Rule2024-07177
Refunds and Other Consumer Protections
Primary source
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Published
April 26, 2024
Effective
June 25, 2024
Issuing agencies
Transportation Department
Abstract
The U.S. Department of Transportation (Department or DOT) is requiring automatic refunds to consumers when a U.S. air carrier or a foreign air carrier cancels or makes a significant change to a scheduled flight to, from, or within the United States and the consumer is not offered or rejects alternative transportation and travel credits, vouchers, or other compensation. These automatic refunds must be provided promptly, i.e., within 7 business days for credit card payments and within 20 calendar days for other forms of payment. To ensure consumers know when they are entitled to a refund, the Department is requiring carriers and ticket agents to inform consumers of their right to a refund if that is the case before making an offer for alternative transportation, travel credits, vouchers, or other compensation in lieu of refunds. Also, the Department is defining, for the first time, the terms "significant change" and "cancellation" to provide clarity and consistency to consumers with respect to their right to a refund. The Department is also requiring refunds to consumers for fees for ancillary services that passengers paid for but did not receive and for checked baggage fees if the bag is significantly delayed. For consumers who are unable to or advised not to travel as scheduled on flights to, from, or within the United States because of a serious communicable disease, the Department is requiring that carriers provide travel vouchers or credits that are transferrable and valid for at least 5 years from the date of issuance. Carriers may require consumers to provide documentary evidence demonstrating that they are unable to travel or have been advised not to travel to support their request for a travel voucher or credit, unless the Department of Health and Human Services (HHS) publishes guidance declaring that requiring such documentary evidence is not in the public interest.
Full Text
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[Federal Register Volume 89, Number 82 (Friday, April 26, 2024)]
[Rules and Regulations]
[Pages 32760-32839]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-07177]
[[Page 32759]]
Vol. 89
Friday,
No. 82
April 26, 2024
Part III
Department of Transportation
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14 CFR Parts 259, 260, 262, et al.
Refunds and Other Consumer Protections; Final Rule
Federal Register / Vol. 89 , No. 82 / Friday, April 26, 2024 / Rules
and Regulations
[[Page 32760]]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Parts 259, 260, 262, and 399
[Docket No. DOT-OST-2022-0089 and DOT-OST-2016-0208]
RIN 2105-AF04
Refunds and Other Consumer Protections
AGENCY: Office of the Secretary (OST), Department of Transportation.
ACTION: Final rule.
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SUMMARY: The U.S. Department of Transportation (Department or DOT) is
requiring automatic refunds to consumers when a U.S. air carrier or a
foreign air carrier cancels or makes a significant change to a
scheduled flight to, from, or within the United States and the consumer
is not offered or rejects alternative transportation and travel
credits, vouchers, or other compensation. These automatic refunds must
be provided promptly, i.e., within 7 business days for credit card
payments and within 20 calendar days for other forms of payment. To
ensure consumers know when they are entitled to a refund, the
Department is requiring carriers and ticket agents to inform consumers
of their right to a refund if that is the case before making an offer
for alternative transportation, travel credits, vouchers, or other
compensation in lieu of refunds. Also, the Department is defining, for
the first time, the terms ``significant change'' and ``cancellation''
to provide clarity and consistency to consumers with respect to their
right to a refund. The Department is also requiring refunds to
consumers for fees for ancillary services that passengers paid for but
did not receive and for checked baggage fees if the bag is
significantly delayed. For consumers who are unable to or advised not
to travel as scheduled on flights to, from, or within the United States
because of a serious communicable disease, the Department is requiring
that carriers provide travel vouchers or credits that are transferrable
and valid for at least 5 years from the date of issuance. Carriers may
require consumers to provide documentary evidence demonstrating that
they are unable to travel or have been advised not to travel to support
their request for a travel voucher or credit, unless the Department of
Health and Human Services (HHS) publishes guidance declaring that
requiring such documentary evidence is not in the public interest.
DATES: This rule is effective June 25, 2024. Upon OMB approval of the
information collection established in this final rule, the Department
will publish a separate notice announcing the effective date of the
collection.
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#4427282136212127216a2f362b2c2504202b306a232b32"><span class="__cf_email__" data-cfemail="ccafa0a9bea9a9afa9e2a7bea3a4ad8ca8a3b8e2aba3ba">[email protected]</span></a> or <a href="/cdn-cgi/l/email-protection#355759545b501b425a475e5c5075515a411b525a43"><span class="__cf_email__" data-cfemail="cdafa1aca3a8e3baa2bfa6a4a88da9a2b9e3aaa2bb">[email protected]</span></a> (email).
SUPPLEMENTARY INFORMATION:
Executive Summary
(1) Purpose of the Regulatory Action
The purpose of this final rule is to ensure that consumers are
treated fairly when they do not receive service that they paid for or
are unable or advised not to travel because of a serious communicable
disease. This rule responds to Executive Order 14036 on Promoting
Competition in the American Economy (E.O. 14036), which was issued on
July 9, 2021.\1\ The Executive Order launched a whole-of-government
approach to strengthen competition and requires the Department to take
various actions to promote the interests of American consumers,
workers, and businesses.
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\1\ Exec. Order No. 14036, 86 FR 36987 (Jul. 9, 2021).
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Section 5, paragraph(m)(i)(C) of E.O. 14036 directs the Department
to submit a report to the White House Competition Council on the
progress of its investigatory and enforcement activities to address the
failure of airlines to provide timely refunds for flights cancelled as
a result of the COVID-19 pandemic. The Department submitted its report
to the White House in September 2021.\2\ In that report, the Department
explained that the lack of definition regarding cancelled or
significantly changed flights had resulted in inconsistency among
carriers on when passengers are entitled to a refund. The Department
also noted that approximately 20% of the refund complaints received
during the first 18 months of the COVID-19 pandemic involved instances
in which passengers with non-refundable tickets chose not to travel
given the COVID-19 pandemic and stated that it planned to address
protections for these consumers in a rulemaking.\3\
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\2\ 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 (Refund Report) (September 9,
2021) at <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>.
\3\ Refund Report at pages 11-12.
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The Executive Order in Section 5, paragraph(m)(i)(D) further
directs the Department to publish a notice of proposed rulemaking
requiring airlines to refund baggage fees when a passenger's luggage is
substantially delayed and to refund other ancillary fees when
passengers pay for a service that is not provided.
(2) Background
The FAA Extension, Safety, and Security Act of 2016 (FAA Extension
Act or Act) requires the Department to issue a rule mandating that
airlines provide refunds to passengers for any fee charged to transport
a checked bag if the bag is delayed as specified in the Act.\4\ On
October 31, 2016, the Department published an advance notice of
proposed rulemaking (ANPRM) seeking comment on various issues related
to the requirement for airlines to refund checked baggage fees when
they fail to deliver the bags in a timely manner as provided by the FAA
Extension Act.\5\ On July 21, 2021, the Department published a notice
of proposed rulemaking titled ``Refunding Fees for Delayed Checked Bags
and Ancillary Services That Are Not Provided'' (Ancillary Fee Refund
NPRM).\6\ Among other things, the Ancillary Fee Refund NPRM proposed
that U.S. and foreign air carriers refund the baggage fee paid for a
checked bag when they fail to deliver the bag to the passenger within
12 hours of the arrival of a domestic flight and within 25 hours of the
arrival of an international flight. This NPRM further proposed ways to
measure the length of the baggage delivery delay for the purpose of
determining whether a refund is due. In addition, the Ancillary Fee
Refund NPRM also proposed to implement a provision in the FAA
Reauthorization Act of 2018 regarding refunding fees for ancillary
services that are paid for but not provided.\7\
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\4\ See FAA Extension, Safety, and Security Act of 2016, Pub. L.
114-190, July 15, 2016; 49 U.S.C. 41704 note.
\5\ 81 FR 75347 (October 31, 2016).
\6\ 86 FR 38420 (July 21, 2021).
\7\ 49 U.S.C. 42301 note prec.
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The Department received a total of 29 comments on the Ancillary Fee
Refund NPRM--three comments from consumer rights advocacy groups,\8\ 16
comments from U.S. and foreign airlines and airline trade
associations,\9\ three
[[Page 32761]]
comments from ticket agent trade associations,\10\ five comments from
individual consumers, one comment from the Colorado Attorney General,
and one comment from an ancillary service provider.\11\ Overall, the
commenters provided various suggestions on how the Department should
interpret and implement the statutory mandate. Airlines asserted they
would face challenges to comply with certain aspects of the proposed
baggage delivery deadlines and other requirements, while consumers and
ticket agents supported a more stringent standard under which a refund
of baggage fees is due.
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\8\ Business Travel Coalition et. al., <a href="http://FlyersRights.org">FlyersRights.org</a>, and
Travelers United.
\9\ Airlines for America, International Air Transport
Association, Arab Air Carriers' Association, Association of Asian
Pacific Airlines, National Air Carrier Association, Regional Airline
Association, Allegiant Air, Air New Zealand, Condor Flugdienst GmbH,
COPA Airlines, Emirates, Kuwait Airways, Qatar Airways, Spirit
Airlines, United Airlines, and Virgin Atlantic.
\10\ American Society of Travel Advisors and Travel Technology
Association (Travel Technology Association submitted two comments).
\11\ Panasonic Avionics Corporation.
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In a separate effort to enhance air travel consumer protection, on
August 22, 2022, the Department published in the Federal Register a
notice of proposed rulemaking titled ``Airline Ticket Refunds and
Consumer Protections'' (Ticket Refund NPRM) to propose measures to
enhance protections for consumers when airlines cancel or make
significant changes to the scheduled itineraries to, from, or within
the United States.\12\ Currently, the Department's regulations in 14
CFR part 259 require that airlines provide prompt refunds ``when ticket
refunds are due.'' Further, the Department's regulations in 14 CFR part
399 require that ticket agents ``make proper refunds promptly when
service cannot be performed as contracted.'' The Department's Office of
Aviation Consumer Protection has interpreted these requirements and its
statutory authority to prohibit unfair and deceptive practices as
mandating airlines and ticket agents provide prompt refunds to
passengers of both the airfare and fees for prepaid ancillary service
fees if a flight is cancelled or significantly changed and the
passenger does not continue his or her travel. The Ticket Refund NPRM
proposed to codify the interpretation that when carriers cancel flights
or make significant changes to flight itineraries and the contracted
service is not provided, ticket refunds are due if consumers do not
accept the alternative transportation offered by carriers or ticket
agents. It also proposed to define ``significant change of flight
itinerary'' and ``cancelled flight'' to protect consumers and ensure
consistency among carries and ticket agents regarding when passengers
are entitled to refunds.
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\12\ 87 FR 51550 (August 22, 2022). Prior to publication in the
Federal Register, on August 3, 2022, the NPRM was publicly available
at <a href="https://www.transportation.gov/airconsumer/latest-news">https://www.transportation.gov/airconsumer/latest-news</a> and at
<a href="https://www.regulations.gov">https://www.regulations.gov</a>, docket number DOT-OST-2022-0089.
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The Ticket Refund NPRM also proposed to require airlines and ticket
agents to issue non-expiring travel credits or vouchers, and under
certain circumstances, refunds in lieu of the travel credits or
vouchers, to consumers when they: (1) 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 direct threat to the health of others.
Under the Department's current regulations, 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. The Ticket Refund NPRM's proposals were
intended to protect consumers' financial interests when the disruptions
to their travel plans were caused by public health concerns beyond
their control, and also to promote safe and adequate air transportation
by incentivizing individuals to postpone travel when they are advised
by a medical professional or determine, consistent with public health
guidance, not to travel to protect themselves from a serious
communicable disease or because they have or may have a serious
communicable disease that would pose a threat to others.
Between August 2022 and January 2023, the Aviation Consumer
Protection Advisory Committee (ACPAC) \13\ devoted substantial time in
three separate meetings to discuss the Ticket Refund NPRM. At an all-
day public meeting on August 22, 2022, the ACPAC heard the perspectives
of consumer advocates, airline and ticket agent representatives, and
members of the public. Then, on December 9, 2022, the ACPAC identified
and deliberated on potential recommendations on the Ticket Refund NPRM.
The ACPAC voted on these recommendations at a meeting held on January
12, 2023.
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\13\ The ACPAC is a statutorily required Federal advisory
committee that 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. Information about ACPAC is available at <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 initially provided a comment period of 90 days on
the Ticket Refund NPRM (i.e., until November 21, 2022). In September
2022, Airlines for America (A4A), the International Air Transport
Association (IATA), the Travel Technology Association (Travel Tech),
the American Society of Travel Advisors (ASTA), and the Travel
Management Coalition requested an extension of the comment period.\14\
The Department extended the comment period to December 16, 2022. In
extending the comment period for an additional 25 days, the Department
acknowledged that the NPRM raised important issues that required in-
depth analysis and consideration by the stakeholders. The Department
also noted that the ACPAC was expected to meet on December 9 to
deliberate on what, if any, recommendations it would make to the
Department regarding this rulemaking and its belief that extending the
comment period of the NPRM for one week after the ACPAC meeting would
provide the public an opportunity to consider and provide comment on
any recommendations of the ACPAC.
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\14\ In the request for extension of comment period by the
airline representatives, they included various questions arising
from the NPRM for which they sought clarifications from the
Department. The Department responded to these questions and placed
the responses in the docket for this rulemaking at DOT-OST-2022-
0089.
