss. These types of actions
by consumers are not in the public interest. The tangible and
significant harm to consumers of losing the entire value of their
ticket is not outweighed by potential countervailing benefits to
consumers or competition. In response to restrictions and health
concerns that limited consumers' ability to travel during the COVID-19
pandemic in 2020, many airlines recognized the unfairness of retaining
consumers' money when the consumer did not utilize the airlines'
service and provided vouchers when consumers did not travel. However,
complaints received by the Department show that numerous consumers were
unable to use these vouchers before they expired during the pandemic.
Further, the Department is aware of that some airlines and ticket
agents did not provide vouchers or refunds to consumers who were unable
to travel. Requiring airlines and ticket agents to provide non-expiring
travel credits/vouchers or refunds provides consumers the opportunity
to postpone travel and still retain some portion of the value of their
ticket when they are advised by a medical professional or determine
consistent with public health guidance (e.g., CDC guidance) not to
travel because they have or may have a serious communicable disease.
2. Safe and Adequate Air Transportation
49 U.S.C. 41702 states that an ``air carrier shall provide safe and
adequate interstate air transportation.'' \5\ The Department's
predecessor, the Civil Aeronautics Board (CAB), relied on section
404(a) of the Federal Aviation Act of 1958 (subsequently codified as 49
U.S.C. 41702 in Pub. L. 103-272), requiring air carriers ``to provide
safe and adequate service, equipment and facilities,'' as authority to
adopt its first regulation restricting smoking on air carrier
flights.\6\ The Department relied on this same authority in issuing a
2016 final rule prohibiting the use of e-cigarettes aboard aircraft (81
FR 11415; Mar. 4, 2016). The Department explained in the 2016 final
rule that the CAB found that ``nonsmoking passengers on aircraft may be
assigned to a seat next to, or otherwise in close proximity to, persons
who smoke and cannot escape this environment until the end of the
flight.'' The Department noted that the CAB relied on its authority to
provide for ``adequate'' service to address this issue in adopting the
smoking ban. Id. at 11420-11421. With regard to e-cigarette use, the
Department stated that, in addition to the direct effects of inhaling
the aerosol from e-cigarettes, ``passengers may reasonably be concerned
that they are inhaling unknown quantities of harmful chemicals, and
that they will not be able to avoid the exposure for the duration of
the flight.'' Id. at 11421. In prohibiting the use of e-cigarettes, the
Department relied on its authority to ensure adequate service under
section 41702. Id.
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\5\ An ``air carrier'' is defined as ``a citizen of the United
States undertaking by any means, directly or indirectly, to provide
air transportation.'' ``Interstate air transportation'' is defined
as ``the transportation of passengers or property by aircraft as a
common carrier for compensation, or the transportation of mail by
aircraft'' within the United States. 49 U.S.C. 40102(a)(2) and
(a)(25).
\6\ 38 FR 12207, May 10, 1973.
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Similar to its prior actions related to smoking and the use of e-
cigarettes, the Department issues this NPRM pursuant to the authority
provided in Sec. 41702 to ensure safe and adequate service. The
Department proposes to require U.S. carriers to provide non-expiring
travel vouchers or credits, or in certain circumstances refunds, to
consumers holding non-refundable tickets for scheduled flights within
the United States in circumstances where consumers are restricted or
prohibited from traveling by a governmental entity due to concerns
about a serious communicable disease or are advised by a medical
professional or determine consistent with public health guidance not to
travel to protect themselves or others from a serious communicable
disease. The Department finds that passenger concerns about being
seated next to, or in close proximity to, a passenger who may have a
serious communicable disease justify the Department's use of its
authority to ensure adequate service under section 41702. In line with
the statute, this proposed requirement would promote safe and adequate
air transportation by reducing incentives for individuals who have been
advised against traveling because they have or may have a serious
communicable disease to travel in an attempt to retain some portion of
the value of their ticket. This proposal would also allow consumers who
are particularly vulnerable to a serious communicable disease to avoid
having to choose between forfeiting the value of a ticket or attempting
to travel in spite of their vulnerability by allowing them to receive a
travel credit and postpone travel during a public health emergency.
Further, 49 U.S.C. 40101(a) directs the Department in carrying out
aviation economic programs, including issuing regulations under 49
U.S.C. 41702 and 41712, to consider certain enumerated factors as being
in the public interest and consistent with public convenience and
necessity. These factors include ``the availability of a variety of
adequate, economic, efficient, and low-priced services without
unreasonable discrimination or unfair or deceptive practices'' and
``preventing unfair, deceptive, predatory, or anticompetitive practices
in air transportation'', as well as ``assigning and maintaining safety
as the highest priority in air commerce.'' Based on the forgoing
discussion, the Department views this proposal as consistent with the
statutory mandate of section 40101(a).
C. Unfair or Deceptive Practice Request for a Hearing
For the reasons discussed in Section I.B.1., the Department
tentatively concludes that the practices it proposes to prohibit in
this NPRM are unfair and deceptive. Specifically, pursuant to its
authority under section 41712, the Department in this NPRM proposes to
require that airlines and ticket agents provide prompt ticket refunds
to consumers for flights cancelled or significantly changed by carriers
if a consumer does not accept alternative transportation offered by
carriers or ticket agents. The Department also proposes to require,
under its authority in section 41712, in concert with 49 U.S.C.
40101(a) and 41702, that carriers and ticket agents provide non-
expiring travel credits or vouchers, and--under certain circumstances--
refunds, to consumers who are restricted or prohibited from traveling
by a governmental entity or are advised against traveling to protect
themselves or others from a serious communicable disease.
Pursuant to the Department's regulations at 14 CFR 399.75(b)(1),
any interested party may file a petition to hold a hearing on the
proposed rule prior to the close of the comment period. As stated in
the DATES section, petitions must therefore be received by November 21,
2022.
The Department's regulations 14 CFR 399.75(b)(2) provide that the
Department will grant a petition if the petitioner makes a clear and
convincing showing that granting the petition is in the public
interest. Factors considered in determining whether a petition is in
the public interest include ``(i) Whether the proposed rule depends on
conclusions concerning one or more specific scientific, technical,
economic, or other factual issues that are genuinely in dispute or that
may not satisfy the requirements of the Information Quality
[[Page 51553]]
Act; (ii) Whether the ordinary public comment process is unlikely to
provide an adequate examination of the issues to permit a fully
informed judgment; (iii) Whether the resolution of the disputed factual
issues would likely have a material effect on the costs and benefits of
the proposed rule; (iv) Whether the requested hearing would advance the
consideration of the proposed rule and the General Counsel's ability to
make the rulemaking determinations required by this section; and (v)
Whether the hearing would unreasonably delay completion of the
rulemaking.'' DOT must also provide an explanation of the basis for the
decision on a petition. (14 CFR 399.75(b)(3)).
D. Summary of the Proposed Regulatory Provisions
The Department is proposing to enhance its aviation consumer
protection requirements applicable to refunds by amending the
Department's regulations in 14 CFR parts 259, 260 and 399. On July 21,
2021, the Department issued a Notice of Proposed Rulemaking titled
``Refunding Fees for Delayed Checked Bags and Ancillary Services That
Are Not Provided.'' \7\ That NPRM proposes, among other things,
adopting a new part under Subchapter A of Title 14 of the Code of
Federal Regulations, 14 CFR part 260,\8\ which would address refund
requirements related to fees for significantly delayed checked bags and
fees for ancillary services that are paid for but not provided.\9\ In
addition to the July 2021 NPRM, this proposed action--Airline Ticket
Refunds and Consumer Protections--would substantially increase the
protections provided to consumers by adding sections to the proposed
part 260, amending part 259, and amending part 399 as provided in the
summary table below.
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\7\ 86 FR 38420.
\8\ On July 21, 2021, the Department issued a Notice of Proposed
Rulemaking titled ``Refunding Fees for Delayed Checked Bags and
Ancillary Services That Are Not Provided.'' See, 86 FR 38420. That
NPRM proposes, among other things, adopting a new part under
Subchapter A of Title 14 of the Code of Federal Regulations, 14 CFR
part 260, which would address refund requirements related to fees
for significantly delayed checked bags and fees for ancillary
services that are not provided. The Department believes that this
new proposed rule would be an appropriate vehicle to add the
proposed ticket refund requirements. As such, in this NPRM, we are
proposing to add sections to the proposed part 260 that addresses
ticket refund requirements. The Department will review comments
already submitted on baggage fee and other ancillary fee refunds in
that rulemaking. Comments on part 260 submitted in response to this
rulemaking should solely focus on proposals related to ticket
refunds with one exception. This exception is the proposed
regulatory text at 14 CFR 260.9, which would specify that a
carrier's failure to ensure that its contract of carriage provisions
is consistent with 14 CFR part 260 would be considered an unfair and
deceptive practice.
\9\ DOT is not making changes to the proposals from the July 21,
2021 proposed rule in this NRPM. Accordingly, comments submitted in
response to the 2021 NPRM regarding the refund requirements related
to fees for significantly delayed checked bags and ancillary
services need not be resubmitted.
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Subject Proposal
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Refunding Airline Tickets.... Amend 14 CFR parts 259, 260, and 399 to
require U.S. and foreign airlines and
ticket agents to provide prompt ticket
refunds for ``cancelled flights'' or
``significant changes of flight
itinerary'' when consumers do not accept
alternative transportation.
Definition of Cancelled Amend 14 CFR parts 260 and 399 to define
Flight. cancelled flight as a flight that was
published in a carrier's Computer
Reservation System (CRS) at the time of
the ticket sale but was not operated by
the carrier.
Definition of Significant Amend 14 CFR parts 260 and 399 to define
Change of Flight Itinerary. significant change of flight itinerary
as a change made by a carrier where:
(1) the passenger is scheduled to depart
from the origination airport three hours
or more (for domestic itineraries) or
six hours or more (for international
itineraries) earlier than the original
scheduled departure time;
(2) the passenger is scheduled to arrive
at the destination airport three hours
or more (for domestic itineraries) or
six hours or more (for international
itineraries) later than the original
scheduled arrival time;
(3) the passenger is scheduled to depart
from a different origination airport or
arrive at a different destination
airport;
(4) the passenger is scheduled to travel
on an itinerary with more connection
points than that of the original
itinerary;
(5) the passenger is downgraded to a
lower class of service; or
(6) the passenger is scheduled to travel
on a different type of aircraft with a
significant downgrade of the available
amenities and travel experiences.
Notification of Right to Amend 14 CFR parts 259 and 399 to require
Refund. U.S. and foreign airlines and ticket
agents inform consumers that they are
entitled to a refund if that is the case
before making an offer for travel
credits, vouchers, or other compensation
in lieu of refunds.
Providing Non-Expiring Travel Amend 14 CFR parts 259 and 399 to require
Credits or Vouchers. U.S. and foreign airlines and ticket
agents issue non-expiring travel credits
or vouchers to:
(1) consumers who are restricted or
prohibited from traveling in relation to
a serious communicable disease (e.g.,
stay at home order, entry restriction,
border closure), irrespective of a
public health emergency being declared,
by a governmental entity, whether it be
a foreign government or Federal, State
or local government;
(2) consumers who are advised not to
travel during a public health emergency
by a medical professional or determine
not to travel consistent with public
health guidance issued by CDC,
comparable agencies in other countries,
or WHO to protect themselves from a
serious communicable disease; and
(3) consumers who are advised not to
travel, irrespective of a public health
emergency being declared, by a medical
professional or determine not to travel
consistent with public health guidance
issued by CDC, comparable agencies in
other countries, or WHO because they
have or may have contracted a serious
communicable disease and their condition
would pose a threat to the health of
others.
Providing Refunds if Amend 14 CFR part 260 and 399 to require
Receiving Significant U.S. and foreign airlines and ticket
Governmental Financial agents that receive significant
Assistance. governmental financial assistance after
the effective date of the final rule in
relation to a public health emergency to
issue refunds, in lieu of non-expiring
travel credits or vouchers, to:
[[Page 51554]]
(1) consumers who are restricted or
prohibited from traveling in relation to
a serious communicable disease (e.g.,
stay at home order, entry restriction,
border closure), during a public health
emergency, by a governmental entity,
whether it be a foreign government or
Federal, State or local government;
(2) consumers who are advised not to
travel during a public health emergency
by a medical professional or determine
not to travel consistent with public
health guidance issued by CDC,
comparable agencies in other countries,
or WHO to protect themselves from a
serious communicable disease; and
(3) consumers who are advised not to
travel during a public health emergency
by a medical professional or determine
not to travel consistent with public
health guidance issued by CDC,
comparable agencies in other countries,
or WHO because they have or may have
contracted a serious communicable
disease and their condition would pose a
threat to the health of others.
Eligible consumers must make a request
for a refund from the carrier or ticket
agent within 12 months of the date that
the Department has made a determination
that the carrier or the ticket agent
received significant financial
assistance.
Documentation................ Amend 14 CFR parts 259 and 399 to allow
U.S. and foreign airlines and ticket
agents to require consumers requesting a
refund or a non-expiring credit or
voucher for a non-refundable ticket when
the flight is still scheduled to be
operated without significant change to
provide, as appropriate:
(1) the applicable government order or
other document demonstrating how the
passenger's ability to travel is
restricted; and/or
(2) a written statement from a licensed
medical professional, attesting that it
is the medical professional's opinion,
based on current medical knowledge and
the passenger's health condition, that
the passenger's health would be
endangered if the passenger traveled or
the passenger would pose a direct threat
to the health of others if the passenger
traveled.
Service and Processing Fees.. Amend 14 CFR part 399 to allow ticket
agents to retain a service fee for
purchasing the ticket or processing a
refund or a non-expiring credit or
voucher, as long as the fee is on a per-
passenger basis and the existence and
amount of the fee is clearly and
prominently disclosed to consumers at
the time they purchased the airfare.
Amend 14 CFR parts 259 and 260 to allow
airlines to assess a fee for processing
a refund or a non-expiring credit or
voucher when the flight is still
scheduled to be operated without
significant change, as long as the fee
is on a per-passenger basis and the
existence and amount of the fee is
clearly and prominently disclosed to
consumers at the time they purchased the
airfare.
------------------------------------------------------------------------
II. Applicability
A. Airlines
(1) Covered Carrier
The proposed rule in 14 CFR parts 259 and 260 applies to a
certificated or commuter air carrier \10\ that operates scheduled
passenger service to, within, and from the United States using aircraft
of any size, and to a foreign carrier that operates scheduled passenger
service to or from the United States using aircraft of any size. The
Department's existing regulation at 14 CFR 259.5 requiring carriers to
adopt and adhere to a customer service plan, which includes a
commitment to provide prompt ticket refunds to passengers when a refund
is due, applies to all scheduled flights of a certificated or commuter
air carrier if the carrier operates passenger service using any
aircraft originally designed to have a passenger capacity of 30 or more
seats, and to all scheduled flights to and from the United States of a
foreign carrier if the carrier operates passenger service to and from
the United States using any aircraft originally designed to have a
passenger capacity of 30 or more seats.\11\ As such, section 259.5
presently does not cover U.S. and foreign carriers operating scheduled
flights to, from, or within the United States, as applicable, solely
using aircraft originally designed to have a passenger capacity of
fewer than 30 seats. The Department considered the burden on smaller
carriers of adopting and adhering to a comprehensive customer service
plan, which extends to all aspects of customer service, and ultimately
determined that exempting smaller carriers that do not operate aircraft
larger than 30 seats would protect the vast majority of passengers
using scheduled service without unduly burdening smaller carriers.
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\10\ A certificated air carrier is an air carrier holding a
certificate issued under 49 U.S.C. 41102. A commuter air carrier is
an air carrier as established by 14 CFR 298.3(b) that carries
passengers on at least five round trips per week on at least one
route between two or more points according to a published flight
schedule, using small aircraft--i.e., aircraft originally designed
with the capacity for up to 60 passenger seats. See 14 CFR 298.2.
Commuter air carriers, along with air taxi operators, operating
under 14 CFR part 298 are exempted from the certification
requirements of 49 U.S.C. 41102.
\11\ 14 CFR 259.2, 259.3, and 259.5(a).
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In this NRPM, the Department is proposing to revise section
259.5(b)(5) by defining under what situations a ticket refund would be
due and under what situations passengers cancelling a non-refundable
ticket should receive a travel credit or voucher. The proposal would
require all U.S. and foreign carriers operating scheduled services to,
from, or within the United States to comply with the refund requirement
when carriers cancel or make a significant change to a flight
itinerary, and to provide non-expiring travel credits or vouchers, or
in certain circumstances refunds, when a passenger is unable or advised
not to travel due to a concern related to a serious communicable
disease, regardless of the size of the aircraft they operate. Carriers
that are otherwise not currently covered under section 295.5 to provide
refunds when due because they operate only small aircraft would be
required, under this proposal, to comply with the specific requirements
on refunding and providing vouchers and credits.