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On December 16, 2022, A4A and IATA filed a petition to request a
public hearing on the NPRM pursuant to the Department's regulation on
discretionary rulemaking relating to unfair and deceptive practices at
14 CFR 399.75. The Department granted the request and conducted a
public hearing on March 21, 2023, to afford A4A, IATA, and other
stakeholders an opportunity to present certain factual
[[Page 32762]]
issues that they asserted are pertinent to the Department's decision on
the rulemaking. At the hearing, the Department heard from various
stakeholders and subject matter experts on three issues regarding the
Ticket Refund NPRM: (1) whether consumers can make reasonable self-
determinations regarding contracting a serious communicable disease;
(2) whether the documentation requirement (medical attestation and/or
public health guidance) is sufficient to prevent fraud; and (3) how to
determine whether a downgrade of amenities or travel experiences
qualifies as a ``significant change of flight itinerary.'' The
Department reopened the comment period for seven days after the hearing
to allow the public the opportunity to provide comments on issues
discussed at the hearing.
The Department received over 5,300 comments on the Ticket Refund
NPRM from consumer rights advocacy groups, airlines and airline trade
associations, ticket agents and ticket agent trade associations,
academic researchers, State attorneys general, and individual
consumers. Of the 5,300 comments, approximately 4,600 comments are from
individual consumers or consumer organizations, while approximately 24
comments are from airline representatives and 650 comments are from
those representing ticket agents. Almost all consumer commenters
expressed strong support of the Department's proposals to enhance
aviation consumer protection. The industry commenters raised various
concerns about the NPRM proposals, supporting some while urging the
Department to reconsider or revise others.
The Department has carefully reviewed and considered the comments
on the Ancillary Fee Refund NPRM and the Ticket Refund NPRM received in
the rulemaking dockets, as well as comments received during the March
2023 hearing and the recommendations of the ACPAC. The Department is
now issuing a combined final rule for the Ticket Refunds NPRM and the
Ancillary Fee Refund NPRM to significantly strengthen protections for
consumers seeking refunds of: (1) airline tickets when an airline
cancels or significantly changes a flight, and the consumer rejects or
is not offered alternative transportation; (2) checked bag fees when
bags are significantly delayed; and (3) ancillary services fees when
consumers pay for services, such as Wi-Fi, that are not provided. In
addition, this final rule provides protections for consumers who are
unable or advised not to travel because of a serious communicable
disease by requiring that carriers provide these consumers travel
vouchers or credits that are transferrable and valid for at least 5
years from the date of issuance.
(3) Summary of Major Provisions
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Subject Final rule
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Definition of Cancelled Flight.... Amend 14 CFR part 399 and add 14 CFR
part 260 to define cancelled flight
as a flight that was published in a
carrier's Computer Reservation
System (CRS) at the time of the
ticket sale but not operated by the
carrier.
Definition of Significant Change Amend 14 CFR part 399 and add 14 CFR
of Flight Itinerary. part 260 to define significant
change of flight itinerary as a
change to the itinerary 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;
(6) the passenger with a disability
is scheduled to travel through one
or more connecting airports that
differ from the original itinerary;
or
(7) the passenger with a disability
is scheduled to travel on a
substitute aircraft that results in
one or more accessibility features
needed by the passenger being
unavailable.
Entity Responsible for Refunding Add 14 CFR part 260 to require U.S.
Airline Tickets. and foreign air carriers that are
the merchants of record \15\ of the
ticket transactions to provide
prompt refunds when they are due,
including for codeshare and
interline itineraries.
Amend 14 CFR part 399 to require
ticket agents that are merchants of
record of the airline ticket
transactions to provide prompt
ticket refunds when they are
due.\16\
Notification of Right to Refund... Amend 14 CFR parts 259 and 399 to
require U.S. and foreign airlines
and ticket agents inform consumers
that they are entitled to a refund
of the ticket if that is the case
before making an offer for
alternative transportation or
travel credits, vouchers, or other
compensation in lieu of refunds.
Add 14 CFR part 260 to require U.S.
and foreign airlines to provide
prompt notifications to consumers
affected by a cancelled or
significantly changed flight of
their right to a refund of the
ticket and ancillary fees due to
airline-initiated cancellations or
significant changes, any offer of
alternative transportation or
travel credit, vouchers, or other
compensation in lieu of a refund,
and airline policies on refunds and
rebooking when consumers do not
respond to carriers' offers of
alternative transportation or
travel credit, vouchers, or other
compensation in lieu of a refund.
``Prompt'' Ticket Refund.......... Amend 14 CFR parts 259 and 399 and
add 14 CFR part 260 to specify
``prompt'' ticket refund means:
(1) Airlines and ticket agents
provide refunds for tickets
purchased with credit cards within
7 business days of refunds becoming
due; and
(2) Airlines and ticket agents
refund tickets purchased with
payments other than credit cards
within 20 calendar days of refunds
becoming due.
Define ``business days'' to mean
Monday through Friday excluding
Federal holidays in the United
States.
[[Page 32763]]
Automatic Refunds of Airline Add 14 CFR part 260 to require
Tickets. carriers who are the merchants of
record to provide automatic ticket
refunds when:
(1) a carrier cancels a flight and
does not offer alternative
transportation or travel credits,
vouchers, or other compensation for
the canceled flight in lieu of a
refund;
(2) a carrier significantly changes
a flight and the consumer rejects
the significantly changed flight
itinerary and the carrier does not
offer alternative transportation or
offer travel credits, vouchers, or
other compensation in lieu of a
refund;
(3) a consumer rejects the
significantly changed flight or
alternative transportation offered
as well as travel credits,
vouchers, or other compensation
offered for a canceled flight or a
significantly changed flight
itinerary in lieu of a refund;
(4) a carrier offers a significantly
changed flight or alternative
transportation for a significantly
changed flight itinerary or a
canceled flight, but the consumer
does not respond to the
transportation offered on or before
a response deadline set by the
carrier and does not accept any
offer of travel credits, vouchers,
or other compensation, and the
carrier's policy is to treat a lack
of a response as a rejection of the
alternative transportation offered;
(5) a carrier does not offer a
significantly changed flight or
alternative transportation for a
significantly changed flight
itinerary or a canceled flight but
offers travel credits, vouchers, or
other compensation in lieu of a
refund, and the consumer does not
respond to the alternative
compensation offered on or before a
reasonable response date in which
case the lack of a response is
deemed a rejection; or
(6) a carrier offers a significantly
changed flight or alternative
transportation for a significantly
changed flight itinerary or a
canceled flight and offers travel
credits, vouchers, or other
compensation in lieu of a refund
and the carrier has not set a
deadline to respond, the consumer
does not respond to the
alternatives offered, and the
consumer does not take the flight.
Carriers may set a reasonable
deadline for a consumer to accept
or reject a significant change to a
flight or an offer of alternative
transportation following a
significant change or a
cancellation.
Carriers that set a deadline must
establish, publish, and adhere to a
policy regarding whether consumers
not responding to a significant
change or an offer of alternative
transportation following a
significant change or cancellation
before the carrier's deadline
would: (1) have their reservations
cancelled and receive a refund; or
(2) maintain their reservations and
forfeit the right to a refund.
Refunding Fees for Significantly Add 14 CFR part 260 to require U.S.
Delayed Bags. and foreign airlines that are
merchants of record for the checked
bag fee or if a ticket agent is the
merchant of record for the checked
bag fee, the carrier that operated
the last flight segment to provide
automatic refunds of checked
baggage fees when they fail to
deliver checked bags in a timely
manner:
(1) For domestic itineraries, a
refund of baggage fee is due when
an airline fails to deliver the
checked bag within 12 hours of the
consumer's flight arriving at the
gate and the consumer has filed a
Mishandled Baggage Report.
(2) For international itineraries
where the flight duration of the
segment between the United States
and a point in a foreign country is
12 hours or less, a refund of
baggage fee is due when the airline
fails to deliver the checked bag
within 15 hours of the consumer's
flight arriving at the gate and the
consumer has filed a Mishandled
Baggage Report.
(3) For international itineraries
where the flight duration of the
segment between the United States
and a point in a foreign country is
over 12 hours, a refund of baggage
fee is due when the airline fails
to deliver the checked bag within
30 hours of the consumer's flight
arriving at the gate and the
consumer has filed a Mishandled
Baggage Report.
Refunding Ancillary Services Fees Add 14 CFR part 260 to require U.S.
for Services Not Provided. and foreign airlines that are
merchants of record for the
ancillary service or if a ticket
agent is the merchant of record for
the ancillary service, the carrier
that failed to provide the
ancillary service to provide
automatic refunds of ancillary
service fees when a passenger pays
for an ancillary service that the
airlines fail to provide.
Providing Travel Credits or Add 14 CFR part 262 to require U.S.
Vouchers to Consumers Affected by and foreign airlines that are
a Serious Communicable Disease. merchants of record for the ticket
transaction or if a ticket agent is
the merchant of record, the carrier
that operated the flight to issue
travel credits or vouchers, valid
for at least five years from the
date of issuance and transferrable,
when:
(1) a consumer is advised by a
licensed treating medical
professional not to travel during a
public health emergency to protect
himself/herself from a serious
communicable disease, the consumer
purchased the airline ticket before
a public health emergency was
declared, and the consumer is
scheduled to travel during the
public health emergency to or from
the area affected by the public
health emergency;
(2) a consumer is prohibited from
travel or is required to quarantine
for a substantial portion of the
trip by a governmental entity in
relation to a serious communicable
disease and the consumer purchased
the airline ticket before a public
health emergency for that area was
declared or, if there is no
declaration of a public health
emergency, before the government
prohibition or restriction for
travel to or from that area is
imposed; or
(3) a consumer is advised by a
licensed treating medical
professional not to travel,
irrespective of a public health
emergency, because the consumer has
or is likely to have contracted a
serious communicable disease and
would pose a direct threat to the
health of others.
Documentation Requirement for Add 14 CFR part 262 to allow U.S.
Receiving Credits or Vouchers. and foreign airlines to require
consumers requesting a credit or
voucher for a non-refundable ticket
when the flight is still scheduled
to be operated without significant
change to provide, as appropriate:
[[Page 32764]]
(1) the applicable government order
or other document relating to a
serious communicable disease
demonstrating how the passenger is
prohibited from travel or is
required to quarantine at the
destination for a substantial
portion of the trip; or
(2) a written statement from a
licensed treating medical
professional, attesting that it is
the medical professional's opinion,
based on current medical knowledge
concerning a serious communicable
disease such as guidance issued by
CDC or WHO and the passenger's
health condition, that the
passenger should not travel to
protect the passenger from a
serious communicable disease or the
passenger would pose a direct
threat to the health of others if
the passenger traveled. This
medical statement may only be
required in the absence of HHS
guidance declaring that requiring
such documentation is not in the
public interest.
Service Fees by Ticket Agents for Amend 14 CFR part 399 to allow
Issuing Tickets. ticket agents to retain the service
fee charged when issuing the
original ticket if the service
provided is for more than
processing payment for a flight
that the consumer found and so long
as the fee is on a per-passenger
basis and the existence, amount,
and the non-refundable nature of
the fee if this is the case, is
clearly and prominently disclosed
to consumers at the time they
purchase the airfare.
Processing Fees for Issuing Retaining Processing Fee for
Refunds, Credits, or Vouchers. Required Refunds: Add 14 CFR part
260 to prohibit carriers from
retaining a processing fee for
issuing required refunds when the
carrier cancels or significantly
changes a flight.
Processing Fee for Issuing Required
Credits or Vouchers: Add 14 CFR
part 262 to allow airlines to
retain a processing fee from the
value of a required travel credit
or voucher provided to a passenger
due to a serious communicable
disease. Airlines (not ticket
agents) are responsible for issuing
travel credits or vouchers to
eligible consumers whose travel is
affected by a serious communicable
disease.
------------------------------------------------------------------------
(4) Costs and Benefits
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\15\ Merchants of records are the entities shown in the
consumer's financial charge statements such as debit or credit card
charge statements.
\16\ Comments from ticket agents assert that ticket agents
appear as merchants of records in less than 10 percent of
transactions addressed in this final rule.
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The final rule will reduce inconsistencies in granting consumers
airline ticket refunds that stem from the lack of universal definitions
for cancellation and significant itinerary change. As such, the rule is
expected to reduce the resources consumers need to expend to obtain the
refunds they are owed. Consumer time savings are estimated to be about
$3.8 million annually. The rule also implements 2016 and 2018 statutory
mandates pertaining to refunds of fees for delayed baggage and
ancillary services that a consumer does not receive. The expected
economic impacts of the fee refund provisions consist of $16.0 million
annually in increased refunds to consumers and $7.1 million annually in
administrative costs for the airlines.
The rule also requires airlines to provide five-year transferable
travel credits or vouchers to passengers who cancel travel for reasons
related to a serious communicable disease. Expected societal benefits,
which were not quantified, are from infected air passengers who cancel
air travel due the option of receiving the five-year travel credit and
the reduction in exposure of uninfected passengers to serious
contagious disease. Estimated annual costs range from $3.4 million to
$482.0 million.
Statutory Authority
The Department is issuing this rulemaking under its authority to
prohibit unfair or deceptive practices or unfair methods of competition
in air transportation or the sale of air transportation pursuant to 49
U.S.C. 41712, its authority to require safe and adequate interstate
transportation pursuant to 49 U.S.C. 41702, its authority to mandate
that airlines refund checked baggage fees to passengers when they fail
to deliver checked bags in a timely manner pursuant to 49 U.S.C. 41704
note, and its authority to mandate that airlines promptly provide a
refund to a passenger of any ancillary fees paid for services related
to air travel that the passenger does not receive pursuant to 49 U.S.C.
42301 note prec.
Under the Department's procedural rule regarding rulemakings
relating to unfair and deceptive practices, 14 CFR 399.75, the
Department is required to provide its reasoning for concluding that a
certain practice is unfair or deceptive to consumers, as defined in 14
CFR 399.79, 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 49 U.S.C. 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.\17\ Proof of intent is not necessary to
establish unfairness.\18\ The elements of unfairness are further
elaborated by the Department in its guidance document. \19\
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\17\ 14 CFR 399.79(b)(1).
\18\ 14 CFR 399.79(c).
\19\ 87 FR 52677 (August 28, 2022).
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The Department has determined that it is an unfair business
practice in violation of section 41712 for airlines or ticket agents to
refuse to refund passengers when an airline cancels or significantly
changes a flight and passengers do not accept the offered alternative
transportation or compensation (e.g., airline credits or vouchers) in
lieu of a refund, regardless of whether the passenger purchased a non-
refundable ticket. A practice by airlines or ticket agents of not
providing refunds in such situations substantially harms consumers
because consumers paid money for services that were not provided when
the airline cancelled or significantly changed the flight. This harm is
not reasonably avoidable by consumers as cancellations or significant
changes to their flights are outside of their control. A reasonable
consumer would not expect that he or she must pay more to purchase a
refundable ticket to be able to recoup the ticket price when the
airline fails to provide the service through no action or fault of the
consumer. Also, the tangible and significant harm to consumers of not
receiving a refund is not outweighed by benefits to consumers or
competition. The Department acknowledges that consumers may benefit
from the availability of lower cost nonrefundable tickets but does not
expect that this requirement would result in airlines no longer
offering
[[Page 32765]]
nonrefundable tickets as the term nonrefundable has generally been
understood not to apply in cases where airlines cancel or make a
significant change in the service provided.
For airlines, this prohibited unfair practice includes a carrier's
retention of a fee to process a required refund or of a booking fee
(i.e., a fee for processing payment for a flight that the consumer
found) because it is the carrier's flight that is significantly changed
or canceled; the Department is deferring decision on whether the same
prohibition should apply to ticket agents because ticket agents do not
operate the flight. Further, the Department has determined that it is
an unfair and deceptive practice in violation of section 41712 for
airlines and ticket agents to not inform consumers that they are
entitled to a refund of the ticket and ancillary fees if that is the
case before making an offer for travel credits, vouchers, or other
compensation in lieu of refunds. Also, it is an unfair and deceptive
practice to not provide proper disclosures and notifications to
consumers with respect to: the limitations, restrictions, and
conditions on any travel credits, vouchers, or other compensation
offered in lieu of refunds; consumers' rights to automatic refunds
under certain circumstances; and any airline-imposed requirements on
accepting or rejecting alternative transportation. Additionally, to
ensure that consumers who purchased their airline tickets from a ticket
agent receive refunds that are due in a timely manner, the Department
has determined that it is an unfair practice for airlines to not
confirm a consumer's refund eligibility in a timely manner. The
Department's analysis on why these actions by airlines or ticket agents
violate section 41712 will be provided in each section that discusses
these matters in substance.
Similarly, the Department considers it to be an unfair practice for
an airline to not provide travel credits or vouchers when (1) a
consumer is advised by a licensed treating medical professional not to
travel to protect himself/herself from a serious communicable disease
and the consumer purchased the airline ticket before a public health
emergency affecting the origination or destination of the consumer's
itinerary was declared and is scheduled to travel to or from that area
during the public health emergency; (2) a consumer is prohibited from
traveling or is required to quarantine for a substantial portion of the
trip by a governmental entity due to a serious communicable disease
(e.g., as a result of a stay-at-home order, border closure) affecting
the origination or destination of the consumer's itinerary and the
consumer purchased the airline ticket before a public health emergency
was declared or, if there is no declaration of a public health
emergency, before the government prohibition or restriction for travel
to the consumer's destination or from the consumer's origination; or
(3) a consumer is advised by a licensed treating medical professional
consistent with public health guidance (e.g., CDC guidance) not to
travel to protect others from a serious communicable disease. Consumers
are substantially harmed when they pay for a service that they are
unable to use because they were directed or advised by governmental
entities or a medical professional not to travel to protect themselves
or others from a serious communicable disease, and the airline does not
provide a travel credit or voucher. More specifically, the loss of the
value of their tickets is a substantial harm that is not reasonably
avoidable when consumers purchased their tickets before the declaration
of a public health emergency and the only way to avoid the loss of the
ticket value is to disregard a medical professional's advice not to
travel and risk inflicting serious health consequences on themselves.
This loss is also not reasonably avoidable when consumers purchased
their tickets before the declaration of a public health emergency that
results in the issuance of communicable disease-related travel
prohibition or restriction or, if there is no declaration of a public
health emergency, before the government prohibition or restriction for
travel due to a serious communicable disease and the only way to avoid
the loss of the ticket value is to disregard direction from
governmental entities. Finally, this loss of the value of their tickets
is not reasonably avoidable when the only way to avoid the loss of the
ticket value is to disregard medical professionals' advice not to
travel and risk inflicting serious health consequences on others. The
tangible and significant harm to consumers of losing the value of their
ticket is not outweighed by potential benefits to consumers or
competition because the requirement to provide travel credits or
vouchers would have minimal, if any, impact on nonrefundable fares. A
public health emergency affecting travel to, within, and from the
United States in a large scale is infrequent, and this requirement
applies only to consumers who have been advised or directed not to
travel by a medical professional or governmental entity in relation to
a serious communicable disease.
In addition, the Department considers it to be an unfair practice
for airlines to not provide travel credits or vouchers to consumers who
are advised by a medical professional not to travel because they have
or are likely to have contracted a serious communicable disease,
regardless of whether there is a public health emergency. Infected
passengers who are unwilling to incur a financial loss for the airline
tickets may choose to travel despite the infection, which is likely to
cause substantial harm to other passengers on the flight by
significantly increasing the likelihood of these passengers, especially
those seated within close proximity of the infected passenger, being
infected by the communicable disease. Such harm cannot be reasonably
avoided by these passengers because they are assigned to sit close to
the infected passenger and may have no knowledge about the infection by
that passenger. The harm to these passengers' health is not outweighed
by any benefits to consumers or competition. The Department believes
there would not be any benefit to consumers or competition among
airlines in infected or potentially infected travelers possibly
choosing to travel by air and infecting other passengers.
Further, the Department relies on its authority in 49 U.S.C. 41702
to require U.S. air carriers to ``provide safe and adequate interstate
air transportation'' to establish the requirement that an airline
provide travel credits or vouchers to consumers who are unable or
advised not travel due to a serious communicable disease. This final
rule promotes safe and adequate air transportation by reducing
incentives to travel for individuals who have been advised against
traveling because they have or are likely to have contracted a serious
communicable disease or individuals who are particularly vulnerable to
a serious communicable disease by allowing them to retain the value of
their tickets in travel credits and postpone travel.
The Department has received comments from the airlines, ticket
agents, and their trade associations disputing the Department's
authority to promulgate the regulation relating to providing travel
credits or vouchers to passengers whose travel is impacted by a serious
communicable disease. Those comments and the Department's responses are
provided in Section IV.1 of this rule preamble.
The requirements in this final rule regarding airlines refunding
baggage fees when significantly delayed and refunding ancillary service
fees when
[[Page 32766]]
the paid for services are not provided are specifically required by
statute. The requirement for airlines to refund fees for checked bags
that are significantly delayed is issued pursuant to the Department's
authority in 49 U.S.C. 41704 note, which was enacted as part of the FAA
Extension Act (Pub. L. 114-90) and requires the Department to
promulgate a regulation that mandates that airlines refund checked
baggage fees to passengers when they fail to deliver checked bags in a
timely manner.\20\ The requirement to refund ancillary fees for air
travel related services that passengers paid for but did not receive is
issued pursuant to the Department's authority in 49 U.S.C. 42301 note
prec., which was enacted as part of the FAA Reauthorization Act of 2018
(Pub. L. 115-254) and requires the Department to promulgate a rule that
mandates that airlines promptly provide a refund to a passenger of any
ancillary fees paid for services related to air travel that the
passenger does not receive.\21\
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\20\ See Section 2305 of the FAA Extension, Safety, and Security
Act of 2016, Public Law 114-190 (July 15, 2016)).
\21\ See Section 421 of the FAA Reauthorization Act of 2018,
Public Law 115-254 (October 5, 2018).
---------------------------------------------------------------------------
Comments and Responses
I. Refunding Airline Tickets for Cancelled or Significantly Changed
Flights
1. Covered Entities, Flights, and Consumers
The NPRM: The existing requirement under 14 CFR 259.5 for 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 \22\ 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. The Ticket Refund NPRM proposed
to expand the applicability of the requirement to provide prompt
refunds to a certificated or commuter air carrier 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 sought comments on whether the proposed
expansion of the regulation in section 259.5 to include smaller
carriers is reasonable, and what obstacles, if any, these smaller
carriers may encounter to compliance.
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\22\ 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.
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As for ticket agents,\23\ the Department's rule in 14 CFR 399.80(l)
requires that ticket agents of any size ``make proper refunds promptly
when service cannot be performed as contracted.'' The Ticket Refund
NPRM proposed that, like the existing rule on ticket agents providing
refunds, the proposed refund requirements would apply to ticket agents
of any size but specified that it would only apply to ticket agents
that sell directly to consumers for scheduled passenger service to,
from, or within the United States.
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\23\ 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.
---------------------------------------------------------------------------
In the NPRM, the Department also considered whether the
applicability of DOT's proposed refund requirements should be limited
to sellers of air transportation located in the United States and
whether the beneficiaries should be limited to aviation consumers who
are residents of the United States based on its review of Regulation Z
of the Consumer Financial Protection Bureau (CFPB), as codified in 12
CFR part 1026, and the airline refund regulation in 14 CFR part 374,
which implements the requirement of Regulation Z with respect to
airlines. The Department recognized that the regulated entities covered
by Regulation Z for airline ticket transactions with credit cards may
be limited to sellers located in the United States and that the
protection afforded by Regulation Z may be limited to consumers who are
residents of the United States with credit card accounts located in the
United States. The Department also noted its broad and independent
authority to prohibit unfair or deceptive practices in air
transportation or sale of air transportation,\24\ which enables it to
cover flights to, within, and from the United States, irrespective of
whether the consumer holding reservations on those flights is a
resident of the United States, whether the seller of the airline ticket
is located in the United States, or whether the transaction takes place
in the United States. The Department asked for comment on the
applicability of the proposed requirement.
---------------------------------------------------------------------------
\24\ Air transportation means foreign air transportation,
interstate air transportation, or the transportation of mail by
aircraft. See 49 U.S.C. 40102 (a)(5).
---------------------------------------------------------------------------
The Department also sought comments on applicability of the rule to
certain flight segments between two foreign points if they are on the
same itinerary or ticket with flights to, from, or within the United
States. If adopting the same itinerary/ticket standard, the Ticket
Refund NPRM asked whether the refund requirement should only apply when
the entire itinerary/ticket is sold under a U.S. carrier's code or
whether it should also apply to itineraries/tickets that combine flight
segments sold under a U.S. carrier's code and flight segments sold
under a foreign carrier code pursuant to an interline agreements.
Comments Received: The Department received one comment from an
individual stating that including small carriers operating flights to,
from, or within the United States solely using aircraft originally
designed to have a passenger capacity of fewer than 30 seats in these
regulatory proposals would place a considerable burden on these
carriers, potentially drive many of the smaller carriers that provide
access to more remote and distant parts of the country out of business.
The Department received no comments on the proposed scope of covered
ticket agents in the Ticket Refund NPRM, which incorporates the current
scope of ticket agents refund rule in 14 CFR 399.80(l), and the
definition for ``ticket agent'' in 49 U.S.C. 40102(a)(45).
For the covered tickets/itineraries/flights under the Ticket Refund
NPRM, IATA and several foreign carriers raised two concerns. First,
they suggested that applying the rule to all scheduled flights to,
from, or within the United States is incompatible with regulations from
other jurisdictions such as the European Union and Canada. They further
argued that the rule should only apply to flight segments departing a
U.S. airport. Air Canada argued that the scope of the refund
regulation, as proposed, would cause confusion as refund rules in other
jurisdictions typically apply to itineraries departing that
jurisdiction to a foreign destination. Air Canada contended that the
Department's proposal represents a misalignment with Canada's Air
Passenger Protection Regulations (APPR) when both sets of rules apply
to the same itinerary. Air Canada provides an example that in the
[[Page 32767]]
case of uncontrollable event such as winter storm causing a
cancellation, the APPR only requires a carrier to refund if the carrier
is not able to rebook the passenger within 48 hours from the departure
time, whereas the Department's proposed rule would require a refund
offer upon flight cancellation. Second, IATA and several foreign
carriers objected to applying the rule to certain flight segments
between two foreign points, raising extraterritoriality concerns. Air
Canada argued that the Department's attempt to apply its refund rule
extraterritorially would violate the longstanding principles of comity
and reciprocity of international aviation agreements and the bilateral
air transport agreement \25\ between the United States and Canada.
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\25\ As support for its position, Air Canada references Article
12.1 of the Air Transport Agreement Between the Government of Canada
and the Government of the United States, which states ``While
entering, within, or leaving the territory of one Party, its laws
and regulations relating to the operation and navigation of aircraft
shall be complied with by the other Party's airlines.''
---------------------------------------------------------------------------
Consumers and their representatives are largely in support of a
broad scope of the Ticket Refund NPRM. Travelers United stated that the
European regulation, EU261, applies to the scheduled flights of all
carriers departing the European Union to the United States but only
applies to the scheduled flights of EU carriers departing the United
States to the European Union. Travelers United pointed out that, as
such, a consumer traveling from the United States to the European Union
on a flight by a U.S. carrier, for example, would not be protected by
EU 261. Some individual consumer commenters argued that the
Department's refund rule should cover flights between two foreign
points in the same itinerary to streamline the refund process for
international travel.