The Department has tentatively made the policy decision to include
these smaller carriers in the refund and voucher issuance requirements
as specified in section 259.5 for the following reasons. With respect
to refund, these carriers are already covered in the Department's
credit card
[[Page 51555]]
purchase refund regulation, 14 CFR part 374. The Department's proposal
merely clarifies under what situations a refund is due and does not
impose additional requirements on carriers. With respect to
communicable disease related travel voucher, credit, and refund
issuance, this proposal would impose new requirements on carriers,
including these smaller carriers. The Department has determined that
placing this burden on smaller carriers is appropriate because the
financial harm and the serious potential health risks this proposal is
intended to address and prevent affect consumers traveling on all
airlines. The Department believes that the expansion of the
applicability of this proposed regulation is particularly meaningful to
many consumers traveling on smaller carriers who are from economically
disadvantaged small communities. The Department seeks public comments
on whether the proposed expansion of the regulation to include smaller
carriers is reasonable, and what obstacles, if any, these smaller
carriers may encounter to comply.
(2) Covered Flights and Consumers Protected
The current refund requirement in part 259 applies to all scheduled
flights of a covered U.S. carrier and all scheduled flights to and from
the U.S. of a covered foreign carrier. While proposing to expand the
scope of covered carriers for the refund and travel credit issuance
requirements, DOT does not propose to expand the scope of covered
flights or consumers protected. Nonetheless, the Department is
interested in exploring whether clarification regarding the scope of
the covered flights and consumers protected is appropriate. Any
examination of the applicability of DOT's refund requirement for
aviation consumers would not be complete without looking at Regulation
Z, as codified in 12 CFR part 226 and 12 CFR part 1026,\12\ and the
airline refund regulation in 14 CFR part 374, which implements the
requirement of Regulation Z with respect to airlines. The applicability
provision in 14 CFR 374 states that ``this part is applicable to all
air carriers and foreign air carriers engaging in consumer credit
transactions.'' \13\ In Supplement I to parts 226 and 1026, the issue
of foreign applicability is addressed by explaining that ``Regulation Z
applies to all persons (including branches of foreign banks and sellers
located in the United States) that extend consumer credit to residents
(including resident aliens) of any state. . .'' and that ``[i]f an
account is located in the United States and credit is extended to a
U.S. resident, the transaction is subject to the regulation.'' \14\ The
Department's authority to prohibit unfair or deceptive practices in air
transportation or sale of air transportation \15\ means that the
Department's aviation consumer protection regulations, including the
refund regulations in 14 CFR parts 259 and 374, cover flights to,
within, and from the United States, irrespective of whether the
consumer on those flights is or is not a resident of the United States.
While Regulation Z focuses on whether consumers reside in the United
States and whether the sellers (airlines or ticket agents) have a
branch located in the United States that sells to consumers in the
United States,\16\ the Department's airline refund regulations have
focused on whether the flight subject to the refund request is a flight
to, from, or within the United States, irrespective of whether the
consumer requesting a refund is a resident of the United States. The
Department seeks comments on whether the scope of the refund
requirement under parts 259, 260, and 399 should be amended to make
clear, consistent with the Department's statutory authority under 49
U.S.C. 41712, that the consumers' place of residence is irrelevant to
whether the consumer is entitled to a refund. The Department also seeks
comment on whether the Department, as a matter of policy, should limit
the applicability of the refund requirement to U.S. consumers (U.S.
citizens and residents) on covered flights. Commenters should
articulate the reason for their position regarding expansion or
limitation, with a focus on whether such a provision would better
protect U.S. consumers while not overly burdening airlines with matters
that do not significantly impact U.S. consumers.
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\12\ The Department's refund regulation in 14 CFR part 374
refers to both 12 CFR part 1026 and Regulation Z of the Board of
Governors of the Federal Reserve, which is in 12 CFR part 226. See
14 CFR 374.3(b).
\13\ 14 CFR 374.2.
\14\ See, 12 CFR Appendix Supplement I to Part 226--Official
Interpretations. See also 12 CFR Appendix Supplement I to Part
1026--Official Staff Interpretations.
\15\ Air transportation means foreign air transportation,
interstate air transportation, or the transportation of mail by
aircraft. See 49 U.S.C. 40102 (a)(5).
\16\ The Department would consider an airline that has a website
that markets to U.S. consumers to be a branch located in the United
States.
---------------------------------------------------------------------------
The Department is also interested in comments regarding whether a
limited expansion of the applicability is appropriate to cover certain
flight segments between two foreign points. For example, should the
Department's refund requirements in parts 259 and 260 cover segments
between two foreign points marketed and operated by a foreign carrier
as a part of an international itinerary to or from the United States?
Should these proposed requirements only cover the foreign segment if it
is marketed as a code-share flight under a U.S. carrier's code? For
example, for a passenger traveling between New Delhi and New York via
London, should the refund rule cover the cancellation or significant
change of the New Delhi-London segment if both New Delhi-London and
London-New York segments are sold on the same ticket under a U.S.
carrier's code? Should the rule cover an interline itinerary on the
same ticket but the New Delhi-London segment is under a foreign
carrier's code and the London-New York segment is under a U.S.
carrier's code?
This proposed rulemaking, similar to the existing regulation in 14
CFR 259.5 on refunds, would cover only scheduled flights. Public
charter passengers oftentimes also face flight cancellations, itinerary
changes, and travel plan interruptions related to communicable
diseases. The Department's regulation on public charter operations, 14
CFR part 380, has specific consumer protection requirements regarding
flight cancellations by a public charter operator \17\ or by a direct
air carrier \18\ and under what conditions a public charter participant
(passenger) would be entitled to a refund,\19\ including the right to a
refund due to a ``major change'' \20\ made by the public charter
operator as defined in 14 CFR 380.33. Furthermore, the public charter
regulation provides that a passenger would receive a full refund (less
any applicable administrative fee of no more than $25) if the passenger
wishes to cancel the booking, as long as that passenger provides a
substitute passenger in his or her place.\21\ This requirement would
potentially address the situation where the charter flight is operated
but a passenger is unable or
[[Page 51556]]
unwilling to travel because of a concern related to a serious
communicable disease. It is the Department's view that the regulatory
framework protecting public charter passengers in the event of charter
operator-initiated cancellation or changes or passenger-initiated
changes due to a concern regarding communicable disease has been in
place for many decades, which has been adequately addressing issues
unique to public charter operations. The Department does not propose to
amend the separate requirements regarding passenger refunds applicable
to public charter operations.
---------------------------------------------------------------------------
\17\ See, e.g., a public charter operator may not cancel the
charter less than 10 days before the scheduled departure date,
except for circumstances that make it physically impossible to
perform the charter trip, 14 CFR 380.32(h).
\18\ See, 14 CFR 380.43, a direct air carrier may not cancel any
charter less than 10 days before the scheduled departure date,
except for circumstances that make it physically impossible to
perform the charter trip.
\19\ See, e.g., If a charter is cancelled, a refund will be made
to the participant within 14 days after the cancellation, 14 CFR
380.32(k); any participant will receive a full refund less an
administrative fee upon providing a substitute participant within 14
days, 14 CFR 380.32(m)(2) and 380.32(n).
\20\ 14 CFR 380.32(r).
\21\ 14 CFR 380.32(m)(2).
---------------------------------------------------------------------------
B. Ticket Agents
The proposed rule, similar to the existing rule on refunds in 14
CFR 399.80(l), applies to ticket agents of any size. A ``ticket agent''
is defined in 49 U.S.C. 40102(a)(45) to mean a person (except an air
carrier, a foreign air carrier, or an employee of an air carrier or
foreign air carrier) that as a principal or agent sells, offers for
sale, negotiates for, or holds itself out as selling, providing, or
arranging for, air transportation. ``Air transportation'' is also a
defined term by statute, which essentially encompasses flights to,
from, or within the United States.\22\ In this NPRM, the Department
proposes that the refund and travel voucher or credit issuance
requirements apply to retail ticket agents selling tickets directly to
consumers for scheduled passenger service to, from, or within the
United States. The Department is limiting the proposed applicability to
scheduled service as it believes that there are other adequate consumer
protection mechanisms already in place to protect consumers who
purchase public charter air transportation (14 CFR part 380) and single
entity charter air transportation (14 CFR part 295) from ticket agents.
Similar to the scope of covered flights and protected consumers for
airline refunds, the Department is interested to know whether it is
adequate to require ticket agents to provide refunds and travel credits
or vouchers, as appropriate, for flights to, from, or within the United
States regardless of whether the seller has a location in the U.S.
through which the transaction occurred and regardless of whether the
consumer is a U.S. resident, or whether the Department should focus on
refund requests for U.S. based transactions by U.S. residents. The
Department also seeks comments on whether the rule should cover tickets
for flights to, within, or from the United States sold by a ticket
agent from a foreign location, and to what extent regulating such
transactions would benefit U.S. consumers.
---------------------------------------------------------------------------
\22\ 49 U.S.C. 40102(a)(5). ``Air transportation'' means foreign
air transportation, interstate air transportation, or the
transportation of mail by aircraft.
---------------------------------------------------------------------------
III. Refunding Airfare for Cancelled or Significantly Changed Flights
A. Background
The Department has the authority to prohibit unfair or deceptive
practices by airlines and ticket agents in air transportation or the
sale of air transportation under 49 U.S.C. 41712. For well over 20
years, the Department's Office of Aviation Consumer Protection has
informed airlines operating flights to, within, and from the United
States that a refusal to refund passengers when an airline cancels or
significantly changes a flight and passengers do not accept alternative
transportation would be an unfair business practice in violation of
section 41712, regardless of whether the passenger has purchased a non-
refundable ticket. In a letter to U.S. carriers issued in 1996, the
Office of Aviation Enforcement and Proceedings (now the Office of
Aviation Consumer Protection) reminded carriers that a refusal to
refund or an application of penalties to non-refundable tickets would
be considered grossly unfair and a violation of section 41712 in
situations where the change of flight time or travel date was
necessitated by carrier action or ``an act of god'', e.g., where the
carrier cancels a flight for weather or mechanical reasons. The letter
also explained that any contract of carriage or tariff provision
mandating such a result would also be grossly unfair and a violation of
section 41712.\23\
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\23\ See, Industry Letter to U.S. Air Carriers, July 15, 1996,
<a href="https://www.transportation.gov/sites/dot.gov/files/docs/19960715_2.pdf">https://www.transportation.gov/sites/dot.gov/files/docs/19960715_2.pdf</a>.
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The Office of Aviation Consumer Protection's longstanding view that
it is an unfair practice in violation of section 41712 for airlines to
refuse refunds or impose monetary penalties on passengers holding
nonrefundable tickets when the carrier cancels a flight or makes a
significant change to a flight itinerary remained the same even when
air travel was disrupted on a large scale. For example, following the
aftermath of the terrorist attacks on September 11, 2001, the
Department's Office of Aviation Consumer Protection issued a letter
\24\ to major U.S. airlines and U.S., international, and regional
airline associations, reminding them of airlines' responsibility to
provide refunds upon request to passengers who wish to cancel their
trip as a result of a flight cancellation or significant schedule
change made by the carriers. Recognizing the dramatic impact of the
terrorist attacks on airline personnel and schedules, the deluge of
refund requests that airlines received, and the added time needed to
process them, the Office of Aviation Consumer Protection nonetheless
stated that it expected carriers to dedicate the appropriate resources
necessary to process refunds in a timely manner.
---------------------------------------------------------------------------
\24\ See, Email to Major Airlines and Aviation Associations,
September 25, 2001, <a href="https://www.transportation.gov/sites/dot.gov/files/docs/20010925_0.pdf">https://www.transportation.gov/sites/dot.gov/files/docs/20010925_0.pdf</a>.
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The Department reiterated this interpretation of 49 U.S.C. 41712 in
a 2011 final rule. The Department's aviation consumer protection
regulation in 14 CFR 259.5(b)(5), adopted in 2011, requires covered
U.S. and foreign air carriers to adopt and adhere to a customer service
plan, which must include, among other things, a commitment that
carriers will provide prompt refunds to consumers when ticket refunds
are due. Although the rule text does not specify under what situations
a ticket refund would be due, in the preamble of the 2011 final rule
implementing this requirement, the Department discussed extensively
circumstances under which a refund, including a refund of non-
refundable tickets, should be provided. These circumstances include
flight cancellations or significant flight delays where consumers
choose to not travel because of these disruptions. The Department
stated:
We reject some carriers' and carrier associations' assertions
that carriers are not required to refund a passenger's fare when a
flight is cancelled if the carrier can accommodate the passenger
with other transportation options after the cancellation. We find it
to be manifestly unfair for a carrier to fail to provide the
transportation contracted for and then to refuse to provide a refund
if the passenger finds the offered rerouting unacceptable (e.g.,
greatly delayed or otherwise inconvenient) and he or she no longer
wishes to travel. Since at least the time of an Industry Letter of
July 15, 1996 . . ., the Department's Aviation Enforcement Office
has advised carriers that refusing to refund a non-refundable fare
when a flight is [cancelled] and the passenger wishes to cancel is a
violation of 49 U.S.C. 41712 (unfair or deceptive practices) and
would subject a carrier to enforcement action.\25\
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\25\ See, Final Rule, Enhancing Airline Passenger Protections,
76 FR 23110, at 23129, April 25, 2011. see also id. (the Office
``continue[s] to believe that there are circumstances in which
passengers would be due a refund, including a refund of non-
refundable tickets and optional fees associated with those tickets,
due to a significant flight delay'').
In the 2011 final rule, the Department also stated that while the
Department views it as manifestly unfair for carriers
[[Page 51557]]
to refuse to provide prompt refunds when consumers choose to not travel
and to not accept alternative transportation following a cancelled or
significantly delayed flight, the Department was persuaded by industry
commenters that it should not adopt a strict standard of what
constitutes a significant delay for the purpose of determining whether
a refund of the airfare is due. In deciding not to adopt a strict
standard, the Department explained that the definition of a significant
delay depends on a wide variety of factors such as the length of the
delay, length of the flight, and the passenger's circumstances. The
Department declared that its Office of Aviation Consumer Protection
would continue to monitor how carriers apply their non-refundability
provision in the event of a significant change in scheduled departure
or arrival time and would determine based on the facts and
circumstances of the delay whether a failure to provide a refund in
response to such a delay is an unfair and deceptive practice.
More recently, in April and May 2020, the Office of Aviation
Consumer Protection issued two notices reminding airlines and ticket
agents that their obligation to refund passengers for cancelled or
significantly changed flights remains unchanged even given the impact
of the COVID-19 pandemic.\26\ The May 2020 notice also acknowledged
that neither the term ``significant change'' nor ``cancellation'' is
defined in regulation or statute. It noted that, based on the Office of
Aviation Consumer Protection's review of the refund policies and
practices of U.S. and foreign air carriers, airlines define
``significant change'' and ``cancellation'' differently when fulfilling
their obligation to provide refunds. Because ``cancellation'' and
``significant change'' are not defined in the context of ticket
refunds, the Office of Aviation Consumer Protection stated that
airlines may develop reasonable interpretations of those terms.
---------------------------------------------------------------------------
\26\ See ``Frequently Asked Questions Regarding Airline Ticket
Refunds Given the Unprecedented Impact of the COVID-19 Public Health
Emergency on Air Travel'' (May 12, 2020) (``May 12, 2020 Enforcement
Notice''), available at <a href="https://www.transportation.gov/airconsumer/FAQ_refunds_may_12_2020">https://www.transportation.gov/airconsumer/FAQ_refunds_may_12_2020</a>; ``Enforcement Notice Regarding Refunds by
Carriers Given the Unprecedented Impact of the COVID-19 Public
Health Emergency on Air Travel'' (April 3, 2020) (``April 3, 2020
Enforcement Notice''), available at <a href="https://www.transportation.gov/airconsumer/enforcement_notice_refunds_apr_3_2020">https://www.transportation.gov/airconsumer/enforcement_notice_refunds_apr_3_2020</a>.
---------------------------------------------------------------------------
Similar to the refund requirement on airlines in section 259.5, the
Department's aviation consumer protection regulation requires ticket
agents to provide prompt refunds when the services paid for by
consumers cannot be provided as contracted. Specifically, 14 CFR
399.80(l) declares it an unfair or deceptive practice by a ticket agent
of any size to fail or refuse to make proper refunds promptly when
service cannot be performed as contracted or representing that such
refunds are obtainable only at some other point, thus depriving persons
of the immediate use of the money to arrange other transportation, or
forcing them to suffer unnecessary inconveniences and delays or
requiring them to accept transportation at higher cost, or under less
desirable circumstances, or on less desirable aircraft than that
represented at the time of sale. This provision, originally adopted by
the Civil Aeronautics Board, has not been amended since at least 1960s.
The regulation in section 399.80(l) also does not specify what
situations would constitute ``service [that] cannot be performed as
contracted,'' which would impose refund obligations on ticket agents.
With respect to the timeliness of a refund when it is due, carriers
and ticket agents are subject to the credit refund requirements of
Regulation Z as discussed earlier. The Department's regulation, 14 CFR
part 374, implements Regulation Z with respect to airlines. These
regulations establish that, with respect to refund requests involving
airline tickets purchased with a credit card, the airline must transmit
a credit statement for a passenger refund to the credit card issuer
within seven business days of receipt of full documentation for the
refund requested. Further, the Department's regulation in 14 CFR part
259 requires airlines to provide refunds involving airline tickets
purchased with cash or check within 20 days after receiving a complete
refund request.
These time frames for refunding consumers have been challenging for
airlines and ticket agents when air travel was disrupted in a large
scale. For example, in the early months of the COVID-19 pandemic,
airlines responded to travel restrictions imposed by various
governments and the rapidly reduced consumer demand by cancelling
significant amounts of flights and making drastic adjustments to the
schedules of the flights that were still operating. These cancellations
and schedule changes by airlines, in conjunction with cancellation
requests by many consumers who had already booked travel but decided
that they no longer wished to travel during a pandemic, led to an
unprecedented number of refund requests, which airlines had difficulty
processing in a timely manner. In addition, many airlines were facing
cashflow difficulties, which resulted in them initially being reluctant
to process refund requests. Similar to the airlines' situation, ticket
agents also faced a drastic increase in refund requests from consumers.
In addition to facing the similar cashflow difficulties arising from
the large numbers of refund requests, ticket agents' cashflow situation
may have been more challenging because they were not the ultimate
recipients of the consumer funds originally used to purchase the
ticket. Consumers complained that many ticket agents only offered
travel credits or simply passed the requests on to airlines, failing to
provide a refund.
Since March 2020 when the COVID-19 public health emergency was
declared in the United States, the Department's Office of Aviation
Consumer Protection has received a significant number of consumer
complaints regarding airlines and ticket agents refusing to provide a
refund or delaying processing of refunds when their flights were
cancelled or significantly changed due to the impact of the public
health emergency.\27\ Consumers, many holding non-refundable tickets,
allege that after flight cancellations or changes that affected their
travel were made by airlines, instead of providing refunds, they were
offered travel vouchers or credits for future use. Consumers often
mention the financial difficulties they are already suffering from the
effect of the pandemic, which are exacerbated by the inability to
receive timely refunds of their airfares. In addition, consumers assert
that the airline vouchers or credits are not useful to them due to the
lack of available flights or their inability or unwillingness to travel
overall because of government restrictions and health concerns.
---------------------------------------------------------------------------
\27\ See, Report to the White House Competition Council: U.S.
Department of Transportation's Investigatory, Enforcement and Other
Activities Addressing Lack of Timely Airline Ticket Refunds
Associated With the COVID-19 Pandemic, September 9, 2021, <a href="https://www.transportation.gov/individuals/aviation-consumer-protection/dot-report-airline-ticket-refunds">https://www.transportation.gov/individuals/aviation-consumer-protection/dot-report-airline-ticket-refunds</a>. From January 1, 2020 to June 30,
2021, the Department received a total of 105,327 complaints
concerning refunds. In comparison, from July 1, 2018 to December 31,
2019, the Department received a total of 2,264 complaints concerning
refunds. This change represents an increase of 4,552%.
---------------------------------------------------------------------------
Despite the Office of Aviation Consumer Protection's efforts to
ensure airlines' and ticket agents' compliance with their refund
obligations, the significant delays in providing refunds led the Office
of Aviation Consumer Protection to pursue enforcement action
[[Page 51558]]
in appropriate instances. The Department's existing regulations
pertaining to refunds have exacerbated this challenge and made it more
difficult to monitor compliance and enforce requirements. This is
because the existing refund requirement provides that airlines have an
obligation to provide prompt refunds when refunds are due, but the
Department's longstanding position on refunding airfare due to
cancellations and significant delays is not codified in rule text.
Also, the terms ``cancelled flight'' and ``significant change of flight
itinerary'' are not defined in regulation, which has resulted in
inconsistency among carriers on when passengers are entitled to
refunds.
The Aviation Consumer Protection Advisory Committee (ACPAC) has
also considered the issue of refund requirements applicable to airlines
and ticket agents.\28\ In a December 2, 2021 public meeting, the ACPAC
examined the Department's current airline ticket refund regulations and
enforcement activities, and received presentations from representatives
of the airline industry, consumer rights advocacy groups, State
consumer protection agencies, and ticket agents.\29\ Focusing on the
massive airline cancellations and changes during the COVID-19 pandemic,
consumer rights advocates shared the frustration many consumers felt
regarding not receiving timely refunds after airlines cancelled or made
significant changes to their flights. They also expressed concern about
airline internal policies that are not transparent or consistent in how
delays and cancellations are defined and how lack of clarity or
consistency affected passengers' refund eligibility. Airline
representatives described the challenges airlines faced handling the
massive volume of refund requests during the COVID-19 pandemic. They
expressed support for the Department's effort to codify its
longstanding policy regarding refunds but emphasized the long history
of airlines' compliance with the existing regulation and advocated
against prescriptive regulations establishing a hard time limit for
significant changes that trigger a refund. Representatives of ticket
agents expressed understanding of consumer frustration when requesting
refunds through ticket agents but emphasized the ticket agents' role in
acting as intermediaries between consumers and airlines in the process.
They opined that in most refund cases ticket agents have no role in
determining refund eligibility nor are they the appropriate source of
refund issuance. Ticket agent representatives stated that they support
the Department's effort to clarify ``significant change'' that triggers
a refund requirement.
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\28\ The ACPAC is a statutorily required committee most recently
extended to 2023 by the FAA Reauthorization Act of 2018. The ACPAC
evaluates current aviation consumer protection programs. It also
provides recommendations to the Secretary for improving and
establishing additional consumer protection programs that may be
needed.
\29\ See, Advisory Committee for Aviation Consumer Protection
(ACACP) Docket: <a href="https://www.regulations.gov/docket/DOT-OST-2018-0190">https://www.regulations.gov/docket/DOT-OST-2018-0190</a>.
---------------------------------------------------------------------------
This NPRM proposes to clarify that airlines and ticket agents have
an obligation to promptly refund consumers' airfares when airlines
cancel or significantly change flight schedules or the quality of their
services by including such language in the rule text. This rulemaking
would also ensure the consistency of consumer protections and industry
compliance across the board by defining the terms ``significant change
of flight itinerary' and ``cancelled flight.'' The Department has
reconsidered the rationale it stated in the 2011 final rule for not
adopting a stricter standard that defines a ``significant change,'' and
believes that the benefit of maintaining a performance-based standard,
namely, the flexibility for airlines to determine the type of flight
schedule changes that warrants a refund, does not justify the negative
impact of such a standard on consumers. Indeed, the airline industry's
and ticket agents' overall reactions to refund requests during the
initial period of the COVID-19 pandemic, including refusal to issue
refunds for cancelled or significantly changed flights and
retroactively revising refund policies to apply more stringent criteria
for refund eligibility, have shown that it is difficult and at times
impossible to enforce the current standard by monitoring how carriers
apply their non-refundability provisions in the event of a significant
change and determining, on a case by case basis, whether a failure to
provide a refund in response to such an itinerary change is an unfair
or deceptive practice.
B. Proposals
In this NRPM, the Department is proposing to specifically require
airlines and ticket agents to promptly refund airline ticket purchase
prices if a passenger's flight itinerary is cancelled or significantly
changed by an airline. We further propose to define ``cancelled
flight'' and ``significant change of a flight itinerary'' that would
result in a consumer being entitled to a refund. In the Department's
view, by holding out in its Computer Reservation System (CRS) to the
public a flight itinerary with specific characteristics, including
origin and destination airport, scheduled departure and arrival dates
and times, and other features material to a consumer, the carrier is
making an offer of a specific service. The consumer, having accepted
that specific offer by purchasing a ticket for a specific flight
itinerary, is acting reasonably in expecting to be provided the service
that was purchased. Thus, the carrier would be obliged to provide the
flight as promised or provide a refund if unable to provide that
specific flight and the consumer finds the alternative transportation
offered by the carrier to be unacceptable. The carrier's failure to do
so would be an unfair practice. Similarly, a ticket agent selling a
ticket for the flight listed by the carrier is offering a specific
service and is similarly engaging in an unfair practice if it does not
provide a refund or assist the consumer in obtaining a refund from the
carrier. This is because the harm to consumers is substantial and
unavoidable when they do not receive the air transportation service
that they purchased and, as discussed above, no countervailing benefit
that outweighs the harm has been provided.
(1) Defining ``Cancelled Flight''
Although the Department interprets its aviation consumer protection
regulation to require airlines and ticket agents to issue a refund for
flights that are cancelled by airlines, the regulation does not define
``cancelled flight'' for the purpose of issuing a ticket refund.\30\
The Department proposes to define a cancelled flight to mean a covered
flight that was listed in the carrier's CRS at the time the ticket was
sold to a consumer but was not operated by the carrier. Under this
proposed definition, the reason that the flight was not operated (e.g.,
mechanical, weather, air traffic control) would not matter. Also, the
removal of a flight from a carrier's CRS after a consumer has purchased
a ticket on that flight would not negate the obligation to provide a
refund. For example, a flight would be considered a ``cancelled
flight'' for the purpose of ticket refunds even if it was removed from
the carrier's CRS six months before the passenger's scheduled
departure, if the passenger had purchased the flight eight months prior
to the scheduled departure.
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\30\ For reporting purposes, a cancelled flight is defined as
``a flight operation that was not operated but was listed in a
carrier's computer reservation system within seven calendar days of
the scheduled departure.'' See 14 CFR 234.2.
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[[Page 51559]]
(2) Defining ``Significant Change of Flight Itinerary''
The NPRM proposes to require that airlines and ticket agents
provide prompt refunds when an airline makes a ``significant change of
flight itinerary'' and the passenger does not accept the alternative
transportation offered and requests a refund. This proposal would cover
any significant changes made by a carrier after the consumer purchased
the ticket, including significant changes to an alternative flight
accepted by the passenger after the initial flight was cancelled. In
proposing a definition of a significant change of flight itinerary, the
Department focused on what change, from a consumer's perspective, would
materially alter the value of the airline ticket as compared to the
original ticket. Based on this principle, the Department has
tentatively determined that, at a minimum, changes that affect
departure and/or arrival times, departure or arrival airport, a change
in the type of aircraft that causes a significant downgrade in the air
travel experience or amenities available onboard the flight, as well as
the number of connections in the itinerary, would be significant to
consumers. As such, the NPRM proposes to define a ``significant change
of flight itinerary'' as a change to a flight itinerary made by a
marketing or operating carrier that involves one of the following:
<bullet> A revised departure time that is scheduled to depart from
the passenger's origination airport three hours or more earlier than
the original scheduled departure time for a domestic flight itinerary,
and six hours or more earlier for an international flight itinerary,
regardless of the final arrival time;
<bullet> A revised arrival time that is scheduled to arrive at the
passenger's final destination three hours or more later than the
original scheduled arrival time for a domestic flight itinerary, and
six hours or more later for an international flight itinerary,
regardless of the initial departure time;
<bullet> A change in the original departing airport or the final
arrival airport;
<bullet> An increase in the number of connecting points;
<bullet> A downgrade of the class of service; or
<bullet> A change in the type of aircraft that causes a significant
downgrade of the available amenities and travel experience.
The Department seeks general comments regarding whether this
approach is reasonable and fair to passengers while not imposing undue
burden on carriers and ticket agents. The Department further seeks
suggestions on any other changes to flight itineraries that airlines
may make that should also be considered a ``significant change of
flight itinerary.'' The Department also seeks comments on whether there
are any operational concerns from airlines and ticket agents when
implementing these proposed definitions into their refund policies that
should be taken into consideration.
i. Early Departure and Late Arrival
When booking an air travel itinerary, aside from cost, the
departure and arrival times are two of the major considerations for
most passengers. Consequentially, a major change in the departure or
arrival time is likely to cause significant disruptions to the
passenger's travel and planned activities before and after the air
travel. To define the extent of early departure or delayed arrival that
should be considered as ``significant changes,'' the Department
considered three options.
The first option, which we are proposing in this NPRM, is a set
timeline of three hours applicable to domestic itineraries and another
set timeline of six hours applicable to international itineraries that
would constitute a significant departure and arrival change. Under the
NPRM, airlines and ticket agents would be free to apply a shorter time
period to constitute a significant departure or arrival change but
would not be able to increase it beyond three hours for domestic
flights and six hours for international flights. The Department
considers this approach to be the most straightforward, clearly defined
standard that would be easily understood by airlines and consumers. A
bright line standard such as this would also make it easier for
carriers and ticket agents to train personnel on how to respond to
refund requests and would streamline and possibly expedite the refund
review and issuance process. The Department proposes different
timeframes for domestic itineraries and international itineraries,
recognizing that many international itineraries involve long-haul
flights for which carriers should be afforded more leeway before a
change of departure or arrival time becomes grounds for a refund.
However, the Department also recognizes that the proposed standard
would allow international flights with shorter flight durations (e.g.,
flights between Miami and Nassau) a much longer window of early
departure or late arrival before a refund becomes due than some
domestic flights with longer durations (e.g., flights between New York
and Honolulu). The Department seeks comments on whether, despite these
variations, the standards drawn between domestic and international
itineraries are reasonable for most refund requests and, if not, how
the standards should be revised.
In applying the proposed standard to a refund request, airlines and
ticket agents would consider the departure time of the first flight
segment and the final arrival time of the last flight segment to
determine whether a refund is due. In other words, an early departure
of a connecting flight or a late arrival of a flight that is not the
final flight, even exceeding the proposed timeframe, may not
necessarily result in a passenger being entitled to a refund. For
example, in a situation where a passenger is traveling from New York to
Los Angeles via Denver, with a layover of 5 hours at Denver, if the
passenger's first flight from New York to Denver was delayed and it
resulted in an arrival delay of 3.5 hours into Denver, but the
passenger was able to catch the flight from Denver to Los Angeles and
experienced no delay in arriving at the final destination, there is no
requirement for a refund despite the 3.5-hour arrival delay into
Denver. Conversely, in the same example, if the passenger's flight from
New York to Denver operated on time but the flight from Denver to Los
Angeles has a change that results in a departure time of 3.5 hours
earlier, and the passenger was able to catch that flight and arrived in
Los Angles in time, that 3.5 hour early departure in Denver would not
be a ``significant change of flight itinerary'' for the purpose of
receiving a refund.
Another issue the Department wishes to clarify in application of
the proposed standard is that the international standard of 6 hours
would apply to the initial flight segment's departure and final flight
segment's arrival even if that flight segment is a domestic flight, as
long as the domestic segment is on the same ticket as the international
segment(s). To illustrate this, assume a passenger is traveling from
Chicago to London with Boston as the connecting point, and all flight
segments are on the same ticket. Under the proposal, if the departure
time of the flight from Chicago to Boston is changed to an earlier
time, the early departure must exceed six hours for the passenger to be
eligible for a refund. On the reverse route, when the passenger is
traveling from London, stopping at Boston and then continuing to
Chicago, the late arrival of the flight from Boston to Chicago must
exceed six hours before the passenger would be eligible for a refund.
This would not be the case if the two flight segments are on separate
[[Page 51560]]
tickets, and in that situation, each ticket would be treated as a
separate itinerary, one domestic and one international. The Department
welcomes comments on applying this proposed standard, particularly any
operational challenges that could occur.