Ticket agents also commented on the scope of itineraries/tickets
covered by the Ticket Refund NPRM. Travel Management Coalition
suggested that the refund rule should apply only to ticket transactions
with a point of sale in the United States. Travel Technology
Association (Travel Tech) echoed the ``point of sale'' approach and
added that this approach is a bright-line and widely used industry
standard as the Global Distribution Systems (GDSs) denote the point of
sale on all their ticket transactions. Travel Tech suggested that this
approach would make the implementation of any final rules easier for
the regulated entities.
U.S. Travel Association stated that the refund requirement should
be limited to flights to, from, or within the United States purchased
by consumers residing in the United States. It argued that this
approach is consistent with CFPB's interpretation of Regulation Z and
the Department's proposed rule on Transparency of Ancillary Fees, which
proposes that the consumer protection measures relating to disclosure
apply to websites ``marketed to United States customers'' and ``tickets
purchased by consumers in the United States.''
DOT Response: The Department has determined that it is appropriate
to include within the scope of covered carriers with respect to the
ticket refund requirements U.S. and foreign air carriers operating
scheduled flights to, from, or within the United States solely using
aircraft originally designed to have a passenger capacity of fewer than
30 seats. The Department notes that the new ticket refund regulations
in part 260, which provide clarity on various issues related to
refunds, do not add new burdens to these carriers as they are already
covered under 14 CFR part 374 with respect to refunds for credit card
purchases. The applicability provision in 14 CFR 374.2 states that
``this part is applicable to all air carriers and foreign air carriers
engaging in consumer credit transactions.'' Also, the Department's
Office of Aviation Consumer Protection has for many years interpreted
49 U.S.C. 41712 as requiring all carriers to provide prompt refunds
when due irrespective of the form of ticket purchase payment.
The Department has carefully considered airlines' argument that the
proposed scope of covered flights for airline ticket refunds (i.e.,
scheduled flights to, from, or within the United States) would
potentially result in some flights being subject to refund rules of
multiple jurisdictions, causing complexity to carriers' compliance and
potential consumer confusion. The Department is not convinced that any
potential compliance complexity or consumer confusion arising from
these situations cannot be addressed by carriers offering all the
accommodations required by the applicable regulations so consumers can
choose the option that best suits their needs. For instance, the
Department does not see any conflict of law in the example provided by
Air Canada. APPR, which applies to all flights to, from, and within
Canada,\26\ requires airlines to provide a passenger affected by a
cancellation or a lengthy delay due to a situation outside the
airline's control with a confirmed reservation on the next available
flight that is operated by the carrier or a partner airline, leaving
within 48 hours of the departure time indicated on the passenger's
original ticket; if the airline cannot provide a confirmed reservation
within this 48-hour period, it will be required to provide, at the
passenger's choice, a refund or rebooking. Both the APPR requirement
and the Department's refund requirement would apply to a flight between
the United States and Canada. Under the regulation finalized here, the
carrier would be required to refund the affected passenger if the
flight is cancelled or delayed for more than six hours and the consumer
rejects the alternative offered or an alternative is not offered. In
this situation, the carrier would be expected to offer the passenger
the choice of a refund and a choice of rebooking on a flight departing
within 48 hours if such flight exists. Providing consumers such choices
would satisfy the requirements of both U.S. and Canadian regulations.
---------------------------------------------------------------------------
\26\ <a href="https://otc-cta.gc.ca/eng/publication/application-air-passenger-protection-regulations-a-guide">https://otc-cta.gc.ca/eng/publication/application-air-passenger-protection-regulations-a-guide</a>.
---------------------------------------------------------------------------
The Department notes that airlines operating international air
transportation are subject to rules from multiple jurisdictions in many
other areas, such as oversales and disability. The Department does not
believe there is a conflict of law in ticket refunds which makes it
impossible for carriers to comply with laws of multiple jurisdictions.
The Department expects that U.S. and foreign air carriers operating
scheduled flights to, from, and within the United States will fully
comply with the refund regulations to which they are subject,
consistent with the bilateral agreements between the United States and
other countries. Such compliance will result in consumers benefiting
from having more choices when their flights are canceled or
significantly changed by airlines.
We have also considered the comments on the scope of ``air
transportation'' for tickets that include flight segments between two
foreign points. The Department has determined that the refund
requirements would cover these flight segments that are on a single
ticket/itinerary to or from the United States without a break in the
journey. Congress has authorized the Department to prevent unfair or
deceptive practices or unfair methods of competition in ``air
transportation,'' 49 U.S.C. 41712(a), and ``air transportation'' is
defined to include ``foreign air transportation.'' \27\ The
[[Page 32768]]
Department has concluded that ``foreign air transportation'' includes
journeys to or from the United States with brief and incidental
stopover(s) at a foreign point without breaking the journey. We believe
this approach fully addresses the extraterritoriality concerns raised
by some carriers and is consistent with the Department's general
approach adopted in this final rule of considering domestic segments of
international itineraries as a part of the international journey. While
the Department is not providing an exhaustive list of what a stopover
that would break the journey is, it is setting an outer limit by
treating any deliberate interruption of a journey at a point between
the origin and destination that is scheduled to exceed 24 hours on an
international itinerary to be a break in the journey.\28\
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\27\ Foreign air transportation ``means the transportation of
passengers or property by aircraft as a common carrier for
compensation, or the transportation of mail by aircraft, between a
place in the United States and a place outside the United States
when any part of the transportation is by aircraft.'' See 49 U.S.C.
40102(a)(23).
\28\ See definitions for common terms in air travel at <a href="https://www.transportation.gov/sites/dot.gov/files/docs/Common%20Terms%20in%20Air%20Travel.pdf">https://www.transportation.gov/sites/dot.gov/files/docs/Common%20Terms%20in%20Air%20Travel.pdf</a>.
---------------------------------------------------------------------------
Besides this bright-line outer limit, to determine whether a
stopover under 24 hours at a foreign point breaks the journey between a
point in the United States and a point in a foreign country, the
Department would view factors including whether the whole itinerary was
purchased in one single transaction, whether the segment between two
foreign points is operated or marketed by a carrier that has no
codeshare or interline agreement with the carrier operating or
marketing the segment to or from the United States, and whether the
stopover at a foreign point involves the passenger picking up checked
baggage, leaving the airport, and continuing the next segment after a
substantial amount of time.
The Department has also determined that it is appropriate to apply
the refund and other consumer protection regulations finalized here to
all tickets/itineraries to, from, or within the United States
regardless of the point of sales or the residency of the consumers.
While recognizing that Regulation Z applies only to credit card
transactions that take place in the United States involving residents
of the United States, the Department's authority to prohibit unfair or
deceptive practices in air transportation under 49 U.S.C. 41712 goes
beyond this scope with respect to the type and location of the
transactions and the residency of consumers. The Department has made
the policy decision to exercise its broad authority under section 41712
to ensure that its ticket and ancillary service fee refunds
requirements and the protections for passengers affected by a serious
communicable disease provide the maximum protections to consumers as
permitted by the law. The Department also believes that this broad
scope would simplify and streamline the refund process by the regulated
entities and reduce consumer frustration and confusion.
2. Need for a Rulemaking
The NPRM: The NPRM is intended to prevent unfair or deceptive
practices by airlines and ticket agents when airlines cancel or make
significant changes to flights. Under the Department's existing
regulations, airlines have an obligation to provide prompt refunds when
refunds are due, but a specific reference to refunding airfare due to a
canceled or significantly changed flight is not codified in the
regulations. Also, today, airlines are permitted to adopt their own
standards for ``cancellation'' and ``significant change,'' which has
resulted in lack of consistency from airline to airline and passenger
confusion about their rights, particularly during periods of
significant air travel disruptions such as the COVID-19 pandemic when
refund requests overwhelmed the industry. As noted in the NPRM, the
Department received a significant number of complaints against airlines
and ticket agents for refusing to provide a refund or for delaying
processing of refunds during the COVID-19 pandemic. In issuing the
NPRM, the Department explained that its existing regulations on refunds
made it difficult to monitor compliance and enforce refund requirements
and described benefits of strengthening protections for consumers to
obtain a prompt refund when airlines cancel or significantly change
flight schedules.
Comments Received: Virtually all consumers and consumer rights
advocacy groups that commented on the NPRM are in support of the
Department exercising its legal authority under section 41712 to codify
the Department's longstanding enforcement policy requiring airlines and
ticket agents to provides refunds when airlines cancel or make a
significant change to a flight itinerary. They also strongly support
the proposal to define ``cancellation'' and ``significant change'' to
eliminate the inconsistencies among airline policies that are the main
sources of consumer frustration. FlyersRights commented that some
airlines' behavior during the COVID-19 pandemic to retroactively extend
the length of delay that would qualify affected consumers for a refund
is strong evidence for the need of rulemaking. In addition to
supporting the proposals in this area, approximately 500 individual
consumers expressed their view that the NPRM does not go far enough in
terms of consumer protection, with over 300 commenters explicitly
suggesting that the Department adopt regulation mandating airlines to
compensate consumers for incidental costs (e.g., meals, hotels, ground
transportation) associated with airline cancellations or significant
changes, similar to the European Union Regulation EC261/2004 (EC261).
National Consumers League noted that this additional consumer
protection measure would mitigate consumer inconveniences and
incentivize airlines to invest in maintaining operations according to
the published schedules.
Among airline commenters, A4A expressed support for codifying the
refund policy and adopting definitions for ``cancellation'' and
``significant change'' but disagreed with some components of the
proposed definitions. The National Air Carrier Association (NACA)
stated that the Department should simply codify the current policy
without adopting definitions for ``cancellation'' and ``significant
change.'' IATA and several airline commenters asserted that it is not
necessary to promulgate a new rule because airlines were already
providing refunds pre-COVID-19 pandemic, as evidenced by the relatively
small numbers of complaints on refunds at that time. They contended
that the Department should not rely on a once-in-a-lifetime event
(i.e., the COVID-19 pandemic) as the justification for a rulemaking.
They pointed out that airlines have issued unprecedented amounts of
refunds during the pandemic and in cases where they failed to do so,
the Department's enforcement actions under the current rule have proven
that rulemaking is unnecessary. IATA's comment recognized that
standardizing definitions would provide consistency in passenger
experiences and avoid consumer confusion, although it argued that
allowing airlines to define these terms provides greater flexibility,
fosters competition, and helps maximize value for consumers. The
Association of Asian and Pacific Airlines (AAPA) expressed its view
that the refund requirement should exempt situations where
cancellations and significant changes are caused by safety or security-
related reasons including pandemics and when large scale disruptions or
``force majeure'' such as unannounced border closures and restrictions
by governments occur.
Ticket agents and their trade associations are generally in support
of the proposals on codification of the refund enforcement policy and
adopting
[[Page 32769]]
definitions for ``cancellation'' and ``significant change.'' Many
ticket agent commenters share the Department's view that these
proposals mitigate consumer confusion caused by different airline
refund policies and enhance predictability regarding refund rights.
However, U.S. Travel Association, an organization representing various
components of the U.S. travel industry, including some ticket agents,
opposed the proposals on refunds due to airline cancellation and
significant change, arguing that the proposals do not address the root
causes of flight delays and cancellations and would have unintended
consequences of higher costs for travel and reduced options for
consumers.
The Department also received a joint comment by 32 State Attorneys
General supporting the Department's proposal but also urging, among
other things, that the Department: (1) work on a partnership with
States to enforce consumer protection rules, (2) require airlines to
sell tickets only for flights they have adequate staff to operate, (3)
impose significant penalties for airline cancellations or lengthy
delays not caused by weather or other unavoidable reasons, and (4)
require airlines to compensate consumers affected by cancellations or
delays, including compensating for the cost of meals, hotels, flights
on another airline, rental cars, and issuing partial refunds to
consumers who took the alternative flight that is later, longer, or
otherwise of less value.
The Department's Aviation Consumer Protection Advisory Committee,
after discussing the Department's proposals on refunds related to
airline cancellation and significant change during several meetings,
unanimously recommended that the Department codify its longstanding
policy to require airlines and ticket agents to provide prompt refunds
to consumers when airlines cancel or make a significant change to
flight itineraries and consumers do not accept alternative
transportation offered by airlines or ticket agents. The member
representing airlines noted that the airlines' support on this
recommendation is limited to adopting a rule that codifies the
Department's current policy.
DOT Response: The Department continues to be concerned about the
lack of regulatory clarity regarding airlines' obligation to provide
prompt refunds when airlines cancel or make significant changes to
flights and the impact that this lack of regulatory clarity has on
airlines' compliance and the ability of the Department's Office of
Aviation Consumer Protection to take enforcement action despite the
Department's statutory authority to prohibit unfair and deceptive
practices. As described in the Statutory Authority section, the
Department believes that an airline's or ticket agent's practice of not
providing a prompt refund when an airline cancels or significantly
changes a passenger's flight and the passenger does not accept the
alternative offered causes substantial harm to consumers, the harm is
not reasonably avoidable, and the harm is not outweighed by benefits to
consumers or competition. As such, the Department concludes that its
existing regulatory structure on refunds should be enhanced to better
protect consumers.