The second option the Department considered is the option of not
defining the timeframes of early departure and late arrival. Under this
approach, the Department would continue to use the word ``significant''
to describe the amount of time lapse that would justify a refund. The
Department recognizes that the level of disruption and inconvenience to
passengers caused by early departure or late arrival may differ
depending on many factors, including each affected passenger's
individual situations. However, determining refund eligibility based on
these individualized factors is not the most efficient way to address
refund issues. The Department is focused on striking a balance between
considering all relevant factors on the one hand, and ensuring the
efficiency, consistency, and certainty of its regulation on the other
hand. In that regard, although this second option retains all the
flexibility the current regulation affords the industry, the Department
has concerns that this option of leaving the determination of refund-
qualifying flight schedule time changes to individual airlines is not
the best way to achieve this balance and may not be in the public
interest. Complaints submitted to the Department's Office of Aviation
Consumer Protection show that under the current regulation, airlines'
policies differ in the amount of schedule time change required for a
passenger to qualify for a refund. This causes consumer confusion and
creates challenges for the Department in enforcing its consumer
protection regulation. The Department seeks comments on whether
continuing to provide airlines the flexibility to define significant
change is a better option than the proposed approach (option 1) of
defining a significant departure or arrival change to mean beyond three
hours for domestic flights and six hours for international flights.
Which option would better ensure consumers are treated fairly?
Proponents of this approach are invited to articulate how to improve
consistency across the industry when applying this standard to reduce
compliance cost and consumer confusion.
A third approach considered by the Department is to define
significant departure and arrival through adoption of a tiered
structure based on objective factors that would be most likely to
impact the level of consumer inconvenience and harm caused by the
flight itinerary time change. For illustration purposes only, below is
an example of a tiered standard based on the factor of total travel
time as originally scheduled. As the original travel time (including
total flight duration and layover time) is an objective pre-determined
factor, the presumption is that the longer the original scheduled total
travel time is, the more tolerant a consumer is to an itinerary change
involving early departure or late arrival.
------------------------------------------------------------------------
Original scheduled total travel
time (measured from the schedule Projected arrival
departure time of the first delay or early
flight segment to the scheduled departure as Result
arrival time of the last flight offered to
segment) passenger
------------------------------------------------------------------------
3 hours or less................. 2 hours or less... Refund Not
Required.
More than 2 hours. Refund Due.
3-6 hours....................... 3 hours or less... Refund Not
Required.
More than 3 hours. Refund Due.
6-10 hours...................... 4 hours or less... Refund Not
Required.
More than 4 hours. Refund Due.
More than 10 hours.............. 5 hours or less... Refund Not
Required.
More than 5 hours. Refund Due.
------------------------------------------------------------------------
An obvious negative aspect of this very specific standard is that
it is more difficult for carriers to implement and for consumers to
understand. This table also does not distinguish single-segment flight
itineraries from multi-segment flight itineraries with connections. For
itineraries with multiple segments, when factoring in the layover time,
should the layover time be weighed the same as the actual flight
duration time? For example, for refund purposes, should a multi-segment
itinerary with a total travel time of 9 hours (6-hour total flight
duration time and 3-hour layover time) be treated the same as a single-
segment itinerary with a total travel time/flight duration of 9 hours?
From the industry perspective, is adopting this type of tiered standard
practical? What are the obstacles to implementing this? From the
consumer perspective, does this type of tiered standard better reflect
the inconvenience and disruption caused by a flight schedule change?
Besides the total scheduled travel time, is there any other objective
benchmark that should be considered as the basis of calculating whether
a refund is due? For all commenters, if the idea of this table is
workable, are the numbers proposed in the first two columns reasonable
and practical?
ii. Change of Origination or Destination Airport
Besides departure and arrival times, most consumers are also
concerned about origin and destination airports when booking a flight
itinerary. In the event that a carrier-initiated change results in a
passenger departing from or arriving at a different airport, it is
likely that additional time and cost would be incurred by the passenger
because consumers normally travel from and to airports that are most
convenient to them. As such, the Department views that such a change in
most cases would significantly reduce the value of the passenger's
original ticket and, therefore, a refund would be due if the passenger
no longer wishes to travel because of this change. The NPRM's proposal
focuses on the change of the origination or destination airports and
does not propose to require a refund if a carrier changes the
connecting airport(s), as long as the change of connecting airport(s)
does not cause early departure from the origination airport or delay in
arriving into the final destination beyond the proposed hours. The
Department invites comments on whether the change of origination or
destination airports should entitle passengers to a refund and whether
the change of connecting airports should also be included in this
category. In this regard, we are especially interested to know the
public's view on refund eligibility related to the change of a
connection airport when the original booking included an extended
period of layover time (e.g., over 12 hours). The Department's concern
is that in these
[[Page 51561]]
situations, passengers are more likely to choose a particular
connection airport in the original booking for a particular purpose
such as conducting business, visiting family, friends, or tourist sites
at that location. Changing that layover point to another airport may
materially affect the value of the trip to passengers. We also seek
comment on whether further refining refund eligibility based on the
length of layover time at the original connection airport is overly
burdensome for carriers to implement.
iii. Increase of the Number of Connection Points
Although the NRPM does not propose to include the change of any
connection airport as a ``significant change,'' the Department believes
that adding to the number of connection points in an itinerary would
significantly affect the value of a ticket because the more connection
points, the more likely passengers are going to experience flight
irregularities, complications, and disruptions, as well as mishandled
checked baggage. Further, certain passengers such as families with
young children may have a strong preference for non-stop flights
because of the convenience and pay more for such flights. In fact,
comparing airfares between two given points, itineraries with fewer
connection points are generally priced higher than itineraries with
more connection points. Under this proposal, a carrier changing a non-
stop itinerary to a one-connection itinerary, or changing a one-stop
itinerary to a two-stop itinerary, even if the change would not add to
the total travel time or cause early departure or late arrival, would
qualify as a ``significant change'' for which the passenger would be
entitled to a refund upon request. The Department believes that this is
a reasonable ground for refund eligibility because in those situations,
passengers likely paid a higher fare for an itinerary with fewer
connection points or no connection and, as the result of the carrier's
change, received service of less value. On the reverse side, if the
change of the itinerary results in a decrease in the number of
connections, then no refund is required.
iv. Downgrade in the Class of Service
Another ground for refund eligibility proposed in this NPRM is a
carrier-initiated downgrade in the class of service. Under the
Department's oversales regulation, when a passenger on an oversold
flight is offered accommodation or is seated in a section of the
aircraft for which a lower fare is charged, the passenger is not
entitled to denied boarding compensation but is entitled to an
appropriate refund for the fare difference.\31\ Here, the Department is
proposing that when a passenger is downgraded to a lower class of
service, either on the originally booked flight or on an alternative
flight offered by the carrier, and the passenger declines the
downgrade, a refund of the entire unused ticket price must be offered.
The proposal is not limited to situations where the entire flight or
the class of service the passenger was initially booked on was
oversold. Downgrade of a passenger could occur for other reasons such
as weight and balance or change of aircraft. It is the Department's
view that a downgrade in the class of service significantly changes the
passenger's ticket value and travel experience and is a reasonable
ground for a refund. The Department seeks comments on whether a
downgrade in the class of service should be considered a ``significant
change of flight itinerary'' based on which a refund would be due, or
whether the Department should require airlines to provide a refund of
only the ticket price difference, and not mandate that carrier provide
a full refund if the passenger does not accept the downgrade, similar
to the existing oversales regulation.
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\31\ See 14 CFR 250.6(c).
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v. Aircraft Downgrade
The change of aircraft is often required for operational reasons.
For example, inbound flight delays or mechanical issues can lead to the
use of substitute aircraft. While some aircraft substitutions result in
significant changes in the passengers' travel experiences, most do not
and would not result in affected passengers qualifying for a refund
under this proposal. The Department considers a substitute aircraft of
similar size that offers comparable amenities and does not
substantially affect the passengers' overall travel experience to not
be a ``significant change'' to the passenger's flight itinerary for
refund purpose. The Department solicits comments on how to determine
whether an aircraft downgrade is a significant change. Should the
determination of whether an aircraft downgrade is a significant change
be dependent on the person? For example, for a person who uses a
wheelchair, a substituted aircraft having a smaller cargo compartment
may mean that his or her battery-powered wheelchair cannot fit in the
cargo compartment. On the other hand, a person without a disability may
not be impacted by the substituted aircraft having a smaller cargo
hold. Are there certain types of changes in amenities or air travel
experience that should automatically be considered significant
irrespective of the person? Should the Department's rule specify the
types of change on the substitute aircraft that would result in
passengers qualifying for a refund, or should the Department allow
carriers to make this determination on a case-by-case basis? For
passengers with disabilities, DOT proposes that the lack of certain
disability accommodation features as the result of aircraft change,
such as onboard wheelchair storage spaces and moveable armrests, which
negatively impacts the particular passenger's travel experiences and
access to services onboard, would be considered a ``significant
change'' that entitles the passenger to a refund upon request.
(3) Airlines' Obligation To Provide Full Refunds (Including for
Codeshare and Interline Flights)
Under this NRPM, when ticket refunds are due, airlines would be
required to provide a full refund equal to the ticket purchase price
and including government-imposed taxes and fees and carrier-imposed
fees and surcharges (such as fuel surcharges), minus the value of any
air transportation that is already used by the passenger. Similar to
calculating the amount of denied boarding compensation in an oversales
situation, which is based on the passenger's one-way fare for the
affected flight(s), airlines should rely on established industry
practices and guidelines to calculate the value of any used portion of
the air transportation when providing refunds.
Additionally, consistent with the Department's longstanding view,
it would be an unfair practice for airlines to charge a fee when
issuing a refund of a ticket that is cancelled or significantly changed
by the carrier. The Department is also proposing to require airlines to
ensure that the terms or conditions in their contracts of carriage are
consistent with the proposed regulation \32\--
[[Page 51562]]
specifically that passengers will not be charged a fee when they do not
accept an alternative itinerary following a carrier-initiated
cancellation or significant change to their original itinerary. The
Department believes that it is important to ensure that passengers are
provided accurate information regarding their rights to a refund.
---------------------------------------------------------------------------
\32\ While 14 CFR part 260 would address refund requirements
related not only to the ticket refunds that are the subject of this
NPRM, but also the baggage and ancillary fee refunds proposed in the
Department's July 2021 NPRM, we are proposing in this NPRM to add
sections to the proposed part 260 that addresses only ticket refund
requirements with one exception. This exception is the proposed
regulatory text at 14 CFR 260.9, which would specify that a
carrier's failure to ensure that its contract of carriage provisions
is consistent with 14 CFR part 260 would be considered an unfair and
deceptive practice. Comments on part 260 submitted in response to
this rulemaking should solely focus on proposals related to ticket
refunds aside from this one exception.
---------------------------------------------------------------------------
The Department has also considered airlines' obligations to provide
refunds in codeshare and interline situations. For itineraries issued
under one carrier's designator code, the carrier under whose code the
ticket was issued (marketing carrier) would be responsible for
providing the refund, regardless of whether the marketing carrier is
also the operating carrier of the affected flight(s) or whether the
marketing carrier is the carrier that cancelled or made significant
changes to the flight itinerary. For itineraries that contain flight
segments sold under more than one carrier's code (interline
itineraries), the Department would require that the carrier that sold
the ticket and collected the money from consumers be responsible for
providing the refund even though not all flight segments were sold
under that carrier's code. This is because that carrier would already
have the information on consumer payment instruments, which facilitates
issuing the refunds. The Department believes that this approach
benefits consumers by streamlining the process for them to obtain
refunds and expects that, with minimum burden, carriers will be able to
develop a system with their codeshare and interline partners to ensure
that refunds are provided timely. The Department seeks comments on the
costs associated with establishing such a system for interline and
codeshare partners to process refunds according to this proposal and
whether there are technical obstacles that should be considered.
(4) Ticket Agents' Obligation To Provide Refunds, Fees, and Disclosure
The Department is proposing to require that ticket agents provide
prompt refunds of airline ticket purchase prices or the air
transportation portion of tour packages when an airline cancels or
significantly changes a scheduled flight itinerary that the ticket
agents sold directly to consumers, regardless of whether the ticket
agent is in possession of the ticket purchase funds. Approximately 50%
of tickets are sold by airlines directly to consumers, and the
remainder are sold through ticket agents.\33\ According to the
Department's September 2021 report to the White House Competition
Council on DOT's activities addressing airline ticket refunds
associated with the COVID-19 pandemic,\34\ approximately 17% of the
105,327 refund complaints the Department received between January 1,
2020 and June 30, 2021 are against travel agents and tour operators.
The Department views this significant volume of refund complaints
against ticket agents as an indicator that strengthening protections
for consumers purchasing air transportation from ticket agents is
needed.
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\33\ Transparency of Airline Ancillary Service Fees and Other
Consumer Protection Issues, 79 FR 29970, 29975 (May 23, 3014).
\34\ See, Report to White House, Supra, FN 16.
---------------------------------------------------------------------------
According to representatives of ticket agents,\35\ typically, when
a consumer purchases an airline ticket through a ticket agent, the
airline is the ``merchant of record'' recorded on the credit or debit
card transaction, meaning the airline name appears on the consumer's
card statement and the airline, not the ticket agent, receives the
money via an intermediary financial settlement service. Similarly, in
the usual process when a carrier-initiated cancellation or significant
change to a flight occurs and the passenger requests a refund from the
ticket agent, the ticket agent generally initiates an automated refund
but the money flows directly from the carrier to the consumers, not
through the ticket agent. Also, according to ticket agent
representatives, depending on the ticket agents and airlines involved
and the terms and conditions applicable, in a small percent of
transactions, airlines would remit the consumer funds back to ticket
agents, who then remit the funds back to consumers. During the initial
months of the COVID-19 pandemic, many airlines suspended the automated
process and refunds requested for tickets sold through ticket agents
had to be processed manually. Further, ticket agents have stated to the
Department that in many cases, they are not able to provide refunds to
passengers because the agents do not have possession of the consumer
funds. Consumer complaints to the Department have illustrated the
difficulty that consumers sometimes have in obtaining a refund for a
ticket purchased through a ticket agent when the consumer does not have
the means to determine whether the airline or ticket agent needs to
take action to process the refund and which entity is in possession of
the consumer's money.
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\35\ See, Presentation to the Advisory Committee On Aviation
Consumer Protection (ACPAC) by Travel Technology Association--The
Role of Online Ticket Agents in Airline Ticket Refund, Dec. 2, 2021,
<a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0034">https://www.regulations.gov/document/DOT-OST-2018-0190-0034</a>. The
Department received similar input from ticket agent representatives
during meetings with staff of the Office of Aviation Consumer
Protection on February 9 and 23, 2022.
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As illustrated in the preceding paragraph, one of the major issues
the Department recognized in reviewing COVID-19 related refund
complaints against ticket agents is that ticket agents often claimed
that they did not have the funds consumers paid for air transportation
because the funds have already been remitted to airlines. In many
complaints, consumers expressed great frustration as they were forced
to go back and forth between the ticket agent and the airline in an
effort to chase down their refunds. The Department has considered
placing the obligation of refund on the entity that is in possession of
the consumer funds at the time the refund request is made, but does not
propose this approach because which entity is in possession of the
funds would not necessarily be clear to the consumer because multiple
entities may be involved in the transaction process. Such uncertainty
would result in additional costs, delay, and confusion to consumers.
To minimize consumers' burden, in this NPRM, the Department is
proposing to revise the regulation prohibiting unfair or deceptive
practices by ticket agents in 14 CFR 399.80 to require that retail
ticket agents provide prompt refunds of the airfare or the air
transportation portion of the cost of tour packages when an airline
cancels or significantly changes a scheduled flight itinerary sold by a
retail ticket agent, i.e., ticket agents that sell directly to
consumers. This requirement would cover retail ticket agents of all
sizes, conducting business online or via brick-and-mortar stores
transact directly with consumers. This requirement would not cover
wholesale ticket agents who purchase bulk seats and resell them to
other ticket agents, as well as Global Distribution Systems because
these entities do not transact directly with consumers.
The proposed refund requirements for ticket agents applies to
airfare or airfare-inclusive travel package transactions in which the
ticket agents' identities are shown in the consumer's financial charge
statements, such as debit or credit card charge statements, indicating
that, from the consumer's perspective, the ticket agent is the ultimate
recipient of the funds irrespective of whether the ticket agent is in
possession of the consumer funds at the time of the refund request.