The Department also agrees with comments from ticket agent
representatives and others that definitions for ``cancellation'' and
``significant change of flight itinerary'' mitigate consumer confusion
caused by different airline refund policies and enhance predictability
regarding refund rights. As the Department stated in the Ticket Refund
NPRM, the consumer complaints received by the Department during the
COVID-19 pandemic demonstrated that various airline definitions for
these terms have caused a great level of consumer harm in terms of
frustration and confusion. The Department agrees with FlyersRights that
a lack of a uniform standard on the meaning of a cancellation and
significant change has resulted in certain airlines improperly revising
and applying less consumer-friendly refund policies during periods when
flight cancellations and changes spike, which is strong evidence of the
need of rulemaking. The Department notes, however, that the adoption of
this final rule is not, as some airline commenters argue, solely based
on issues arising from an unprecedented pandemic. As we have witnessed
during the past two years while the air travel industry is recovering
post-pandemic, disruptions in large scales continue to occur as the
result of other factors such as weather, technological issues, and
staffing shortages. The significant number of consumer complaints on
refunds filed with the Department in recent years demonstrates the need
to strengthen the current regulation on refunds.
Regarding the various comments by consumers, consumer right
advocacy groups, and the State Attorneys General regarding promulgating
regulations to require airlines to provide compensation to consumers
when their flights are cancelled or significantly changed to cover the
incidental costs such as meals, hotels, and ground transportation, the
Department has initiated another consumer protection rulemaking to
address these issues.\29\ The Department fully recognizes that the
measures finalized in this rule on airline ticket refunds are merely
the first steps towards the Department's goal of strengthening overall
protections to consumers affected by airline cancellations and changes.
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\29\ See, Rights of Airline Passengers When There Are
Controllable Flight Delays or Cancellations, <a href="https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202304&RIN=2105-AF20">https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202304&RIN=2105-AF20</a>.
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3. Definition of a Cancelled Flight
The NPRM: The Ticket Refund NPRM proposed 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 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 would not
negate the obligation to provide a refund when the alternative offered
is not accepted.
Comments Received: A4A and IATA expressed support for the
Department codifying a definition for ``cancelled flight'', as they
believe it is necessary to provide clarity and transparency to the
traveling public. They argued, however, that the definition should
exclude situations that would technically qualify as a ``cancellation''
under the proposed definition but do not affect consumers, such as a
simple flight number change or a flight that was delayed into the next
calendar day but does not exceed the delay limits set forth in the
definition for ``significant change of flight itinerary.'' They further
argued that when a passenger from any cancelled flight was rebooked on
a new flight that does not constitute a ``significant change of flight
itinerary'' when compared to the original flight that was cancelled,
consumers should not be entitled to a refund. The flight number change
and overnight delay exemptions argument is supported by the Regional
Airline Association (RAA) and some foreign airline commenters. The
National Air Carrier Association (NACA) argued that the definition for
``cancelled flight'' should exclude cancellations due to situations
outside of carriers' control. Qatar Airways argued that the definition
should include only flight operations that are not operated but were
listed in the carrier's CRS within seven calendar days of the scheduled
departure. On a similar issue, A4A submitted that the Department should
clarify that this definition is distinct from the Department's airline
service quality
[[Page 32770]]
reporting rule, 14 CFR part 234, and it does not change the definition
for ``cancelled flight'' in that regulation.\30\ Spirit Airlines stated
that it accepts the Department's proposed definition for ``cancelled
flight.''
---------------------------------------------------------------------------
\30\ Under 14 CFR part 234, which sets forth the requirements
that U.S. carriers must follow when submitting, among other things,
on-time performance data to the Department, 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.
---------------------------------------------------------------------------
Consumers and consumer rights advocacy groups fully support the
Department's proposed definition for ``cancelled flight.'' National
Consumers League commented that whether a flight was removed from a
carrier's CRS one year or one day before its scheduled operation is
irrelevant for consumers. U.S. Public Interest Research Group Education
Fund filed comments supporting stronger consumer protections for air
travelers. It specifically commented that by adopting the proposed
definition for ``cancelled flight,'' airlines should no longer be
allowed to categorize cancellations that occur more than seven days
before the departure as ``discontinued'' flights therefore evading
being held accountable for the true number of cancellations. It further
stated that this would encourage airlines to produce more realistic
flight schedules.
Ticket agent representatives' positions on this definition are
split. The United States Tour Operators Association (USTOA) supported
the airlines' position on exempting situations under which consumers
are reaccommodated on flights that do not constitute a ``significant
change of flight itinerary'' when compared to the cancelled flight.
Global Business Travel Association, on the other hand, supported the
Department's proposed definition.
U.S. Chamber of Commerce opposed the proposal based on its
understanding that the definition would expand the current refund
entitlement and hold carriers liable for cancellations due to
situations beyond their control such as weather or air traffic control
delays. It further argued that this definition would also entitle a
passenger who is reaccommodated on another flight to a refund. It
suggested that the Department reconsider the definition to exempt
cancellations unforeseeable by carriers. On the other hand, the ACPAC
recommended to the Department that it adopt the proposed definition for
``cancelled flight.'' \31\
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\31\ Three members representing consumer rights advocacy groups,
State Attorneys General, and airports, respectively, voted for the
recommendation, and the member representing A4A voted against the
recommendation, stating that although A4A generally supports DOT
defining the term, the proposed definition does not address several
concerns that A4A mentioned in its comments to the rulemaking.
According to the ACPAC Charter, a quorum must exist for any official
action, including voting on a recommendation, to occur. A quorum
exists whenever three of the appointed members are present, whether
in person and/or virtually. In any situation involving voting, the
majority vote of members will prevail, but the views of the minority
will be reported as well.
---------------------------------------------------------------------------
DOT Responses: The Department has considered the comments
suggesting the definition of ``cancelled flight'' not include a flight
cancellation that has no significant impact on a consumer because the
new flight offered to the consumer does not constitute a ``significant
change of flight itinerary'' as compared to the original flight. The
Department is concerned, however, that carving out such an exemption
would lead to substantial consumer confusion as to whether a consumer
is entitled to a refund after a flight cancellation, as entitlements to
a refund would depend on the nature of the new flight offered to each
affected consumer, a fact-specific and case-by-case analysis that is
often time-consuming, and complex. For example, if two passengers from
a cancelled flight were offered different alternative flights, one that
would be considered a ``significant change'' compared to the cancelled
flight and the other that would not be considered a ``significant
change,'' the outcome is that one passenger would be entitled to
rejecting the alternative flight and receiving a refund, and the other
would not. The Department believes that the potential complexity and
confusion associated with a case-by-case determination of when
passengers are entitled to a refund of a cancelled flight outweighs its
benefits. Further, the Department believes that consumers who are
reaccommodated on a flight that is substantially comparable to the
original flight generally would not typically refuse the re-
accommodation and seek a refund. For these reasons, the Department is
adopting the proposed definition of ``cancelled flight'' under which a
consumer would be entitled to a refund with clarification. A cancelled
flight means a flight with a specific flight number that was published
in a carrier's Computer Reservation System to operate between a
specific origin-destination city pair at the time of the ticket sale
that was not operated. Under this definition, a flight that was
operated under a different flight number would be considered a new
flight and the original flight would be considered a canceled flight.
The Department further clarifies that the NPRM did not propose to
amend, and this final rule does not amend, the existing definition of
``cancelled flight'' for airline reporting purposes in 14 CFR part 234.
U.S. carriers will continue to apply the existing definitions for
``cancelled flight'' and ``discontinued flight'' in part 234 when
reporting their on-time performance data to the Department. In response
to the comment by U.S. Chamber of Commerce, the Department notes that
its current policy requiring airlines to provide refunds due to flight
cancellations applies irrespective of the reason for a cancellation,
and this continues to be the case under this final rule. The Department
further adds that the final rule adopted here does not require airlines
or ticket agents to provide a refund to a passenger for a canceled
flight if that passenger accepts the alternative transportation offered
and is reaccommodated.
4. Definition of ``Significant Change of Flight Itinerary''
The NPRM proposed to ensure consistency on when passengers are
entitled to a refund for a significantly changed flight by defining the
term ``significant change of flight itinerary'' instead of relying on a
case-by-case analysis on whether a flight change was significant to the
consumer. The Department proposed that 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. The NPRM sought comments regarding whether this approach is
reasonable and fair to passengers while not imposing undue burden on
carriers and ticket agents, and whether there are any other changes to
flight itineraries that airlines may make that should also be
considered a ``significant change of flight itinerary.'' The NPRM also
sought 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.
A. Types of Significant Changes
(i) Early Departure and Late Arrival
The NPRM: The NPRM considered three options in defining the extent
of early departure or delayed arrival that
[[Page 32771]]
would qualify as ``significant changes.'' The first option, which the
NPRM proposed, 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 time change. The NPRM emphasized that airlines and ticket
agents would be free to apply a shorter timeframe that constitutes 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 NPRM described this approach to be the most
straightforward, clearly defined standard that would be easily
understood by airlines and consumers, making it easier to train airline
and ticket agent personnel on how to respond to refund requests, and
potentially streamlining and expediting the refund review and issuance
process. In applying the proposed standard to a refund request, the
NPRM explained that the proposal's focus is only on the departure time
of the first flight segment and/or the arrival time of the final flight
segment. In other words, an early departure of a connecting flight or a
late arrival of a flight that is not the final flight segment, even if
exceeding the proposed timeframe, may not necessarily result in a
passenger being entitled to a refund. In addition, the NPRM clarified
that the proposed standard for international itineraries would apply to
the early departure or the late arrival of a domestic segment of those
itineraries if the domestic segment is the first or the last segment
and is on the same ticket as the international segment.
The second option the Department considered in the NPRM 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 change that would
justify a refund. The Department stated that it 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 the balance between considering all relevant factors impacting
consumers on the one hand, and ensuring the efficiency, consistency,
and certainty of its regulation on the other hand, and may not be in
the public interest. The NPRM sought comments on whether continuing to
provide airlines the flexibility to define significant flight schedule
time 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.
A third approach considered by the Department is to define
significant departure and arrival time change through the adoption of a
tiered structure based on objective factors such as the total travel
time of an itinerary. The NPRM provided an example of a tiered standard
using the illustration below.
------------------------------------------------------------------------
Original scheduled total travel
time (measured from the Projected arrival
scheduled departure time of the delay or early
first flight segment to the departure as Result
scheduled arrival time of the offered to
last flight 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.
------------------------------------------------------------------------
The NPRM acknowledged that this approach would be more difficult
for carriers to implement and for consumers to understand because a
determination on whether a refund is due would be based on each
individual itinerary. The NPRM asked whether the industry considers the
adoption of this type of tiered standard to be practical and whether
consumers believe this type of tiered standard would better reflect the
inconvenience and disruption caused by a flight schedule change.
Comments Received: A4A expressed its support for adopting a set
timeframe standard for determining whether a refund is due. A4A stated
that, however, the standard should only include late arrivals (delays)
and not early departures because it is consistent with the Department's
reporting regulation for U.S. carriers. A4A further suggested that the
standard should be four hours for domestic itineraries and eight hours
for international itineraries. A4A also commented that a schedule
change accepted by the passenger should reset the calculation for
delays for the purpose of refund. RAA supported A4A's position that the
standard should only cover delays but not early departures, arguing
that including both would create potential conflict when the arrival
time did not exceed the standard, but the departure time did. RAA also
supported A4A's suggestion on calculation of delay being reset once a
passenger accepts an alternative flight. RAA suggested that a flight
diversion should not be treated as a significant change of flight
itinerary as long as passengers are transported to their final
destination because safety and security are usually the principal
reason for diversions. NACA and its member Allegiant Air (Allegiant)
commented that the three/six-hour standards unduly burden Ultra-Low-
Cost-Carriers (ULCCs) because of their limited networks and the lack of
interline agreements with the large U.S. airlines that have operated
for many years. They believed that the proposal would increase
operating costs and ultimately result in higher airfares. Allegiant
further suggested that the Department should not require refunds when
the reason for the cancellation or delay is outside of a carrier's
control, as long as the carrier makes a good faith effort to rebook the
passenger. Spirit Airlines, another NACA member, commented that it has
a two-hour standard for both domestic and international itineraries,
and it does not object to the proposed three/six-hour standards. IATA,
AAPA, and Qatar Airways supported the second option, which is to allow
carriers to set their own standards for flight schedule time change.
IATA argued that a uniform standard harms consumers who travel with
airlines that currently have a more generous policy. IATA suggested
that if the Department adopts a set of uniform standards, it should be
four hours for domestic itineraries and eight hours for international
itineraries, with the international standard applying to all segments.
Air Senegal and SATA
[[Page 32772]]
International--Azores Airlines, S.A. (SATA) also supported an eight-
hour standard for international itineraries. AAPA stated that the
proposal disregards many contributory factors impacting ultra-long-haul
operations including weather, safety, security considerations, and
government restrictions. Among consumer comments, National Consumers
League supports the proposed three/six-hour standards. However,
FlyersRights stated that the proposed standards are more lenient than
many carriers' current policies. FlyersRights believes that the refund
rule should count for delayed departures (as opposed to late arrivals)
and the standard should be two hours for domestic and three hours for
international itineraries. FlyersRights further commented that for
early departures, the standard should be one hour for domestic and two
hours for international itineraries. FlyersRights explained that it
views early departures as being more harmful to consumers because for
late departures, consumers are usually already waiting at the airports.
Travelers United shared FlyersRights' view that the proposed standards
are more generous to airlines than many airlines' policies and suggests
that the standards should be 90 minutes. Among the over 4,500
individual consumer commenters, approximately 500 commented on the
proposed three/six-hour standards, with 85% in support, and 15%
suggesting shorter hours, such as two hours for domestic and four hours
for international, or three hours for both.
Two ticket agent trade associations, the Destination Wedding &
Honeymoon Specialists Association (DWHSA) and USTOA, expressed their
support for the proposed three/six-hour standards on early departures
and late arrivals. Similarly, the ACPAC recommended that the Department
adopt the proposed three- and six-hour delay standard under which a
refund is due.\32\ The joint comment filed by 32 State Attorneys
General also advocated for a three-hour delay benchmark being the floor
for consumers' entitlement to refunds and stated that this floor will
result in benefits for consumers on airlines with unclear or lengthier
delay parameters for refunds. The comment further argued that because
some airlines currently adopt a short timeframe, the Department should
take steps to ensure that setting a floor does not cause these airlines
to loosen their standards to the detriment of consumers. With respect
to the third option proposed in the NPRM to adopt a standard with a
tiered matrix based on objective factors such as the total travel time
of an itinerary, several airline commenters as well as individual
consumers expressed their opposition, arguing that this approach is not
workable because there are too many variables.
---------------------------------------------------------------------------
\32\ Three members representing consumer rights advocacy groups,
State Attorneys General, and airports, respectively, voted for the
recommendation, and the member representing A4A voted against the
recommendation, stating that A4A supports defining ``significant
delay'' but does not support the three- and six-hour timeframes.
---------------------------------------------------------------------------
DOT Responses: The Department appreciates the comments by
stakeholders on the proposed standards for flight departure/arrival
changes that would constitute ``significant changes of flight
itinerary.'' The Department agrees with commenters that defining
significant departure and arrival through the adoption of a tiered
matrix based on an objective factor such as total travel time to
determine significance is unworkable because of its complexity. Based
on the support from the airline and ticket agent industries and
consumers, the Department has determined that adopting a unified
standard consisting of set timeframes to determine whether a flight
schedule change constitutes a significant change is a preferred
approach as compared to the current policy of allowing airlines to set
their own timeframes. This approach provides much needed clarity and
consistency to consumers with respect to their rights to refunds, no
matter on which airline they travel.
The Department has further concluded that covering early departure
of the initial flight segment and late arrival of the final flight
segment is reasonable and workable for airlines and ticket agents, and
beneficial to consumers. Commenters have varied perspectives on whether
the definition of significant change should be based on early or late
departure of the initial flight segment or the late arrival of the
final flight segment. We have considered some airlines' comments that
the timeframes should apply only to flight late arrivals (delays) but
not early departures, as well as FlyersRights' comment that the
timeframes should apply to change in flight departure time (early or
late departures) regardless of whether consumers' arrival time is
significantly changed. We disagree with these suggestions. The
Department has concluded that it is important to ensure that the
definition of significant change includes both early departure as
consumers may not be available to take the flight significantly earlier
than scheduled, and late arrivals, because arriving significantly later
than scheduled may make the trip moot (e.g., job interview) or severely
disrupt travel plans (e.g., miss embarkation of a cruise). In contrast,
the Department does not believe that a late departure would cause as
much disruption, so long as the consumer arrives at the final
destination without substantial delay. As FlyersRights pointed out,
consumers are already at the departure airport while waiting for a
delayed departure flight, and the late departure alone does not add
significant amount of additional time to the total time that the
consumers already carved out for travel.
Regarding the timeline that would constitute a significant
departure and arrival time change, the Department agrees with the
comment provided by the State Attorneys General and others that the
proposed three-hour timeframe for domestic itineraries and six-hour
timeframe for international itineraries constitute a significant
departure and arrival time change. The Department acknowledges that
several airlines' current refund policies adopt shorter timeframes than
the proposed three/six-hour standards, and the Department notes that
these airlines are not only permitted under this final rule to continue
these polices but are encouraged to do so. The Department establishes a
baseline to set the minimum consumer protection requirement, and the
Department expects that healthy competition in the marketplace will
lead to airlines adopting consumer-friendly refund policies that go
above and beyond the regulatory minimum. The Department will closely
monitor airlines' implementation of this final rule and the impact on
consumers to determine whether the three/six-hour timeframes are
adequate to ensure that consumers who experience significant
disruptions and inconveniences from airline flight schedule changes
receive refunds if they so choose.
The Department is not persuaded by NACA's argument that ULCCs are
unduly burdened by the three/six-hour standard and it would ultimately
cause higher airfares. The fact that at least one ULCC has already
implemented for some time a refund policy with a schedule delay
threshold lower than the Department's minimum standard indicates that
the three/six-hour standard can work well with ULCCs' unique business
model and competition strategies, and it will not be detrimental to
maintaining ULCCs' fare structure.
The Department is also not persuaded by comments that a schedule
change accepted by the passenger should reset the calculation for
delays for the purpose of refunds. Under the final rule,
[[Page 32773]]
a consumer's acceptance of the flight schedule time change when the
original flight encounters expected early departure or late arrival or
a consumer's acceptance of another flight when the original flight was
cancelled does not reset the clock. The timeframes adopted here are
measured from the original departure and arrival times offered to
consumers when they purchased their tickets, and any deviation from
those times represents a change to the product that they agreed to and
paid for. By adopting these timeframes in the regulation, the
Department has deemed that any change to these original times by three
hours or more for domestic itineraries and six hours or more for
international itineraries are material and significant to consumers and
they are entitled to a refund if they do not accept the change, or any
alternative transportation offered. Although the Department understands
that flight schedule changes may occur multiple times before the
flight's actual operation, we believe it is fundamentally unfair to
consumers and it will defeat the purpose of this rule if we allow the
clock to reset every time a consumer accepts the time change to a
flight. In a typical rolling delay scenario, a domestic flight
initially projected to arrive two hours late could actually be delayed
for eight hours, with each new projection adding two more hours at a
time, and if the clock resets each time, the consumer would never be
entitled to a refund despite the lengthy delay.
Regarding RAA's comment that the refund requirement should exempt
situations involving flight diversions due to safety or security
concerns as long as passengers were ultimately transported to their
destinations, the Department does not view the refund requirement as
applying to these diversion situations. Typically, when a decision to
divert a flight is made, the flight has already departed and from the
passenger's perspective, the travel already took place. The passengers
would not have the opportunity to refuse the flight. For those
passengers, the issue of requesting compensation for their
inconvenience caused by the diversions will be addressed in the
Department's forthcoming rulemaking on Rights of Airline Passengers
When There Are Controllable Flight Delays or Cancellations.\33\
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\33\ See <a href="https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AF20">https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AF20</a>.
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(ii) Change of Origination, Connection, or Destination Airport
The NPRM: The Department proposed to define a significant change
that would entitle a consumer to a refund to include a change of the
origination or destination airports. The Department reasoned that most
consumers are concerned about origin and destination airports when
booking a flight itinerary because of convenience and stated that a
carrier-initiated change in the origination or destination airport is
likely to lead to additional time and cost for consumers. The NPRM did
not propose to require refunds if a carrier changes the connecting
airport(s) and instead invited comments on whether a change of
connecting airports should also be considered a significant change that
would entitle consumers to a refund. Further, the NPRM asked whether
special consideration on refund eligibility should be given in
situations where passengers choose to connect at a particular airport
with extended layover time for specific purposes beyond connecting to
the next flight, such as conducting business or visiting family,
friends, or tourist sites at that location.
Comments Received: Airline commenters generally supported including
the change of an origination or destination airport as a ``significant
change of flight itinerary.'' They contended, however, that the
definition should exclude a change of airport involving airports
located in the same metropolitan area. A4A and AAPA suggested that a
change between two ``co-terminal airports,'' as defined by the
Transportation Security Administration's (TSA) regulation, should be
exempted.\34\ Airline commenters argued that these airports are
sufficiently close in proximity to each other, indicating that a change
of the airport would not necessarily significantly impact consumers'
travel plans. Some carriers further argue that allowing this exemption
would incentivize carriers to provide greater rebooking options. Air
Senegal provided long-haul international carriers' perspective by
arguing that these carriers' first and foremost goal is to provide
transportation between two major metropolitan gateways and a change of
airport within the same metropolitan area that is necessitated by
circumstances beyond the carrier's control (e.g., airport staffing
shortage, government public health restriction) should not trigger the
refund obligation. Airline commenters also supported the position that
a change of connecting airport should not be considered a ``significant
change of flight itinerary.'' IATA commented that if a passenger wishes
to have a longer layover at a particular airport, airlines should
accommodate by rebooking on another flight to that layover airport.
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\34\ Co-terminal [airport] means an airport serving a multi-
airport city or metropolitan area that has been approved by TSA to
be used as the same point for purposes of determining application of
the security service fee imposed under [49 CFR 1510.5]. See 49 CFR
1510.3.
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Consumers, consumer rights advocacy groups, and ticket agent
representatives who commented on this issue were in support of the
Department's proposal. Two disability rights advocacy groups, Paralyzed
Veterans of America (PVA) and United Spinal Association, commented
that, from passengers with disabilities' perspective, any change to the
origination, connection, and destination airport should be considered a
``significant change of flight itinerary.'' They stated that when
booking flights, passengers with disabilities may rely on the specific
accessibility features of an airport to select the flights and
itinerary, and this may include selecting a particular connecting
airport based on the accessibility features needed to accommodate their
disabilities during the layover time.
DOT Responses: There is a consensus from all the comments received
that a change of the origination or destination airport in general
would significantly impact a passenger's travel plan and should be
considered a basis for a refund if the passenger no longer wishes to
travel. The Department disagrees with airlines' suggestion that the
regulation should exempt changes of airports located in the same
metropolitan area. In the Department's view, a change in the
origination or destination airport when located in the same
metropolitan area could still significantly impact passengers depending
on the passenger's specific circumstances including whether the new
airport is sufficiently close to their residence or the hotel so they
have the flexibility to navigate to or from the new airport without
substantial additional cost, whether they have the additional time
needed to travel to or from the alternative airport, and whether
affordable ground transportation is available for them to get to or
from the alternative airport. Given the potential impact, the
Department believes that the best approach is to require refunds if
passengers reject the change in origin or destination airport even if
in the same metropolitan area. The Department also believes that this
approach would not impose a substantial negative impact on long-haul
international carriers, who
[[Page 32774]]
stated that the main goal of their operations is to transport
passengers between two major metropolitan gateways. Passengers carried
on long-haul international flights who are focused on arriving at the
destination city as opposed to a specific airport can accept the
alternative airport offered by the carrier. The Department further
notes that in the case of flights being directed to a ``co-terminal''
airport due to government restrictions, such as a requirement to funnel
flights for communicable disease screening purposes, it is likely that
passengers would not have a choice to travel on an alternative flight
that is destined to the original airport. The Department believes that
passengers should have the choice of either traveling to the co-
terminal airport, which is likely to be the choice of many passengers,
and the option of receiving a refund.
With respect to a change of a connecting airport, the Department is
defining such a change to be a ``significant change of flight
itinerary'' only for consumers who are persons with a disability. The
Department continues to believe that a change in a connecting airport
would not impact most passengers because travelers' goal is to get to
the destination, and they generally care less about the connecting
airport. The Department is also not convinced that imposing a refund
mandate is necessary for passengers who specifically arranged to have
an extended layover at a connecting airport for other business or
leisure purposes. Consumer comments were generally silent on this
issue, and IATA has stated that airlines generally make such an
accommodation on their own when requested.
The Department has decided to require a refund to a passenger with
a disability \35\ and other passengers on the same reservation who
choose not to fly when the person with a disability does not accept a
change in the origination, destination, and connection airport. The
Department appreciates PVA and United Spinal Association sharing their
view that not defining a change to the origination, connection, and
destination airport as a ``significant change of flight itinerary''
would negatively impact persons with disabilities. The Department
accepts that a change of the origination, connection, or destination
airport may represent a significant change to a person with a
disability as the layout, design, and the availability of accessibility
features of these airports are a major consideration for persons with
disabilities when they select travel itineraries. A change of any of
these airports could cause great harm to passengers with disabilities
if the new airports are not as accessible as the original airports.
This change could affect, for example, a passenger traveling with a
service animal who carefully selected an airport with a service animal
relief area located near the passenger's connecting gate to accommodate
a tight connection timeframe, or a passenger with visual impairment who
chose a connection, origination, or destination airport that provides
wayfinding/mapping technologies through a mobile app. Further, the
Department is of the view that a change of airports, at a minimum, adds
uncertainties to the person with a disability regarding the
accessibility of the airport and that the passenger with a disability
is in the best position to conduct a risk assessment and determine
whether he or she still wants to travel from, to, or through a
particular airport.
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\35\ A passenger with a disability means an individual with a
disability who, as a passenger
(1) With respect to obtaining a ticket for air transportation on
a carrier, offers, or makes a good faith attempt to offer, to
purchase or otherwise validly to obtain such a ticket;
(2) With respect to obtaining air transportation, or other
services or accommodations required by this Part,
(i) Buys or otherwise validly obtains, or makes a good faith
effort to obtain, a ticket for air transportation on a carrier and
presents himself or herself at the airport for the purpose of
traveling on the flight to which the ticket pertains; and
(ii) Meets reasonable, nondiscriminatory contract of carriage
requirements applicable to all passengers. See 14 CFR 382.3.
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(iii) Increase in the Number of Connection Points
The NPRM: The NPRM proposed that adding to the number of connection
points in an itinerary qualifies as significant change that entitles a
consumer to a refund if the consumer no longer wishes to travel. The
Department explained that 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 will experience
flight irregularities, complications, and disruptions, as well as
mishandled checked baggage. As evidence, the Department pointed out
that airfares are generally higher for an itinerary with fewer
connection points than an itinerary with more connection points.