Conversely, if, according to the financial statements provided to
consumers, an airline is identified as the recipient of the consumer
funds in a
[[Page 51563]]
transaction facilitated by a ticket agent, the airline would be under
the obligation to provide the requested refunds without considering
whether the airline is in possession of the consumer funds at the time
of the refund request. The Department asks for public comments on
whether it is reasonable to place the refund obligation on the entity
that is the recipient of the funds as identified on the passenger's
financial transaction record, without considering whether that entity
is in possession of the consumer funds at the time the refund is
requested. In relation to this question, the Department notes that,
according to our understanding of the information provided by ticket
agents, in most cases consumer funds move quickly through the
intermediary entities so the entity that is the ultimate recipient of
the funds would most likely be in possession of the funds when a refund
request is made. To better assess the appropriate ways to place
obligations on different parties, the Department is also interested in
obtaining information regarding common practices and timelines for
ticket agents to settle accounts with airlines.
The Department notes that the proposed approach focusing on the
ultimate recipient of consumer funds without considering which entity
is in possession of the funds at the time the refund is requested draws
a clearer line for consumers to determine who would be responsible for
issuing refunds by looking at their financial transaction records.
According to some ticket agents, in most cases airlines are the
ultimate recipients of consumer funds and would be able to issue the
refunds directly to consumers without further delay. What are the
situations in which ticket agents' involvement is necessary for
airlines to issue refunds? What are the situations in which airlines
need to remit the funds back to ticket agents instead of consumers? In
those situations where the involvement of ticket agents is required,
how can the Department's regulation ensure that ticket agents use their
best effort to facilitate the prompt issuance of the refunds by
providing all the information necessary for refund issuance to airlines
in a timely manner, and by remitting the funds returned from airlines
back to consumers? When action by both ticket agents and airlines is
required for a refund to be issued, holding both the airline and the
ticket agent jointly responsible may avoid potential delays for the
airline to return the funds to the ticket agent if that step is needed
to complete the refund process, or avoid the potential delays for
ticket agents to provide the information needed for airlines to issue
refunds. Should the regulation place the burden of issuing refunds on
both airlines, as the recipients of funds, and ticket agents, as the
consumer-facing entity in those situations? The Department also seeks
input on any innovative solutions that we may not have considered to
ensure the consumer is not sent back and forth between the ticket agent
and the airline trying to obtain airline ticket refunds.
The Department acknowledges that for transactions in which a ticket
agent would be responsible for issuing a refund if due, before issuing
the refund, the ticket agent may need further information to verify
whether a refund is due under the Department's regulation. In most
situations where a refund is due because of airline cancellation or
schedule changes (e.g., early departure, late arrival, changes of
airports), there would be sufficient information, such as airlines'
publications or notifications sent to consumers, to confirm refund
eligibility without contacting airlines. However, there may be
situations in which a ticket agent does not have the direct information
to make such a determination and may need to contact the airline to
verify. For example, if a consumer claims that there is a downgrade of
the class of service on a flight and the consumer declined travel under
the downgrade, the ticket agent may not have access to the consumer's
booking record to confirm such a downgrade. Airlines receiving a
request from a ticket agent about a refund request should use their
best efforts to verify whether the consumer requesting a refund would
be eligible for a refund. The Department seeks comment on whether
ticket agent's obligation to provide a refund within 7 days for credit
card payments and 20 days for cash and other payments should not start
until the ticket agent receives refund eligibility confirmation from an
airline when the agent is unable to independently confirm the
passenger's refund eligibility. If a ticket agent's obligation does not
start until the ticket agent receives confirmation from an airline, how
can the Department ensure that the airline acts promptly and the
passenger is refunded in a timely manner if entitled to a refund?
Another issue the Department considered regarding refunds by ticket
agents is the fee for booking travel or issuing a refund which ticket
agents may charge and take out of the refunded portion before refunding
the consumer. Many consumers filing complaints with the Department
expressed dissatisfaction about ticket agents charging a fee for
booking travel that the consumer ultimately did not take and/or
charging a fee for the issuance of refunds. Another issue raised by
consumers is the existence of the fees that the consumer was not aware
of at the time of ticket purchase. Undisclosed fees would be considered
a deceptive practice by the Department pursuant to 49 U.S.C. 41712 and
14 CFR 399.79.\36\ Under this proposal, the Department clarifies that
ticket agents are permitted to charge a service fee for booking travel
or issuing refunds and to deduct those amounts from the refund provided
to consumers, as long as the amount of the fee is on a per-passenger
basis and the existence of the fee was clearly and prominently
disclosed to consumers at the time they purchased the airfare. The
Department is proposing to clarify that ticket agents are permitted to
retain the service fee they charge for ticket issuance at the time of
purchase in recognition that ticket agents are providing a service
apart from airfare, such as specialized knowledge, access to limited
availability fares, or tools to comparison shop across various airlines
to find the best value for the consumer. Ticket agents have noted that
regardless of whether the passenger ultimately travels, the fee for
booking travel represents the cost of service already provided by
ticket agents. The Department is proposing to clarify that ticket
agents may charge a fee for processing refunds while airlines are not
permitted to charge such a fee because unlike airlines, ticket agents
do not initiate the cancellation or significant changes that result in
a refund being due, nor do the ticket agents have any control over the
cancellation or significant changes to a flight itinerary. The
Department welcomes comments on whether it is reasonable to not permit
airlines to charge a ticket purchase service fee or a refund processing
fee for flights that the carrier cancelled or significantly
[[Page 51564]]
changed while allowing ticket agents to do so.
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\36\ Pursuant to 14 CFR 399.79, a practice is ``deceptive,''
within the meaning of 49 U.S.C. 41712, to consumers if it is likely
to mislead a consumer, acting reasonably under the circumstances,
with respect to a material matter. A matter is material if it is
likely to have affected the consumer's conduct or decision with
respect to a product or service. A ticket agent's failure to
disclose that the booking fee charged at the time of reservation is
nonrefundable when the ticket refund is due would likely mislead a
consumer to reasonably conclude that the entire money paid for the
ticket is refundable when ticket refund is due. Similarly, a ticket
agent's failure to disclose the existence and the amount of a fee
for issuing a refund is likely to mislead a consumer to reasonably
believe that no such a fee would apply when ticket refund is due.
Failing to provide either disclosure would be an omission of
material information that may affect the consumer's purchase
decisions.
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(5) Forms of Refund
In this NPRM, we propose to allow airlines and ticket agents to
choose whether to refund passengers by returning the money in the
original form of payment or by providing the refund in cash or a form
of cash equivalent.\37\ Typically, airlines and ticket agents refund
passengers in the original form of payment, i.e., whatever payment
method (credit card, bank account) that the individual used to make the
payment. Carriers may choose to continue to do so but also have the
flexibility to refund passengers in cash, a check, a prepaid card, or
an electronic transfer to the passenger's bank account or other digital
payment methods such as PayPal or Venmo. The Department emphasizes that
under this proposal, a carrier- or ticket agent-issued travel credit or
voucher or a store gift card is not considered a cash equivalent form
of payment because these forms of compensation are not widely accepted
in commerce. Further, the Department considers that when a carrier or
ticket agent issues a prepaid card, any maintenance or usage related
fees should be prepaid into the card by the issuer in addition to the
full amount of refund that is due.
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\37\ The Department's existing interpretation of ``cash
equivalent'' in the context of denied boarding compensation (DBC)
payments provides that the only permissible cash equivalent a
carrier may offer is a check. The Department has initiated a
rulemaking to explore additional means of payments that should be
considered as ``cash equivalent'' in light of the modernization of
payment methods, such as a prepaid card or electronic funds
transfer. See, Notice of Proposed Rulemaking, Modernizing Payment of
Denied Boarding Compensation, 84 FR 11658, March 28, 2019. The
Department plans to issue a final rule in 2022. Consistent with the
Department's proposal in that NPRM, this NPRM also proposes that
prepaid cards and electronic fund transfers, among other things,
should be considered as ``cash equivalent'' for the purpose of
refund issuance.
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By expanding the scope of refund forms, the Department's proposal
intends to provide consumers, carriers, and ticket agents more
flexibility in issuing and receiving refunds. Consumers would have more
flexibility to choose the form of refund payments offered by carriers
that better suit their needs. For example, this proposal would be
beneficial to consumers in situations where a credit card account used
to pay for the ticket has been closed. Carriers and ticket agents also
would benefit from the flexibility by saving costs from consolidation
of refund forms and increasing efficiency. The Department is interested
to know whether this proposal would be beneficial to consumers,
carriers, and ticket agents as intended and whether there are any
unintended negative impacts. Further, the Department's current refund
timeframes (i.e., seven days for credit card purchases and 20 days for
cash and other forms of purchases) are based on the form of payment
used for the purchase. The Department is interested in comments on
whether these timeframes are appropriate and should continue to apply
regardless of the form of refund. For example, if a consumer purchased
a ticket with a credit card and the carrier offers and the consumer
accepts a refund by check, should the carrier have 7 or 20 days to
issue the check?
(6) Option To Offer Travel Vouchers, Credits and Other Forms of
Compensation for Cancelled or Significantly Changed Flights
The Department proposes to allow airlines and ticket agents to
offer but not require other compensation choices such as travel credits
or vouchers and store gift cards in lieu of refunds. The Department
recognizes that while a refund in cash or a cash equivalent form of
payment would be preferred by many passengers, some passengers may have
travel or purchase plans in the foreseeable future and would prefer to
receive travel credits or vouchers or store gift cards, which airlines
and ticket agents may offer, as an incentive, at a dollar value of
greater than or equal to the refund amount. Allowing airlines and
ticket agents this flexibility enables them to preserve cash and
benefits consumers by allowing them more choices of compensation for
interrupted travel plans. The goal is to ensure that passengers, at a
minimum, have the choice of receiving cash or a cash equivalent refund,
while allowing airlines, at their discretion, to offer other choices
that may better suit the needs or preferences of some passengers.
Under the Department's proposal, the option for carriers and ticket
agents to offer compensation other than refund of cash or cash
equivalent when a carrier cancels or makes a significant change to a
flight itinerary must not be misleading with respect to the passengers'
rights to receive a refund. Specifically, while carriers and ticket
agents are free to offer these options, information provided by the
carriers and ticket agents to the public must not lead consumers,
acting reasonably under the circumstances, to believe that these
options are their only choices and that they are not entitled to a
refund. For example, when a carrier agent discusses the options
consumers may have after the carrier cancels or significantly changes a
flight, the agent's failure to clearly disclose that consumers have the
option to receive a refund would be a misleading communication.
Consistent with the prohibition against deceptive practices under 49
U.S.C. 41712 and the Department's rule defining deceptive practices in
14 CFR 399.79, it would be unlawful for carriers or ticket agents to
provide misleading information to consumers affected by cancelled or
significantly changed flight itineraries regarding their eligibility to
a refund, a material matter that is likely to affect a consumer's
conduct or decision with respect to a product or service.
Furthermore, when airlines and ticket agents offer compensation
other than refunds to consumers affected by cancelled or significantly
changed flight itineraries, the Department's proposal would require
airlines and ticket agents to clearly disclose any material
restrictions, conditions, and limitations on the compensations they
offer, so consumers can make informed choices about which compensations
and refunds that would best suit their needs. These material
restrictions, conditions, and limitations would include, among other
things, the validity period, black-out dates, administrative fees,
advance purchase requirements, and capacity restrictions applicable to
travel credits or vouchers, and the validity period, administrative and
maintenance fees, and purchase restrictions for gift cards.
IV. Providing Travel Vouchers or Credits to Passengers Who Are Unable
or Choose Not To Travel Due to Concerns Related to a Serious
Communicable Disease; Refund Requirement for Airlines and Ticket Agents
Accepting Significant Government Financial Assistance Related to a
Public Health Emergency
A. Background
Since the enactment of the Airline Deregulation Act of 1978 that
liberalized the airlines' ability to set ticket prices based on, among
many other factors, market demands, airlines have developed many
innovative ways to price air travel products tailored to different
consumer needs. The concept of ``booking classes'' encompasses
categories of tickets that are priced differently based on the levels
of flexibility a consumer has to change or cancel the tickets. Tickets
in the booking class labeled ``non-refundable'' generally would be
priced the lowest with the most restrictive conditions applicable to
consumer-initiated changes to the booking. Airlines' terms and
conditions for non-refundable tickets often specify that the passenger
[[Page 51565]]
would not be eligible to receive any form of compensation, including
refunds, credits, or vouchers, should the passenger choose not to
travel. As a goodwill or customer service gesture, many airlines
sometimes provide travel credits or vouchers, after evaluating the
situation on a case-by-case basis, to passengers who changed their
travel plans due to unexpected events, such as medical or family
emergencies, including passengers who have contracted a serious
communicable disease and decided to not travel to protect the health of
others. Passengers accepting these credits or vouchers then would have
the flexibility to reschedule their travel for a later date but may at
times be subject to a rebooking fee.
Approximately 20% of the refund complaints that the Department
received from January 1, 2020 to June 30, 2021, involved instances in
which passengers with non-refundable tickets chose to not travel
because of considerations related to the COVID-19 pandemic.\38\ Given
the impact the pandemic has had on passengers' travel plans, most
airlines that fly to, within, and from the United States have offered
travel credits or vouchers, despite the lack of a regulatory mandate,
in situations where a passenger states that he or she was unable to
travel or advised not to travel due to COVID-19 related reasons.
However, consumers have complained to the Department that the airline
vouchers and credits that they received have inadequate validity
periods considering the trajectory and duration of the pandemic. Some
complainants informed the Department that they experienced great
difficulties in receiving and redeeming travel vouchers issued by or
through ticket agents. Others have expressed frustration that the
vouchers are limited to booking future travel with the same routing as
their original bookings. Consumers believe these types of restrictions
significantly reduce the value of the credits or vouchers. Many
consumers have also asked that refunds be provided to them instead of
vouchers and credits. Consumer organizations and certain members of
Congress \39\ have urged airlines to provide non-expiring credits or
refunds in situations where the consumer does not travel due to COVID-
related reasons.
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\38\ See, Report to the White House Competition Council, p. 11.
\39\ See, <a href="https://www.markey.senate.gov/imo/media/doc/flights_credits_all_airlines_combined.pdf">https://www.markey.senate.gov/imo/media/doc/flights_credits_all_airlines_combined.pdf</a>.
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During the December 2021 ACPAC public meeting, participants also
discussed the issue of airline ticket refundability when consumers
cancel flights due to public health concerns or government
restrictions.\40\ With the COVID-19 pandemic as a background, consumer
advocates stated that consumers should not be denied refunds when they
are unable to travel due to government restriction, health concerns,
and cancelled events. Airline representatives focused on the public
benefits of having and maintaining the nonrefundable fare product in
the marketplace and cautioned that overregulation in this area may
result in the elimination of that lower-priced fare product.
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\40\ See, Advisory Committee for Aviation Consumer Protection
(ACACP) Docket: <a href="https://www.regulations.gov/docket/DOT-OST-2018-0190">https://www.regulations.gov/docket/DOT-OST-2018-0190</a>.
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The Department is of the view that a regulation is needed to ensure
consumers are consistently treated fairly when they are unable or
advised not to travel due to reasonable concerns related to a serious
communicable disease. The Department considers a consumer who does not
travel because he or she has contracted a serious communicable disease
or has been advised by a medical professional or determines consistent
with public health guidance not to travel because he or she is likely
to have contracted such a disease to be acting reasonably. Consumers
would also be acting reasonably if they do not travel, during a public
health emergency, to protect themselves from a serious communicable
disease based on restrictions, advisories, and guidance issued by CDC,
comparable agencies in other countries or WHO. Also, a consumer may be
unable to travel in relation to a serious communicable disease because
of restrictions imposed by a governmental entity (e.g., stay at home
order, border closure).
This NPRM proposes to mandate that airlines and ticket agents
provide credits or vouchers under certain circumstances and specifies
the form and nature of these credits or vouchers. It also proposes that
U.S. and foreign air carriers and ticket agents provide refunds during
a future public health emergency, in lieu of travel vouchers or
credits, to consumers if the carrier or ticket agent receives
significant government financial assistance, as determined by the
Department, regarding the public health emergency. The Department
believes that a regulation defining the baseline of accommodations to
non-refundable ticket holders and identifying the specific
circumstances that would give rise to the need to accommodate
passengers when they cancel or postpone their travel would greatly
enhance consumer protection. Without such requirements, airlines and
ticket agents may have different interpretations of what types of event
would be sufficient to justify a deviation from the non-refundable
terms of a ticket. Such application of interpretations may result in
not only increased consumer confusion and frustration, but also
increased administrative cost to airlines and ticket agents for
handling customer service requests and complaints from consumers with
different perspectives.