Comments Received: Airline commenters unanimously opposed
considering adding connection points as a ``significant change.'' Large
U.S. airlines argued that connections are a fundamental part of
carriers' network structure and carriers should be allowed the ability
to consider all available options to reroute passengers, including
through additional connecting points. ULCCs argued that because of
their small networks and the lack of interline partners, they may have
to rebook passengers with more connections, and this would penalize
ULCCs and other small carriers despite their best effort to
reaccommodate passengers. Carriers also argued that adding connections
does not necessarily mean consumer inconveniences and, in some cases,
passengers may even arrive earlier than the original schedule. These
carriers asserted that additional connections without adding more
travel time or significant delay should not be considered a
``significant change.'' IATA commented that this proposal directly
conflicts with the APPR, the Canadian regulation protecting air
travelers, which includes obligation to reroute passengers on a
reasonable route, including connections.
U.S. Chamber of Commerce also opposed the proposal, stating that in
cases of severe weather or major disruptions at a hub airport, it is
necessary to rebook passengers on itineraries with more connections to
ensure that they get to their destinations as swiftly as possible.
Unlike airlines, National Consumers League and FlyersRights
supported the Department's proposal to define significant change to
include additions in the number of connection points on a flight
itinerary. PVA and United Spinal Association also expressed their
support for the proposal, stating that adding connections is a
significant change to passengers with disabilities because additional
connections mean additional inconveniences, increased chance of
passenger injury during transfer, boarding, deplaning, and increased
chance of damage to assistive devices such as wheelchairs, which may
further lead to passengers being forced to use loaner chairs while
waiting for their wheelchairs to be repaired, causing other health and
safety concerns. These disability organizations also commented that
more harm may occur from extended overall travel time to passengers
forced to dehydrate themselves during travel because they cannot use
the lavatories, or passengers who need to minimize the time spent in an
airport wheelchair. In this regard, PVA suggested that extending the
layover time by more than one hour is a significant change.
DOT Responses: The Department has decided to include an increase in
the number of connections in a flight itinerary in the definition of
``significant change of flight itinerary.'' The Department finds the
comments by PVA and United Spinal Association about the substantial
inconveniences, and in some
[[Page 32775]]
cases, potential harm and injury to passengers with disabilities from
additional connections to be compelling. The Department further views
that adding connections may also negatively affect passengers who do
not have a disability in many ways. It is a common sense that when a
non-stop itinerary becomes a one-stop itinerary, or a one-stop
itinerary becomes two-stop itinerary, each added stop indicates
increased chance of irregularities, including the potential of missed
flights and/or delayed baggage due to short connecting times, flight
delays due to weather or air traffic control issues at the additional
connecting airport, and additional complications related to traveling
with young children or the elderly.
The Department disagrees with IATA's comment that considering an
additional connection as a ``significant change'' under which a refund
is due conflicts with APPR. Under APPR, carriers are obligated to
provide passengers the option of rerouting or refunds.\36\ APPR does
not prohibit carriers from providing a refund if a consumer does not
wish to be rerouted or does not accept the rerouting offered by
carriers. Also, this final rule does not require carriers to provide a
refund if the passenger prefers a rerouting even if that rerouting
includes additional connections. The Department believes that the APPR
and this final rule, when working together, increase choices provided
to consumers affected by cancellations and significant changes and
empower consumers to choose the best options for themselves, either
rerouting or receiving a refund.
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\36\ See Air Passenger Protection Regulation (SOR/2019-150)
(APPR), Sections 17-18. <a href="https://laws-lois.justice.gc.ca/eng/regulations/SOR-2019-150/index.html">https://laws-lois.justice.gc.ca/eng/regulations/SOR-2019-150/index.html</a>.
---------------------------------------------------------------------------
The Department is also not convinced that allowing additional
connections to be a basis for a refund would impede carriers' ability
to offer alternative itineraries including itineraries with additional
connections. As stated throughout this document, the goal of defining
``significant flight itinerary'' is to set a baseline for consumers'
rights to refunds when they are affected by a qualified change by
providing them an opportunity to evaluate any alternative
transportation offered by carriers against the option of obtaining a
refund. The fact that a consumer is eligible for a refund because of a
significant change does not mean airlines cannot or should not offer
alternative transportation. In addition, there is nothing in the
Department's regulation that prevents carriers from fully utilizing
their networks and offering options with different connecting points to
passengers. For example, if a passenger's non-stop flight is cancelled
and the carrier determines that traveling on a set of connecting
flights would get the passenger to the destination sooner than waiting
on the next non-stop flight, the carrier is free to make the offer, and
the passenger will likely accept the offer if the additional connection
is acceptable and arriving at the destination sooner is more important
to that passenger than a non-stop flight.
(iv) Change of Aircraft Resulting in Significant Downgrade of Available
Amenities and Travel Experiences
The NPRM: While acknowledging that substitution of aircraft is
often required for operational reasons, and that most substitutions do
not substantially affect consumers' travel experience, the Department
proposed that a change of aircraft would be considered a significant
change entitling the affected passengers to a refund only if it results
in ``a significant downgrade of the available amenities and travel
experiences.'' The NPRM recognized that aircraft substitution may
impact passengers differently, noting that an aircraft change may
impact a passenger traveling with a wheelchair when the wheelchair no
longer fits in the cargo compartment of the new aircraft, but it may
not impact another passenger, even one with a disability. The NPRM
proposed 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 travel
experiences of persons with a disability and their access to services
onboard, would be considered a ``significant change'' that entitles the
passenger to a refund upon request. The Department solicited comments
on how to determine whether an aircraft downgrade is a significant
change, whether it should be a case-by-case analysis, and whether there
are certain types of changes in amenities or air travel experiences
that should automatically be considered significant irrespective of the
affected person.
Comments Received: Airlines and their representatives expressed
strong concerns about the proposal and argued that the term
``significant downgrade of available amenities and travel experiences''
is too broad, vague, and subjective. U.S. Chamber of Commerce supported
the airlines' argument that the proposal is too vague and broad. A4A
suggested that in the absence of clear guidance on this term,
passengers could assert seat configuration changes, the lack of Wi-Fi,
a decrease in the number of available movies, and a reduction of seat
reclining degrees as a significant downgrade. A4A commented that if the
Department finalizes this category as a significant change, it should
allow airlines to establish and publish their own criteria and adhere
to the standard. IATA and Air Canada argued that this proposal would
significantly impact carriers operating multiple types of aircraft, or
airlines that are experiencing significant flight disruptions and
needing the flexibility to fully utilize all available aircraft to
mitigate total passenger inconveniences across the network. IATA
pointed out that the proposal does not consider the situations where a
substitute aircraft provides downgrades to certain amenities and
upgrades to other amenities. Airline commenters agreed that a change of
aircraft that impacts a carrier's ability to accommodate mobility aids
should be considered a significant change.
National Consumers League and FlyersRights expressed their support
of the Department's proposal to consider a significant downgrade of
available amenities and travel experiences to be a significant change
that would entitle consumers to a refund. FlyersRights added that
changes in aircraft size, stowage space, or seat size that no longer
allow passengers with disabilities to travel safely should be
considered a significant change. Several individual consumer commenters
also supported this proposal.
Among ticket agent representatives, USTOA opposed the proposal,
asserting that it is too subjective and thus unworkable. It further
commented that a change from a twin-aisle aircraft to a single-aisle
aircraft, the loss of Wi-Fi, or a change to an older version of
business class may have little impact on some consumers but more impact
on others. It opined that to determine whether a passenger is eligible
for a refund under the proposal may cause extensive and time-consuming
disputes between consumers and airlines and it is counter to the
Department's goal of achieving consistency across the industry. Global
Business Travel Association agreed that aircraft change causing a lack
of disability accommodation should be considered as a significant
change. It further stated that a service downgrade such as the lack of
Wi-Fi would materially impact the value of a flight to business
travelers.
Disability rights advocacy groups voiced their strong opinion that
aircraft changes affecting disability accommodations should be viewed
as significant changes for passengers with
[[Page 32776]]
disabilities. PVA commented that if a substitute aircraft cannot
accommodate a passenger's assistive device, carriers should accommodate
the affected passenger and any caregivers, family members, and other
companions on another flight of that carrier or other carriers, or
other mode of transportation without additional cost. All Wheels Up
commented that the Department should specify that refunds for the
affected passenger and others in the travel party are required when the
substitute aircraft cannot accommodate wheelchairs in the cargo
compartment. United Spinal Association also supported the position that
a significant change includes downgrade or change of aircraft without
equal accessibility features. It urged the Department to require
carriers to find accessible alternative transportation. PVA and United
Spinal Association also commented on additional accessibility-related
issues beyond the substitution of aircraft, which will be discussed in
detail in the next section.
Public Hearing: In addition to considering the public comments
filed in the rulemaking docket, at the request of A4A and IATA, the
Department also conducted a public hearing pursuant to the Department's
procedural regulation on rulemakings relating to unfair and deceptive
practices at 14 CFR 399.75. Such hearings are intended to afford
stakeholders an opportunity to present factual issues that they believe
are pertinent to the Department's decision on the rulemaking. One of
the subjects stakeholders raised during the hearing is how to determine
whether a downgrade of amenities or travel experiences qualifies as a
``significant change of flight itinerary.'' In the Notice \37\
announcing the hearing, the Department requested interested parties to
provide information on whether there are certain types of amenity
changes that should be considered ``significant'' changes that would
entitle a consumer to a refund and if so, whether the determination
should be made categorically or by airlines on a case-by-case basis.
The Department also requested information on how different airline
operational and pricing models affect onboard amenities and travel
experiences, and subsequently affect consumer expectations.
---------------------------------------------------------------------------
\37\ 88 FR 13387, Mar. 3, 2023.
---------------------------------------------------------------------------
During the public hearing, airline representatives reiterated the
view they expressed in the written comments to the NPRM that the
proposal undercuts the Department's goal of achieving consistency and
predictability to consumers who are affected by itinerary changes. They
pointed out that the proposal relies heavily on the subjective
expectations of travelers and the vague concept of ``significant
downgrade of available amenities and travel experiences'' creates
problems for all parties involved, leading to time-consuming and
unsatisfactory case-by-case adjudications by the airlines and the
Department. They suggested that if the Department proceeds to finalize
this proposal, it should explicitly limit qualifying downgrades to
those identified in the airlines' customer service plans. They further
indicated that airlines would support the concept of considering the
inability to accommodate a passenger's mobility device to be a
significant change. Representatives from FlyersRights and National
Consumers League both expressed their support of the proposal to
consider a change of aircraft that results in ``a significant downgrade
of the available amenities and travel experiences'' to be a significant
change that entitles consumers to a refund if they choose not to
travel. The representative from FlyersRights commented that the guiding
principle in determining what downgrades are significant should be
whether a typical passenger would have booked the flight knowing that
they would receive a downgrade of amenities or travel experiences. That
representative further commented that allowing airlines the sole
discretion to make the determination will lead to ever shifting
standards. The representative from National Consumers League commented
that if airlines were allowed to determine what downgrades are
significant, it is highly likely that airlines would define it so
narrowly as to make the consumers' rights under DOT regulation unusable
by most consumers. He suggested that the Department should adopt a
definition that covers as many services as possible to give consumers
the flexibility to determine what is and is not a significant downgrade
for them.
A representative from PVA spoke at the hearing regarding the broad
impact of flight itinerary changes on passengers with disabilities. In
addition to the impact of aircraft substitution on the transportation
of passengers' mobility aids, she also commented on changes of other
accessibility features that may lead to significant disruption to
passengers' travel, such as the lack of accessible lavatories. She
emphasized that passengers with disabilities should not be forced to
accept flights that cause unnecessary inconveniences or undesirable
circumstances because the negative impact of air travel extends not
only to the passengers but also to those who assist them during the
journey or at the destination. Therefore, she commented that any
determinations regarding significant changes should be made
categorically, considering the challenges faced by these passengers.
Representatives from Travel Tech and Travel Management Coalition
spoke on behalf of ticket agents. While supporting the Department's
proposal in principle, they emphasized the importance of designating
airlines with the responsibility to determine whether a change of
available amenities or travel experiences caused by aircraft
substitution is a significant change. They commented that ticket agents
rely on clear guidance from both the regulatory bodies and airlines to
make these determinations.
A public participant provided her opinions as an expert on consumer
law on this issue by suggesting that the Department should adopt a
``reasonable consumer'' standard. She commented that the determination
should be a case-by-case analysis and encouraged the Department to
provide guidance but not adopt a rigid definition.
Following the hearing, A4A, IATA, Spirit, USTOA, and PVA filed
supplemental written comments on this issue. A4A and IATA's joint
comment emphasizes their position to support a rule requiring refunds
when aircraft downgrade prevents the transportation of a passenger's
mobility aid, when an accessible lavatory is no longer available on the
flight, when an on-board wheelchair requested by a passenger is no
longer available, or when moveable armrests are not available on the
aircraft. Spirit commented that a rule consistent with the Department's
oversales regulation should be adopted to require a refund for the
amenity not provided, but not a refund for the full fare. USTOA
comments that, in addition to its written comment on the NPRM, it
continues to strongly oppose the proposal as it believes that
consistency and predictability are necessary and crucial elements in a
final rule which would be lacking if the Department adopts the proposed
standard. USTOA adds that public interest will not be served by
adopting the proposal that introduces further confusion into the ticket
refund process and leaves sellers of travel to grapple with case-by-
case determinations. PVA's comment urges the Department to establish a
clear definition to include downgrades of amenities and travel
experiences for passengers using mobility devices. PVA further provided
examples of downgrades that affect these passengers, including
circumstances in which the
[[Page 32777]]
mobility aids will not fit in the cargo compartment or in-cabin
stowage, loss of lavatory access and/or on-board wheelchair, and loss
of movable armrests.