Aside from enhanced protection of consumers' financial interests,
the Department believes that a regulation providing protection to non-
refundable ticket holders who are unable to travel by air due to
reasonable concerns related to a serious communicable disease is needed
to promote and maintain a safe and adequate aviation transportation
system. 49 U.S.C. 41702 requires U.S. carriers to provide safe and
adequate interstate air transportation and 49 U.S.C. 40101(a) directs
the Department in carrying out aviation economic programs such as
regulations under 49 U.S.C. 41702 and 41712 to consider certain
enumerated factors as being in the public interest. These factors
include ``the availability of a variety of adequate, economic,
efficient, and low-priced services without unreasonable discrimination
or unfair or deceptive practices'' and ``preventing unfair, deceptive,
predatory, or anticompetitive practices in air transportation,'' as
well as ``assigning and maintaining safety as the highest priority in
air commerce.'' Large scale public health emergencies such as the
COVID-19 pandemic often lead to a significant loss of human life and
profoundly impact how people live and behave. This includes a general
reluctance to travel during a pandemic, particularly among certain
sectors of the population, such as the elderly, individuals with
certain health conditions that may place them at greater risk of
serious illness if they contract the disease, or those who are their
caregivers. These consumers face heightened risks when traveling during
a pandemic because of the potentially more severe consequences of them
contracting the communicable disease. Nevertheless, some may take risks
and travel if they have expended funds on airline tickets that they are
unable to recoup. Similarly, individuals who have contracted a serious
communicable disease such as COVID-19 or have been advised by a medical
professional or determine consistent with guidance
[[Page 51566]]
issued by a public health authority not to travel because they are
likely to have such a disease may travel, rather than self-quarantine
as may be suggested by government-issued advisories, if they are unable
to recoup the cost of their ticket. This NPRM would protect passengers'
financial interests in airline tickets that they purchased when they
are unable or choose not to travel due to reasonable concerns about a
serious communicable disease, which would encourage them to postpone
travel and avoid potential harm to themselves and others in the
aviation system. The Department seeks comments on whether requiring
airlines and ticket agents to issue travel credits or vouchers to non-
refundable ticket holders in these situations and refunds when entities
receive government assistance is an appropriate way for the Department
to promote safe and adequate air transportation.
Proposals
(1) Travel Credits or Vouchers to Passengers Who Are Restricted or
Prohibited From Traveling by a Governmental Entity in Relation to a
Serious Communicable Disease Whether or Not There Is a Public Health
Emergency
Under this NRPM, airlines and ticket agents would be required to
provide non-expiring travel credits or vouchers, instead of refunds
except under limited circumstances as described in paragraph (10) of
this section, to a non-refundable ticket holder who is restricted or
prohibited from traveling by a governmental entity for reasons related
to a serious communicable disease. A consumer may be restricted or
prohibited from travel by air through directives such as government
issued ``stay at home'' orders or ``shelter in place'' orders.
Governments may also institute border closure or entry restrictions for
certain types of passengers. The governments imposing these
restrictions may be a foreign government or the U.S. government at the
Federal, State, or local level. The Department believes that it is
fundamentally unfair to allow airlines and ticket agents to enforce the
non-refundability of tickets on consumers under these types of
circumstances, which are out of the consumers' control.
Under this proposal, consumers would be entitled to a non-expiring
voucher or credit if, after the consumers purchased airline tickets, a
government order was issued to prohibit a passenger from leaving the
place of origination or entering into the place of transition or
destination or if the government order renders the passenger's travel
meaningless. For example, if a passenger plans to travel to a vacation
destination and stay for a week but after the passenger purchased his
or her ticket the government of the destination city imposes a seven-
day quarantine requirement for all arriving passengers, the purpose of
this passenger's travel would be rendered meaningless. In these types
of situations, we are proposing that the passenger be entitled to
cancel the travel and receive a travel credit or voucher. On the other
hand, passengers would not be entitled to a travel credit or voucher if
they simply failed to exercise due diligence to ensure that all
conditions for travel imposed by the governments of the departure,
transit, or arrival locations are met. For instance, a passenger who
failed to obtain a negative test result for a communicable disease
within 48-hour of departure if required by the government of
destination would not be eligible for a travel credit or voucher under
this proposal. Further, the Department's proposal would only cover
government-issued travel restrictions or prohibitions in relation to a
serious communicable disease. This NPRM does not address passengers
subject to border closure or entry restriction for reasons not related
to a serious communicable disease, such as security reasons. The
Department expects that many instances would be analyzed on a case-by-
case basis to determine whether a passenger would be eligible to
receive a travel credit or voucher under this proposal. We welcome
comments on whether the proposed requirement for a non-expiring voucher
or credit strikes the right balance given that the travel restrictions
are out of the airlines' and ticket agents' control and the
differential economic impact of a refund mandate versus a travel credit
or voucher on airlines and ticket agents in these circumstances.
(2) Travel Credits or Vouchers to Passengers Who Are Advised or
Determine Consistent With Public Health Guidance Not To Travel To
Protect Themselves From a Serious Communicable Disease During a Public
Health Emergency
The NRPM proposes that, when there is a public health emergency,
airlines and ticket agents must provide non-expiring travel credits or
vouchers to non-refundable ticket holders who are advised by a medical
professional or determine consistent with public health guidance issued
by the CDC, comparable agencies, or WHO not to travel by air to protect
themselves from a serious communicable disease. Under this NPRM, for
airlines to incur this obligation, the non-refundable ticket holder
must have booked the ticket before the beginning of the public health
emergency and the travel date must be during the public health
emergency.
The NPRM further clarifies that a ``public health emergency,'' as
used in this proposed regulation, is defined in the U.S. Department of
Health and Human Services (HHS) regulation addressing measures taken by
CDC to quarantine or otherwise prevent the spread of communicable
diseases, 42 CFR 70.1.\41\ The Department believes that adopting HHS's
definition of public health emergency is appropriate here to capture
large-scale outbreaks of a serious communicable disease that would
significantly impact air travel on a regional, national, or global
basis, during which the Department's regulation is warranted to ensure
a basic level of protection for air travelers affected by the events.
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\41\ At the time of the publication of this NPRM, the definition
for ``Public health emergency'' in 42 CFR 70.1 is: (1) Any
communicable disease event as determined by the Director with either
documented or significant potential for regional, national, or
international communicable disease spread or that is highly likely
to cause death or serious illness if not properly controlled; or (2)
Any communicable disease event described in a declaration by the
Secretary pursuant to 319(a) of the Public Health Service Act (42
U.S.C. 247d (a)); or (3) Any communicable disease event the
occurrence of which is notified to the World Health Organization, in
accordance with Articles 6 and 7 of the International Health
Regulations, as one that may constitute a Public Health Emergency of
International Concern; or (4) Any communicable disease event the
occurrence of which is determined by the Director-General of the
World Health Organization, in accordance with Article 12 of the
International Health Regulations, to constitute a Public Health
Emergency of International Concern; or (5) Any communicable disease
event for which the Director-General of the World Health
Organization, in accordance with Articles 15 or 16 of the
International Health Regulations, has issued temporary or standing
recommendations for purposes of preventing or promptly detecting the
occurrence or reoccurrence of the communicable disease.
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This NPRM is intended to extend broad protection to consumers
scheduled to travel by air to, within, and from the United States
during a public health emergency and are advised by a medical
professional or determine consistent with public health guidance issued
by CDC, comparable agencies in other countries, or WHO not to travel
due to a health condition that makes the traveler particularly
vulnerable to the disease. In recognition of the significant economic
impact of public health emergencies, the Department is proposing to
require airlines and ticket agents to provide non-expiring vouchers and
credits (and refunds under the limited circumstances
[[Page 51567]]
as described in paragraph (10) of this section) to these passengers.
The Department believes that this strikes the right balance between
protecting consumers on the one hand and preserving and ensuring a
healthy air transportation industry on the other. The Department notes
that although the proposed requirement may result in a large amount of
credits and vouchers owed to consumers on carriers' accounting records,
it would not result in an immediate reduction of the carriers'
revenues. The Department believes that the proposal, which would
mandate non-expiring credits and vouchers for consumers to use in the
future instead of refunds, would enable airlines and agents to better
manage their liquidity and reduce the risk of bankruptcies.
The Department welcomes comments regarding whether it is reasonable
to mandate that airlines and tickets agents issue non-expiring travel
credits and vouchers to passengers who have purchased their airline
tickets before the declaration of a public health emergency and are
advised not to travel during a public health emergency to protect
themselves from a serious communicable disease. As stated earlier,
during the COVID-19 pandemic, many airlines have voluntarily provided
vouchers to consumers who were unable or chose not to travel because of
health concerns related to the pandemic. These vouchers, however, were
valid only for specified time periods and had other conditions and
restrictions associated with them. We are interested in comments
related to obstacles airlines and ticket agents may face when
voluntarily providing travel credits and vouchers to consumers who
could not or chose not to travel during the pandemic. Also, we solicit
comment on whether airlines and ticket agents should be required to
provide consumers more flexibility on the use of vouchers by allowing
the use of vouchers by travelers other than the traveler named in the
original ticket or use for travel on different interline partners. We
are also interested in feedback regarding any difficulties that
consumers may have experienced in redeeming credits and vouchers issued
to them and what the Department should consider in the proposed
regulation to address or resolve these difficulties. With respect to
the scope of qualified consumers, the Department's proposal would be
limited to consumers who have purchased their tickets before the public
health emergency. The Department recognizes that this limitation would
not extend the proposed enhanced financial protection to consumers who
purchase tickets during a public health emergency but later find out
that their condition or situation has changed such that it results in a
reluctance or inability to travel. For example, a consumer may have
developed a new health condition after having purchased the ticket
during a public health emergency and the new health condition makes the
consumer more susceptible to the serious communicable disease. Another
example is if the airline reduces the safety measures in place to
protect consumers from contracting this serious communicable disease.
The Department seeks comments on whether the proposed travel credit/
voucher issuance requirement should cover these consumers or if it
would be preferable to have a bright line rule that the protections are
limited to those consumers who purchased their airline tickets before
the declaration of a public health emergency.
(3) Travel Credits or Vouchers to Passengers, Who Are Advised or
Determine Consistent With Public Health Authority Guidance Not To
Travel Irrespective of a Public Health Emergency, Because the Passenger
Has or May Have a Serious Communicable Disease and Would Pose a Direct
Threat to Health of Others
Beyond widespread infections of a communicable disease that lead to
a ``public health emergency'' declaration by relevant governing
entities, this NPRM also addresses incidents of passengers who are
advised not to travel because they have or may have contracted a
serious communicable disease and, to protect the health of others, the
passengers do not take their scheduled flight. These incidents may
occur regardless of whether there is a public health emergency. The
NPRM proposes to require airlines and ticket agents to provide non-
expiring vouchers and credits, instead of refunds, in these types of
incidents, unless the incidents occur during a public health emergency
and the airline or ticket agent has received significant financial
assistance from their home country as described in paragraph (10) of
this section. However, the Department seeks comment on other
alternatives.
It is the Department's understanding that airlines in general would
allow and prefer that a passenger with a serious communicable disease
in the contagious stage not travel, and airlines would likely grant an
exception from the tickets' non-refundability to allow the passenger to
reschedule travel. In fact, if a passenger carrying a serious
communicable disease wants to travel, airlines would likely take steps
to ensure that the health of others in the flight is protected. Such
steps include conducting an assessment regarding whether the passenger
would pose a direct threat to the health of others, requesting medical
documentation, taking precautions to prevent the transmission of the
disease in the cabin while transporting the passenger, or if
appropriate, denying boarding. In the event that a passenger who has a
serious communicable disease wishes to postpone travel, the Department
believes that it would be in the interest of carriers, passengers and
the public at large for the travel to be postponed. This would protect
the health of the public and prevent the further transmission of a
serious communicable disease. The Department notes that this proposal
only intends to cover passengers who have or are likely to have
contracted a serious communicable disease, as determined by current
medical knowledge (e.g., directives issued by public health authorities
such as CDC) or a medical professional treating the consumer.
This proposal defines a serious communicable disease to mean a
communicable disease as defined in 42 CFR 70.1 that has serious
consequences and can be easily transmitted by casual contact in an
aircraft cabin environment. The analysis of whether a communicable
disease is ``serious'' under this NPRM is similar to the analysis of
``direct threat'' under the Department's disability regulation.\42\
Under that regulation and this proposal, carriers would consider the
significance of the consequences of a communicable disease and the
degree to which it can be readily transmitted by casual contact in an
aircraft cabin environment. Communicable diseases that are readily
transmissible but do not result in significant health consequences
(such as the common cold) or those carrying significant health
consequences but are not readily transmissible (such as AIDS) are not
``serious'' communicable diseases for the purpose of this proposal.
Conversely, the SARS-CoV-2 virus that causes the COVID-19 infection
would be considered a ``serious'' communicable disease because it is
readily transmissible in the aircraft cabin and would likely cause
significant health consequences in many people. The Department solicits
comment on its definition of a serious communicable disease. Is it
sufficiently clear to the regulated entities and the public as to which
types of
[[Page 51568]]
communicable diseases would and would not be considered serious? Is
there a better way to define serious communicable disease?
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\42\ See 14 CFR 382.21(b)(2).
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The Department, although not a public health agency, believes that
using economic tools as incentives to discourage passengers who would
pose a risk to the health of others from traveling is consistent with
its mission of ensuring that the air transportation system is safe for
the public. The Department notes that requests from passengers who are
advised by a medical professional or determine consistent with public
health guidance not to travel because they have or may have a serious
communicable disease infection should be infrequent and place little
burden on the airlines outside of the context of public health
emergencies. The Department solicits comment on the potential for abuse
if it adopts, at the final rule stage, its proposal that whether or not
there is a public health emergency airlines provide credits or vouchers
to individuals who have been advised by a medical professional or
determine consistent with public health guidance not to travel because
they have or may have a serious contagious disease. The proposed rule
would allow airlines to require such persons to provide documentation
from a medical professional and/or guidance issued by CDC, comparable
agencies, or WHO that the consumer should not travel by commercial air
transportation. The Department seeks comment on whether this is
sufficient to prevent abuse.
Are there concerns about individuals falsely stating that they have
serious communicable disease? If so, how should the Department address
these concerns? Are there ways to distinguish between consumers who,
after considering public health advisories or medical professional
opinions, genuinely determine that they may have contracted a serious
communicable disease, and consumers who want to take advantage of the
ability to claim vouchers or credits without a real suspicion of having
contracted a serious communicable disease? Should the requirement for
airlines to provide a credit or voucher only be triggered if the
consumer has instructed by a medical professional or public health
authority that he or she must quarantine or isolate and therefore
cannot fly as opposed to consumers who are advised or determine
consistent with public health guidance that they have or may have
contracted a serious communicable disease?
In addition, should the Department consider alternatives to
requiring airlines to offer vouchers or credits to consumers who have
been advised by a medical professional or determine consistent with
public health guidance not to travel because they have or may have
contracted a serious communicable disease? If so, are there other
actions airlines could take to protect consumers from the harm of
losing the value of their tickets? For example, would an airline waiver
of change fees be sufficient protection? Given the COVID-19 pandemic,
many airlines have suspended change fees for most of their tickets
allowing passengers to adjust travel schedules for any reason without
contacting the airline. Some airlines have also created an economy
class of tickets that allow for full refunds when the passenger cancels
before departure under most circumstances. Should the Department
require airlines to allow consumers to change their tickets without
charging a fee instead of providing them non-expiring vouchers or
credits? If so, should such a requirement apply to all classes of
tickets, regardless of airline change fee policies? In addition, should
the Department place additional requirements on airlines, such as
allowing consumers to change the ticket multiple times or to keep the
ticket open so that the consumer could select the new flight at a later
date? The Department welcomes comments on its proposal as well as
suggestions on alternative methods to protect consumers who are advised
by a medical professional or determine consistent with public health
guidance not to travel because they have or may have a serious
communicable disease.
(4) Supporting Documentation To Be Provided to Airlines or Ticket
Agents
The Department is cognizant of the airline industry's longstanding
ticket pricing practice that applies restrictions and fewer
flexibilities to less expensive ticket categories. While proposing a
regulation to ensure that passengers who have legitimate reasons to
postpone travel are accommodated, the Department believes that it is
reasonable for airlines and ticket agents to implement safeguards to
prevent abuse. Under this proposal, airlines and ticket agents would
have the option to assess the validity of passengers' reasons to
postpone travel before issuing travel vouchers, credits, or refunds to
them.
To determine whether a passenger's ability or willingness to travel
is impacted due to government restrictions related to a public health
emergency, this proposal allows airlines and ticket agents to require
passengers to present materials to demonstrate that government
requirements are restricting their air travel. These requirements could
include a quarantine isolation order or a border closure notice or
entry restriction issued by a government. A local stay at home order
that restricts local travel may also be a reasonable ground if it
impacts the passenger's entry or exit of the local vicinity through air
travel. To the extent that a passenger is asserting an inability or
unwillingness to travel to protect himself or herself or others from a
serious communicable disease, airlines and ticket agents would be
permitted to request that the passenger provide a current written
statement from a licensed medical professional attesting that it is the
medical professional's opinion, based on current medical knowledge and
the passenger's health condition, that the passenger should not travel
by commercial air transportation. A general ``fear'' that a passenger
may have about traveling when there is a public health emergency
declared would not be sufficient to entitle that passenger to a travel
credit or voucher.
The Department seeks comments on the adequacy of types of
information that the Department would allow airlines and ticket agents
to seek from passengers requesting a travel credit or voucher for
future travel. If a public health emergency has been declared and the
reason that the passenger is seeking to postpone travel is related to
risk to his or her health, should the Department specify that the
medical documentation explain the reason that the passenger is more
susceptible than others to contracting a serious communicable disease
during air travel? What, if any, privacy concerns are there with
allowing airlines and ticket agents to seek information from passengers
related to their health? What are possible ways to resolve these
concerns? Are there ways to reduce or prevent unscrupulous passengers
from falsely claiming that they have a serious communicable disease
that prevents them from traveling without airlines and ticket agents
requesting documentation from passengers about their health? If CDC,
WHO or other comparable entities recognize certain groups as being more
vulnerable to contracting a serious communicable disease, then would it
be sufficient for the medical documentation to affirm that the
passenger belongs in one of these groups? For example, in a travel
advisory published by the WHO regarding COVID-19,\43\ WHO advises
[[Page 51569]]
that any person in high-risk groups--including those over the age of
60, those with chronic illnesses, and those with underlying health
conditions, should consider postponing travel to areas where COVID-19
is widespread. Although technically members of this vulnerable group
may still travel, the potential serious health risk from contracting
the disease through travel is a material concern that could affect the
person's willingness to travel.
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\43\ <a href="https://www.who.int/news-room/q-a-detail/coronavirus-disease-covid-19-travel-advice-for-the-general-public">https://www.who.int/news-room/q-a-detail/coronavirus-disease-covid-19-travel-advice-for-the-general-public</a>.
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The Department seeks comments regarding whether it is reasonable to
require airlines and ticket agents to consider and accept a broad scope
of ``travel restrictions, advisories, and guidance'' issued by CDC,
comparable agencies in other countries, and WHO, to support a
consumer's assertion that it is not safe for them to travel. Are
``advisories and guidance'' too broad and vague for consideration? For
example, CDC's current travel advisory system includes three categories
applicable to different countries in the world: Warning Level 3--Avoid
all non-essential Travel; Warning Level 2--Practice enhanced
precautions; and Warning Level 1--Practice usual precautions. In this
example, which Warning Level(s) should be considered as a reasonable
level of restriction with respect to allowing non-refundable ticket
holders to receive a travel credit?
The Department notes that there are two categories of evidentiary
documentation airlines and ticket agents are permitted to request as a
condition for issuing the travel credits or vouchers under this
proposal--one is government-issued travel restrictions, guidance,
advisories applicable to the public or sectors of the public or
quarantine orders/isolation advisories applicable to the individual
passenger; the other is a written statement by a licensed medical
professional issued to the individual passenger. The Department notes
that, depending on the reason based on which a passenger is seeking to
postpone travel, not all passengers should be required to provide both
categories of documentation. For example, a passenger seeking to
postpone travel due to a compromised immune system may be required to
provide both the government advisory applicable to travelers with a
compromised immune system and a written statement by the passenger's
doctor attesting that the passenger has a compromised immune system. On
the other hand, a passenger seeking to postpone travel due to the
destination country's entry restriction should not be required to
provide any medical documentation. We expect airlines and ticket agents
to use reasonable judgment to determine what type(s) of documentation
is necessary and reasonable to request. We ask whether the proposal
that medical documentation be dated within 30 days of the initial
departure date is reasonable and appropriate.
Finally, the Department recognizes that many passengers who sought
to defer travel during the COVID-19 pandemic may not fall under one of
the referenced categories. These are passengers who do not have a
health condition themselves but are the caregivers of persons with a
health condition, either through family relationship or employment. The
Department seeks comments on whether this category of passengers should
be included in the protection proposed in this NPRM, and if so, what
are the documentation carriers and ticket agents may request, that are
credible and reasonable. Further, the Department seeks comments on
whether this proposal should also cover both passengers who would have
difficulty traveling alone and their travel companions if only one of
them qualifies for a voucher or refund. For example, if a qualified
passenger is traveling with a minor, should the airline also be
required to provide a voucher or refund to the minor even if the minor
would not otherwise qualify?
(5) Entities Responsible for Issuing Travel Credits or Vouchers
Some of the complaints filed with the Department against ticket
agents regarding the issuance of credits and vouchers indicate that
they were issued by airlines through the ticket agents, and other were
issued by the ticket agents. Some of the airline vouchers would limit
the redemptions to bookings with the same ticket agents while others
did not have such a restriction. As with issuing refunds for flights
cancelled or significantly changed by airlines, for passengers who
booked air travel with ticket agents requesting a travel credit due to
public health concerns, the Department's proposal would place the
obligation of issuing the credits or vouchers on the entity that
``sold'' the tickets (i.e., identified in the consumer's ticket
purchase financial statement). However, the Department is open to
suggestions on whether the entity obligated to issue credits or
vouchers should be determined based on other criteria that provide
consumers more certainty in receiving the credits and more flexibility
in redeeming the credits. Specifically, should airlines be solely
responsible for issuing credits or vouchers because they are the direct
providers of the air transportation paid for by consumers and the
ultimate recipients of the consumer funds? If so, how can the
Department best ensure that the credits and vouchers are issued
appropriately and promptly by the airline when the airline is not a
principal in the original transaction? What role and responsibility
should be placed on ticket agents to facilitate the issuance of credits
or vouchers by airlines when the ticket agents are the principals of
the initial transactions? In addition to answers to these specific
questions, the Department also seeks general information on the
transactions between airlines and ticket agents that would have an
impact on determination regarding how travel credits and vouchers are
issued for non-refundable ticket holders who could not or choose not to
travel due to public health concerns.
(6) Validity Period for Travel Credits or Vouchers
The Department is proposing to require that airlines and ticket
agents provide non-expiring credits or vouchers for future travel to
qualifying consumers. The Department has received numerous complaints
from customers concerned that the airline vouchers or travel credits
provided to them would expire before they are able to use them. These
consumers pointed out that given the uncertainty regarding how the
COVID-19 pandemic would progress, government travel restrictions in
place, and specific health concerns related to flying during the
pandemic, they do not expect to travel by air within the validity
periods of the credits or vouchers. The validity periods for credits
and vouchers generally range from 90 days to two years. The two-year
validity period is a result of extensions to the initial validity
periods by certain airlines and ticket agents as the pandemic has
continued far longer than originally anticipated.
Based in part on the concerns expressed in these complaints, the
Department has tentatively decided that the unpredictability of a
serious communicable disease justifies a proposed requirement for
airlines and ticket agents to provide credits or vouchers for future
travel that do not have an expiration date. These non-expiring vouchers
or credits would be provided to consumers who purchase tickets but are
restricted or prohibited from traveling by a governmental entity (e.g.,
as a result of a stay at home order, quarantine period, entry
restriction, or border closure) due to concerns of a serious
communicable disease; are unable or advised not to travel during a
[[Page 51570]]
public health emergency to protect themselves from a serious
communicable disease consistent with restrictions, advisories and
guidance issued by CDC, comparable agencies in other countries, or WHO;
or are unable or advised not to travel because they have contracted a
serious communicable disease and their condition would pose a threat to
the health of others. A non-expiring voucher or credit would provide
consumers greater flexibility and assurance that the vouchers or
credits would be available when they are ready to travel.
The Department welcomes comments on whether an indefinite validity
period for credits or vouchers issued under this proposal is
reasonable, and if not, the reason that it is unreasonable and what a
reasonable minimum validity period should be. For example, when there
is not a public health emergency, for travel credits or vouchers issued
to passengers who have been advised by a medical professional or
determine consistent with public health guidance not to travel because
they have or may have such a disease, is a validity period of one year
sufficient to ensure that passengers have ample opportunities to use
the credits or vouchers? For travel credits or vouchers issued due to a
public health emergency, should the Department require that they be
valid for one year, or for the duration of the public health emergency,
whichever gives the longer validity period? Commenters are encouraged
to provide information on what challenges airlines and ticket agents
may face when accommodating the redemptions of travel credits and
vouchers that have no expiration dates.
(7) Service Fee by Ticket Agents and Airlines for Processing Credits
and Vouchers; Disclosure
Similar to the proposal regarding ticket agents' issuance of
airfare refunds when refunds are due, the Department is proposing to
allow airlines and ticket agents to charge a processing fee for the
issuance of credits or vouchers to non-refundable ticket holders when
consumers' travel plans are affected by concerns related to a serious
communicable disease, as proposed in section 259.5(b)(6). The
Department is of the tentative view that ticket agents and airlines
should be allowed to impose a processing fee if the fee is on a per
passenger basis and appropriate disclosures were made to the consumer
prior to the consumer purchasing the airline ticket because neither the
airline or ticket agent initiated the change that is resulting in the
need for a credit or voucher. To ensure transparency and fair treatment
of consumers, the existence of the fee must be clearly and
conspicuously disclosed to consumers at the time of ticket sale. The
Department welcomes comments on whether it is reasonable to permit
airlines and ticket agents to charge a processing fee for the issuance
of travel credits or vouchers. If airlines and ticket agents should be
permitted to charge a fee, what type and manner of disclosure would be
sufficient to avoid consumer confusion for fees applicable for these
specific circumstances?
(8) Value of Credits and Vouchers; Disclosure of Reasonable Conditions,
Limitations, and Restrictions on the Use of Credit or Voucher
The NPRM proposes that the travel credits or vouchers issued to
qualified consumers be ``a value equal to or greater than the fare
(including government-imposed taxes and fees and carrier-imposed fees
and surcharges).'' The Department is also proposing that the credits or
vouchers include any prepayment of unused ancillary services such as
baggage fees or seat selection fees. The rationale for including the
fees for ancillary services in the credit or voucher given to consumers
is that those services have not been provided by the carrier.\44\ On
the other hand, under this proposal if the required disclosures have
been provided before the consumer purchased the airline ticket, ticket
agents would be allowed to deduct, from the credit or voucher given to
consumers their service charge, if any, for issuing the original ticket
because that service has already been provided. DOT further believes
the fee deduction is appropriate because the consumer's flight is
operating as scheduled and neither the airline or ticket agent
initiated or had control over the change that is resulting in a credit
or voucher being provided. We invite comments on whether allowing
ticket agents to retain the fees collected for service already provided
is reasonable and appropriate.
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\44\ The Department's rulemaking on Refunding Fees for Delayed
Checked Bags and Ancillary Services That Are Not Provided proposes
that airlines must refund any ancillary service fees when the
service was not provided. See, supra, FN 7.
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In addition to proposing that the value of the travel credit or
voucher be equal to or greater than the airfare, the Department is
considering whether airlines should be required to offer an option to
consumers in which consumers may choose to receive the travel credit or
voucher redeemable for the same itinerary as the original ticket,
regardless of what the ticket cost is at the time of redemption. The
Department believes some consumers may benefit from and prefer this
option if they plan to travel on the same itinerary in the future,
without worrying about price increases. As airfare fluctuates depending
on, among many other factors, travel date, some of the redeemed tickets
may be priced less than the original purchase price of the ticket. In
those situations, airlines would benefit from offering this option.
Also, the Department proposes to require airlines and ticket agents
provide full disclosure of any material restrictions, limitations, or
conditions on the use of the credits and vouchers. The Department also
proposes to prohibit conditions, limitations, and restrictions imposed
on the credits and vouchers that are unreasonable and would materially
reduce the value of the credits and vouchers to consumers as compared
to the original purchase prices of the airline tickets. For example,
under the proposal, a credit or voucher that would severely restrict
bookings with respect to travel date, time, or routes would be
unreasonable. Similarly, a restriction that a voucher can only be used
on one booking and that any residual value would be void afterwards
would be considered unreasonable. Further, imposing a rebooking fee or
a change fee that reduces the value of the voucher or credit applicable
to the new ticket would be considered unreasonable. However, as noted
earlier, this NPRM would allow a carrier to retain a service fee for
processing the travel voucher or credit, as long as the fee is on a
per-passenger basis and the existence and amount of the fee is clearly
and prominently disclosed to consumers at the time they purchased the
airfare. To ensure that consumers have access to the full value of the
credits or vouchers, the Department also proposes that carriers may not
restrict the redemption of the credits or vouchers by providing that
the value of the credits or vouchers may only cover the base fare of
the new bookings and would not cover any taxes, fees, or surcharges
imposed by the government or the carrier. The Department seeks comments
on whether regulating the terms and conditions of the credits or
voucher in this specific context is reasonable and what other steps the
Department should consider to ensure that passengers receiving credits
and vouchers for future travel are adequately protected.
In addition to these proposals that intend to ensure consumers
receive accurate information regarding their rights to the full value
of travel credits or vouchers, the Department is interested in
addressing some
[[Page 51571]]
consumers' concern that they may not be able to use the travel credit
or voucher due to their age, health condition, or other reasons. The
Department is seeking comments on whether it should require that the
travel credit or voucher be transferrable at the consumers' discretion.
Adding transferability to the travel credit or voucher would ensure
that eligible consumers who spent money on tickets they no longer need
would not completely lose the value of the tickets. If adopted, should
airlines be required to allow multiple transfers? The Department also
seeks comments on whether a regulation is necessary to specifically
require that carriers and ticket agents ensure that relevant provisions
in their contracts with consumers are consistent with the Department's
regulation on issuing travel credits and vouchers if adopted, similar
to the one proposed in 14 CFR 260.9 regarding refunds.
(9) Airline Cancelling or Significantly Changing Flights After
Passenger Cancellation
Under this NPRM, the protections provided to passengers who
purchase a non-refundable ticket on a flight to, within, or from the
United States and elect to cancel their travel due to government
restrictions or health concerns differ from the protections provided to
passengers who purchase a non-refundable ticket on a flight to, within,
or from the United States that is cancelled or significantly changed by
the airline. An airline cancelling flights or significantly changing
flight itineraries would entitle passengers to a refund. A passenger
cancelling or postponing travel, despite the flights still operating
without a significant change, due to government restrictions or
reasonable concerns of a serious communicable disease would entitle the
passenger to a travel credit or voucher for future travel, except for
limited circumstances where passenger would be entitled to a refund
because of significant government assistance provided to the airline or
ticket agent. The Department is of the tentative view that if an
airline cancels or makes a significant change to a flight after a
passenger has already requested to cancel his or her a travel itinerary
and received a credit or voucher, then the airline or ticket agent
should not be required to replace that voucher with a refund. This is
because at the time the passenger requested a cancellation of the
ticket, the airline was still planning to operate the flight(s) on the
itinerary. The Department believes it is overly burdensome and costly
for airlines to apply refund eligibility to itineraries that have
already been cancelled pursuant to passengers' requests prior to the
airline's decision to cancel or significantly change the flight. That
said, the Department would caution that its Office of Aviation Consumer
Protection has the authority to investigate whether an airline or a
ticket agent has engaged in an unfair or deceptive practice when it
fails to inform a passenger making a request to cancel the itinerary
that the passenger is eligible for a refund, if the airline or ticket
agents knows or should have known at the time that a flight has been
cancelled or significantly changed.
(10) Airlines and Ticket Agents Receiving Significant Government
Financial Assistance Related to a Public Health Emergency
The impact of a public health emergency on the aviation industry
can be severe. Indeed, the COVID-19 pandemic has led to international
flight restrictions, local ``stay at home'' and ``shelter in place''
orders, and reduced demand for flying, which resulted in a drastic
decrease in the number of flights operated and significant financial
loss for airlines and ticket agents. To ameliorate these negative
consequences, various governments have provided financial support for
airlines and other participants in the aviation industry within their
jurisdiction. They have done so through various types of measures,
including grants and loans, to sustain the industry through these
difficult times and protect airline jobs.
Consumers, consumer advocacy groups,\45\ and certain members of
Congress \46\ have urged airlines receiving government financial
assistances to provide refunds instead of vouchers or credits to
consumers who decided not to travel due to COVID related reasons. They
assert that it is fundamentally unfair for airlines to be supported by
government funds and refuse to provide refunds to consumers who were
not able to travel due to the COVID-19 pandemic. Similarly, in a letter
to Congress, the National Association of Attorney Generals urged
Congress to consider and enact laws to require carriers that receive
Federal financial relief to provide full refunds to customers who
voluntarily cancel their flight reservations for reasons related to
COVID-19.\47\ Although consumer advocacy organizations and others have
urged the Department to mandate that airlines that received government
funds related to the COVID-19 pandemic refund consumers for flights
that consumers were unable to take due to government restrictions or
advisories related to COVID, the Department is not proposing to do so.
The Department does not have the authority to promulgate retroactive
rules unless that power is expressly authorized by Congress.\48\
However, pursuant to the Department's authority as described in Section
I.B. of this proposed rule, the Department is proposing moving forward
to require U.S. and foreign airlines to issue refunds instead of travel
credits or vouchers to qualified passengers holding non-refundable
tickets for flights that operated without a significant change if the
airlines receive a significant amount of government financial
assistance related to that public health emergency. The Department
seeks comment on how to handle the refund/voucher issuance situation
when there is more than one airline on the ticket and not all airlines
receive significant government financial assistance. To the extent that
a ticket agent sold the ticket to a consumer, as identified by the
consumer's financial charge statement, the Department seeks comment on
whether the airline receiving government assistance should be required
to provide a refund in lieu of the travel credit or voucher.
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\45\ See, e.g., Airlines: Give Us Refunds, Not Vouchers,
petition by Consumer Reports, <a href="https://action.consumerreports.org/20200420_finance_airlinerefundpetition">https://action.consumerreports.org/20200420_finance_airlinerefundpetition</a>. Consumer Reports, Letter to
Sect. Buttigieg, <a href="https://advocacy.consumerreports.org/wp-content/uploads/2021/11/CR-letter-to-Sec-Buttigieg-consumer-complaints-11-18-21-FINAL-2.pdf">https://advocacy.consumerreports.org/wp-content/uploads/2021/11/CR-letter-to-Sec-Buttigieg-consumer-complaints-11-18-21-FINAL-2.pdf</a>.
\46\ See, e.g., Senator Edward J, Markey and Richard Blumenthal
press release, <a href="https://www.markey.senate.gov/news/press-releases/senators-markey-and-blumenthal-blast-airlines-inadequate-response-to-their-request-to-eliminate-expiration-dates-for-all-pandemic-related-flight-credits">https://www.markey.senate.gov/news/press-releases/senators-markey-and-blumenthal-blast-airlines-inadequate-response-to-their-request-to-eliminate-expiration-dates-for-all-pandemic-related-flight-credits</a>.
\47\ See, National Association of Attorney Generals (NAAG) press
release, <a href="https://www.naag.org/policy-letter/attorneys-general-call-for-new-consumer-protections-to-protect-airline-industry-customers/">https://www.naag.org/policy-letter/attorneys-general-call-for-new-consumer-protections-to-protect-airline-industry-customers/</a>.
\48\ The Supreme Court, in Bowen v. Georgetown University
Hospital, 488 U.S. 204 (1988), said the Administrative Procedure Act
is very clear in defining ``rule'' to mean an agency statement of
future effect. The Court stated that agencies do not have the power
to promulgate retroactive rules unless that power is expressly
authorized by Congress.
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In determining the scope of ``government financial assistance''
that would impose a requirement to provide refunds to qualified
passengers holding non-refundable tickets for flights that operated
without a significant change, the Department referenced the definitions
for the terms ``Federal award'' and ``Federal financial assistance'' in
the Office of Management and Budget's regulation on Uniform
Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards, 2 CFR part 200. The
[[Page 51572]]
regulation in 2 CFR 200.1 defines these terms to include a broad range
of financial instruments provided by the Federal government to non-
Federal entities. These instruments include direct cash contributions
such as grants and direct appropriations, cash contributions or
insurance related to loans, loan guarantees, interested subsidies, and
non-cash contributions.
Upon consideration, DOT proposes to adopt a definition for
``government financial assistance'' in the context of requiring
airlines and ticket agents to provide refunds in lieu of travel credits
or vouchers to qualified passengers affected by a public health
emergency to include cash contributions provided by a government entity
and accepted by a carrier or a ticket agent selling air transportation
to U.S. consumers, even if the carrier or the ticket agent is expected
to provide shares or options of shares of ownership in exchange for the
cash. The Department's proposal would exclude financial assistance in
the forms of government issued, subsidized, or guaranteed loans and
non-cash contributions by a government entity. The proposed definition
would cover not only financial assistance provided by the Federal
government of the United States to U.S. air carriers and ticket agents
based in the United States, but also financial assistance provided by a
foreign central government to a foreign airline or a ticket agent
selling air transportation to U.S. consumers. The Department's proposal
would require airlines and ticket agents to provide refunds in lieu of
travel credits or vouchers to qualified passengers affected by a public
health emergency only if the future financial assistance is
significant. The Department believes that this approach focuses on the
net benefits airlines and ticket agents receive from the government's
direct cash assistance and ensures that some of the benefits they
receive would be passed on to consumers, who also suffer from financial
losses due to the same event for which airlines and ticket agents are
receiving government assistance. The Department seeks comments on
whether significant government financial assistance in the form of tax
relief or loan forgiveness is similar enough to direct cash
contribution such that the Department's proposal on refunds should
include entities receiving these types of financial assistance.
The Department is cognizant that in many cases, government
financial assistance is granted with a specific purpose. For example,
in the United States, in recognizing the financial difficulties the
airline industry faced due to the COVID-19 pandemic, Congress passed
several statutes in 2020 and 2021 that granted payments to passenger
air carriers, cargo air carriers, and certain contractors, which must
be exclusively used for the continuation of payment of employee wages,
salaries, and benefits. The Department is not proposing to require
airlines or ticket agents to use the specific financial assistances
provided by their government as the sources of consumer refunds.
Instead, the Department is proposing that the requirement for airlines
and ticket agents to provide cash refunds to qualified passengers
holding non-refundable tickets for flights that operated without a
significant change would not start until an airline or ticket agent
receives significant government assistance. This approach recognizes
that airlines and ticket agents would have an increased financial
ability to issue cash refunds at that time.
The Department's proposal is contingent upon airlines' and ticket
agents' receipt of a ``significant'' amount of government financial
assistance. The NPRM does not propose a specific threshold to determine
whether the government assistance is ``significant'' as the impact of
each public health emergency on the airline industry may differ from
time to time. Rather, the Department proposes to consider relevant
factors, on a case-by-case basis, to determine what amount of
government financial assistance provided to an airline would be
considered ``significant'' and therefore trigger the refund requirement
in the proposed 14 CFR 260.7. The factors that the Department believes
are relevant include: the size of the entity (annual enplanements for
airlines, annual revenue, the number of employees), year-over-year
comparison of traffic and revenue before and after the public health
emergency is declared, and the amount of government financial
assistance accepted in relation to the entity's annual revenue. For
foreign carriers, the Department may also consider their enplanements
to and from the United States in addition to the total enplanements.
The Department notes that taking these factors into consideration,
government financial assistance accepted by numerous U.S. and foreign
carriers during the COVID-19 pandemic, including financial assistance
provided under the CARES Act, could be considered ``significant.'' The
Department seeks comments on whether these considerations are
reasonable to determine what amount of government assistance would be
significant enough to trigger the refund requirement. In addition, the
Department seeks comment on what other considerations are relevant that
are not mentioned here. Should the Department adopt the same amount of
government financial assistance as the benchmark for each public health
emergency, which would apply to all entities, or should the amounts
differ based on the entity's sizes and other considerations? Should
there be a different threshold or a different set of considerations for
ticket agents?
Regarding the procedure of determining the amount of government
financial assistance that would be considered ``significant'' for the
purpose of airline refunds, the Department seeks comment on a process
in which, upon the occurrence of a public health emergency and the
provision of government financial assistance to the industry, the
Department would apply the relevant factors and seek public comments on
what it tentatively views as being ``significant'' financial assistance
that would trigger the refund requirement. This notice and comment
process would ensure the public's views are fully considered before
there is a determination as to what is significant using the factors
set forth in this rulemaking. It would also ensure that consumers know
when they would be entitled to a refund instead of a non-expiring
voucher or credit.
The Department emphasizes that to be eligible for a refund under
this proposal, a passenger must be otherwise eligible for a non-
expiring travel credit or voucher under the proposed provisions in 14
CFR 259.5(b)(6) or 14 CFR 399.80(o)(1)(A), and must have made a refund
request from the carrier or ticket agent within 12 months of the date
that a determination has been made that the carrier or ticket agent
received significant government financial assistance in relation to the
public health emergency at issue. Under this proposal, passengers who
have already accepted non-expiring travel credits or vouchers but have
not redeemed them would be able to seek a refund after the airline or
the ticket agent receives the government financial assistance. The
Department believes that limiting the refund obligation to 12 months
would add certainty to airlines with respect to financial and
operational planning, and would also give eligible consumers ample time
to seek refunds. The Department seeks comment on the proposed refund
eligibility timeframe.
Because this refund requirement for passenger-initiated
cancellations is triggered by significant government financial
assistance provided to carriers
[[Page 51573]]
and ticket agents in relation to a public health emergency, when there
is no public health emergency declared, passengers who have or are
likely to have contracted a serious communicable disease that poses a
direct threat to the health of others or those who are restricted from
traveling by a government order in relation to a serious communicable
disease and want to cancel their non-refundable tickets would not be
eligible for a refund but would be entitled to a non-expiring travel
credit or voucher under this proposal.
As with the proposal to require issuance of travel credits and
vouchers to passengers holding non-refundable tickets, airlines and
ticket agents under the proposed obligation to issue a refund because
of their acceptance of significant government financial assistance
would be allowed to require proof from passengers to demonstrate that
they are unable or advised not to travel consistent with a government
restriction, advisory, or guidance related to a public health
emergency, and if appropriate, provide medical documentation. Carriers
and ticket agents that have previously received required documentation
from passengers for issuing travel credits or vouchers may not require
documentation again when the passenger wants to exchange the unused
credit or voucher for a refund. Carriers and ticket agents under the
proposed obligation to issue a refund in these situations would be
permitted to offer travel credits of the same or higher dollar value or
other compensations, as long as passengers are informed of their
eligibility for a refund.
The Department notes again that the proposal to require airlines
and ticket agents to issue refunds in lieu of travel credits or
vouchers because airlines and ticket agents receive significant
government financial assistance related to a public health emergency,
if adopted in a final rule, would not apply retroactively. In other
words, if the Department adopts this proposal, airlines and ticket
agents that have already accepted government financial assistance
during the COVID-19 pandemic, would not be required to provide refunds
to eligible consumers on the basis of that assistance even if the
financial assistance would otherwise be deemed ``significant.''
v. Effective Date
We propose that any final rule we adopt take effect 90 days after
the publication in the Federal Register. We believe this would allow
sufficient time for carriers and ticket agents to comply with the
various proposed requirements should they be finalized. We invite
comments on whether 90 days is the appropriate interval for
implementation of the proposed requirements if adopted in final.
Regulatory Analyses and Notices
A. Executive Order 12866 (Regulatory Planning and Review) and DOT
Regulatory Policies and Procedures and Executive Order 13563 (Improving
Regulation and Regulatory Review)
Executive Order 12866 (``Regulatory Planning and Review''),
supplemented by Executive Order 13563 (``Improving Regulation and
Regulatory Review''), directs Federal agencies to propose or adopt a
regulation only after making a reasoned determination that the benefits
of the intended regulation justifies its costs. The Office of
Management and Budget has determined that this proposed rule is a
significant regulatory action under Executive Order 12866 and requires
an assessment of potential benefits and costs. Accordingly, the
Department has prepared a regulatory impact analysis for the proposed
rule, summarized in this section and available in the docket. Due to a
lack of usable data to specify a baseline and evaluate impacts, the
analysis is mostly qualitative.
The proposed rule would clarify the requirement that carriers and
ticket agents give prompt refunds when a carrier cancels flights or
makes significant itinerary changes, including changes that affect the
schedule or quality of service. It would create industry-wide
definitions for ``cancelled flight'' and ``significant change of flight
itinerary'' and define ``prompt'' as within 7 days of a refund request
for credit card purchases and 20 days for purchases by other forms of
payment.
The proposed rule would also require airlines and ticket agents to
give non-expiring travel credits or vouchers to passengers who do not
travel to protect themselves or others from serious communicable
diseases during a public health emergency and passengers who do not
travel due to government restrictions related to a serious communicable
disease. Airlines and ticket agents could require documentation showing
that the decision was consistent with travel restrictions and guidance
issued by health authorities or medical professionals. For passenger
cancellation requests made during a public health emergency, airlines
and ticket agents would be required to issue cash or cash equivalent
refunds rather than credits or vouchers if they received significant
government financial assistance during the public health emergency,
although the rule does not define ``significant financial assistance.''
The issue of significance would be considered in a subsequent and
separate administrative process.
Table I summarizes the expected economic impacts of the proposed
rule. The expected net benefits of the proposed rule depend on the
probability that a future state of the world involves a public health
emergency. In the case of no public emergency, the proposed rule will
have only modest impacts, but could result in a decrease in transaction
costs associated with processing and obtaining compensation for
cancellations and significant itinerary changes. Net benefits would be
positive by roughly the amount of this reduction in transaction costs.
With a public health emergency, however, net benefits are likely to be
negative. While benefits are uncertain, we do not expect that the
proposed rule would measurably decrease the spread of serious
communicable disease for several reasons. These reasons include that
the incremental incentive from a non-expiring travel credit relative to
baseline industry practices is limited and unlikely to outweigh
restrictions imposed by public health authorities or individuals' own
risk preferences in the decision to postpone travel. In addition,
during a public health emergency, the proposed rule is likely to
increase transaction and documentation costs. The increase in
transaction costs is mainly due to uncertainty in the definition of
significant government assistance and the requirement creating
additional administrative burdens for receiving government funds. The
proposed rule could also lead to other societal costs depending on
whether it affects industry acceptance of government assistance, but
these impacts are uncertain.
In terms of distributional effects, we do not expect significant
changes in the absence of a public health emergency. The needed changes
to existing airline policies are small, and passengers would only
rarely need to use the protections related to serious communicable
diseases. With a public health emergency, the number of refunds to
passengers is expected to increase, and fewer passengers are likely to
forfeit travel credits for trips they cancel due to public health
concerns. Thus, while transfers to passengers would largely remain
unchanged without a public health emergency, they would increase during
a health emergency.
[[Page 51574]]
Table I--Summary of Annual Economic Impacts
[2021 Dollars]
------------------------------------------------------------------------
Baseline 1: no Baseline 2: during
public health a public health
emergency emergency
------------------------------------------------------------------------
Benefits:
Reduction in cases of serious De minimis........ Uncertain.
contagious disease.
Costs:
Documentation................. De minimis........ $55.5 million
(based on example
discussed in
regulatory impact
analysis).
Transaction costs............. Decrease.......... Increase.
Foregone social benefits of n/a............... Uncertain.
government programs.
Transfers:
Refunds (transfer from De minimis........ Increase.
taxpayers to passengers).
Redeemed travel credits De minimis........ Increase.
(transfer from airlines to
passengers).
------------------------------------------------------------------------
Certain regulatory alternatives would reduce transaction costs due
to the proposed rule. For example, removing the refund requirement when
an airline or ticket agent receives significant government financial
assistance would eliminate potential transaction costs due to
ambiguities and would not risk other social costs. Another alternative
that could reduce costs would be not allowing airlines to request
documentation from passengers to demonstrate that they are canceling
travel due to a government order restricting travel or to protect
themselves and others from serious contagious diseases. Airlines would
not be able to distinguish these cancellations from other passenger-
initiated cancellations, however, and passengers would have an
incentive to overuse these protections.
A third regulatory alternative, which would reduce transaction
costs and eliminate documentation costs, would be limiting the scope of
the proposed rule to adding the new definitions for carrier-initiated
``cancelled flight'' and ``significant change of flight itinerary.''
This alternative w
[…truncated; see source link]Indexed from Federal Register on August 22, 2022.
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