DOT Responses: After carefully considering all the comments, the
Department has determined that adopting the proposal to include in the
definition for ``significant change of flight itinerary'' any aircraft
change that leads to ``significant downgrade of available amenities or
travel experiences'' applicable to all passengers is not practical and
workable, and as a result, we are modifying the proposal to cover
specific passengers who are categorically protected and would be
affected by this ``significant change.'' The Department recognizes the
ambiguity and subjectivity of the proposed term ``significant downgrade
of available amenities and travel experience'' and has determined that
adopting this term and requiring airlines and ticket agents to conduct
a case-by-case analysis will lead to tremendous confusion among
consumers, airlines, and ticket agents, who would incur significant
administrative costs when disputes arise. The Department also believes
that outside of accessibility features, most discomfort and
inconvenience caused by aircraft substitution-related changes can be
addressed between airlines or ticket agents and their customers without
a regulatory mandate on ticket refunds. In another part of this final
rule, the Department is adopting the proposal to require airlines to
provide refunds for any ancillary service fees when the services that
consumers paid for are not provided. The Department believes that this
strikes a good balance between ensuring that consumers receive a refund
of the ancillary service fees for services that they did not receive,
including due to aircraft substitution, and avoiding the major
administrative complication related to determining what amenities or
ancillary services are so significant to a passenger that their loss
warrants a refund of the entire ticket.
On the other hand, the Department strongly agrees with the
disability rights organizations that any change of aircraft that leads
to the unavailability of an accessible feature needed by a passenger
with a disability is a significant change and should entitle the
passenger to a refund. We recognize that for persons with disabilities,
a downgrade of onboard amenities or travel experiences from aircraft
substitution may have serious negative implications on the passengers'
health and safety and may fundamentally change these passengers'
decision about travel. As such, the Department determines that aircraft
substitution leading to an accessibility feature being unavailable to a
passenger with a disability who needs the feature is categorically a
``significant change'' for that passenger. The Department notes that
comments from airlines focus on a change involving the inability to
transport a wheelchair in the cargo compartment, which is an example
provided in the NPRM. The Department's final rule, however, is broader
than that example. Under this final rule, airlines and ticket agents
are required to refund to a passenger with a disability who no longer
wishes to travel if an aircraft change leads to the loss of one or more
accessibility feature needed by that passenger. Such features would
include, but are not limited to, in-cabin stowage of assistive devices,
a movable armrest, accessible lavatories, on-board wheelchairs, and
cargo stowage of mobility aids. The Department is also requiring
airlines and ticket agents to provide refunds to other individuals
traveling with the passenger with a disability in the same reservation,
if the passenger with a disability no longer wishes to travel due to a
significant change impacting accessibility. Details of this requirement
will be discussed in Section B below.
The Department also notes that although the rule does not
specifically require airlines to provide refunds to passengers who are
affected by aircraft substitution outside of the disability
accommodation grounds, we expect that airlines will continue to assess
the impact of aircraft substitution on each passenger based on the
passenger's situation and consider providing refunds when appropriate.
(v) Downgrade in the Class of Service
The NPRM: The NPRM proposed that a carrier-initiated downgrade in
the class of service is a ``significant change of flight itinerary''
and would entitle a passenger to a refund if the passenger decides not
to continue travel. The NPRM noted that 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 be denied
boarding compensation but is entitled to an appropriate refund for the
fare difference, assuming the passenger traveled on the flight in the
downgraded class of service.\38\ Here, the NPRM proposed 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 to take the downgraded flight, a
refund of the entire unused portion of the ticket must be offered. The
NPRM explained that the Department views a downgrade in the class of
service as significantly changing the passenger's ticket value and
travel experience and entitling the consumer to a refund of the ticket
price and any unused ancillary services if the consumer does not
travel. The NPRM further clarified that 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's class of service could occur for other reasons such as
weight and balance or change of aircraft. The NPRM asked whether the
Department should require airlines to provide a refund of only the
ticket price difference, and not mandate a full refund if the passenger
does not accept the downgrade, similar to the existing oversales
regulation.
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\38\ See 14 CFR 250.6(c).
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Comments Received: Airline representatives opposed the Department's
proposal of considering a downgrade of the class of service a
significant change, arguing that it would disincentivize carriers from
rebooking affected passengers on the same aircraft but in a lower class
of service. They expressed their belief that a downgrade to a lower
class of service should only result in a refund of the fare differences
because the passenger would be provided with the flight as scheduled.
IATA stated that if this proposal is adopted, minors and companions
traveling with the downgraded passenger should not be eligible for a
refund if they were not downgraded as well. This position was supported
by Qatar Airways. IATA further requested that the Department define a
change in ``class of service'' as a change of cabin to avoid any
confusion. Air Canada suggested that the proposal, if adopted, would
conflict with certain provisions of EC 261/2004, which requires
compensation as opposed to refunds for certain downgrades. SATA
suggested that the Department should adopt a similar requirement as EC
261/2004 that requires a percentage of refund according to the amount
of fare paid and the flight distance.
DOT Responses: The Department has carefully considered this issue
and determined that although not all passengers view a downgrade to a
lower class of service so significantly that they would prefer to not
travel on the flight, there are a substantial number of passengers who
would be impacted significantly by a downgrade and would
[[Page 32778]]
prefer a refund. The Department believes that affected passengers
should be given the choice of either accepting the change and
continuing to travel or receiving a refund. The Department notes that
many passengers with disabilities select a certain class of service
when booking tickets for reasons related to their disabilities. For
example, a higher class of service may provide extra legroom needed by
passengers with a mobility impairment or traveling with service
animals. Besides passengers with disabilities, other passengers may
find a downgrade not acceptable because it substantially affects their
travel experiences. For instance, a passenger of size being downgraded
to a lower class of service may no longer wish to travel because of the
discomfort associated with the reduced seat pitch and width, and this
is particularly a concern for these passengers on long flights.
The Department is not convinced that this requirement would
disincentivize airlines and ticket agents from offering to rebook
passengers in a lower class of service, either on the original flight
or another flight. As in all the other scenarios involving significant
changes, carriers and ticket agents are free to offer a variety of
other options to affected consumers so long as they are informed about
their right to a refund. Consumers can choose the option that best
meets their needs, including traveling in a lower class of service.
Carriers and ticket agents are incentivized to make these offers to
passengers to fill vacant seats on aircraft.
The Department clarifies that this final rule requiring carriers
and ticket agents to provide a refund to passengers who choose to not
travel when being downgraded to a lower class of service does not
negate carriers' and ticket agents' obligation to refund the fare
differences when passengers choose to travel in a lower class of
service. This will continue to be the requirement regardless of whether
the downgrade was due to an oversales situation or any other situation.
The Department does not believe that requiring airlines and ticket
agents to provide a refund to passengers who are downgraded to a lower
class of service conflicts with the laws of other jurisdictions,
including EC261. Like the Department's oversales rule that requires
carriers to refund the fare differences to passengers who are
continuing to travel on a lower class of service, EC261 requires that
carriers refund between 30% to 75% of the ticket price, depending on
the distance of the flight, to a downgraded passenger who is continuing
the flight. In contrast, this final rule simply addresses the situation
in which the passenger chooses not to travel on the original or
rebooked flight in a lower class of service, a situation that is not
directly addressed in EC261.
As suggested by IATA, the Department is also adopting a definition
of class of service in the final rule to avoid any confusion. A class
of service is defined as seating in the same cabin class such as First,
Business, Premium Economy, or Economy class, based on seat location in
the aircraft and seat characteristics such as width, seat recline
angles, or pitch (including the amount of legroom). Premium Economy
would be considered a different class of service from standard Economy,
while Basic Economy would not. Basic Economy seats do not differ in
pitch size or legroom from standard Economy.
In situations where a group of passengers are traveling under the
same reservation, the Department generally is not requiring airlines to
offer refunds to all passengers in the group if not all passengers are
affected by a downgrade of class of service, except when the affected
passenger is a qualified individual with a disability and the downgrade
of class of service affects an accessibility feature needed by that
passenger, in which case refunds must be offered to all passengers in
the group upon notification by the passenger with a disability or
someone authorized to act on behalf of the passenger with a disability
that the person with a disability does not intend to continue travel on
that flight.
B. Individuals Entitled to Refunds When a Significant Change Impacts
Accessibility
The Department agrees with comments received from disability rights
organizations and is requiring a refund to a passenger with a
disability and other passengers on the same reservation who choose not
to fly because the person with a disability does not accept a
significant change of flight itinerary resulting from a change in
aircraft or class of service that results in the unavailability of one
or more accessibility features needed by the person with a disability.
The Department is also requiring a refund to person with a disability
and others on the same reservation who do not wish to continue to
travel because the person with a disability does not accept a
significant change in flight itinerary resulting from a change in
connecting airport. The Department believes that a change in the flight
itinerary that reduces the accessibility of the air travel to a person
with a disability must entitle not only that individual to a refund but
also all other individuals on the same reservation.
The Department notes that being a qualified individual with a
disability alone may not necessarily entitle travel companions to
refunds. This final rule requires carriers to provide passengers with a
disability affected by a change in aircraft or downgrade of a class of
service a refund if they do not continue travel. That refund is limited
to the individual being downgraded, however, unless the downgrade
results in the unavailability of one or more accessibility features
needed by the person with a disability. In that case, individuals who
are not directly affected by the downgrade of class of service are also
entitled to a refund. For example, if a passenger with a hearing
impairment was downgraded to a lower class of service and it is
determined that the downgrade does not impact any accessibility feature
needed by that passenger, that passenger is entitled to a refund if he
or she does not accept the downgrade, but airlines and ticket agents
are not required to extend the refund offer to other persons in the
same reservation who are not downgraded. Conversely, if a passenger
needing extra legroom to accommodate a disability was downgraded and
the extra legroom is no longer available as a result, that passenger is
entitled to a refund and so are any other persons in the same
reservation. For an aircraft change to entitle travel companions of a
person with a disability to a refund, the aircraft change must result
in the unavailability of one or more accessibility features needed by
the person with a disability and that person with a disability must
reject the significant change.
The Department believes that extending refund eligibility to travel
companions of passengers with disabilities whose ability to travel
comfortably or safely is significantly impacted by a flight itinerary
change that affects accessibility is appropriate because family members
or other individuals with whom the person with a disability is
traveling may not wish to continue travel without that person. Also,
the person with a disability may be traveling with a personal care
assistant. The requirement that refunds must be offered to all
passengers in the same reservation is intended to provide flexibility
for passengers to determine whether the group wants to travel together,
decline travel and receive refunds together, or split up with some
continuing to travel and some (including the passenger with a
disability) canceling travel and receiving refunds. Airlines and ticket
[[Page 32779]]
agents may not mandate that all members of the group make the same
decision about refunds but may refuse refunds if the only passengers
requesting refunds are those who would not have qualified for a refund
but for traveling with the passenger with a disability.
The Table below summarizes the rights to a refund by individuals
with disabilities and their travel companions on the same reservations
under certain significant changes that may impact accessibility.
Table 1--Rights to a Refund by Individuals With Disabilities and Travel
Companions
------------------------------------------------------------------------
Are travel
companions on the
Is an individual same reservation
with a disability entitled to a
Significant change entitled to a refund if an
refund? individual with a
disability rejects
change?
------------------------------------------------------------------------
Aircraft Substitution:
Impacts an accessibility Yes............... Yes.
feature needed by a
passenger with a disability.
Does NOT impact an No................ No.
accessibility feature
needed by a passenger with
a disability.
Downgrade in Class of Service:
Impacts an accessibility Yes............... Yes.
feature needed by a
passenger with a disability.
Does NOT impact an Yes............... No.
accessibility feature (NOTE: any (NOTE: if travel
needed by a passenger with passenger companion is
a disability. downgraded is downgraded then
entitled to that individual
refund would be entitled
irrespective of to refund).
disability).
Change of Connecting Airport:
Does not require analysis of Yes............... Yes.
impact on accessibility.
------------------------------------------------------------------------
The Department acknowledges that the disability organizations also
requested that the rule impose a requirement on airlines and ticket
agents to rebook passengers with disabilities and their travel
companions on another flight or ground transportation that would
accommodate the disability without additional cost. The Department is
examining the issue further in its rulemaking on Ensuring Safe
Accommodations for Air Travelers with Disabilities Using
Wheelchairs.\39\ The Department is committed to continuing its efforts
to protect the rights of air travelers with disabilities and is further
exploring how to accommodate their needs during flight disruptions in
this separate rulemaking.
---------------------------------------------------------------------------
\39\ See 89 FR 17766 (Mar. 12, 2024).
---------------------------------------------------------------------------
The Department recognizes that the special considerations given to
passengers with disabilities and their travel companions due to a
significant change of flight itinerary impacting disability
accommodations may lead to some passengers falsely claiming that they
have a disability that was impacted by a change of connecting airport
or an aircraft substitution, as well as to an entire travel group
requesting refunds based on a false claim that one passenger in the
group has a disability the accommodation of which was affected by a
significant flight itinerary change. Consistent with the Department's
Air Carrier Access Act regulation, when conducting inquiries regarding
how a passenger's disability accommodation needs are impacted by a
significant change, carriers should never ask about the nature or the
extent of a passenger's disability. Carriers can ask questions about an
individual's ability to perform specific air travel-related functions
that may be impacted by the change. For example, carriers should not
ask ``what is your disability?'' but may ask ``what is the
accessibility feature that is needed that is no longer available
because of the aircraft substitution or change in class of service?''
Also, the Department notes that an advance request for disability
accommodation recorded in the passenger's reservation before the
significant change occurred can serve as evidence that the passenger is
a qualified individual with a disability and the significant change
indeed impacts the accommodation for that disability. However, some
individuals with disabilities may not request assistance in advance,
but a significant change of flight itinerary may nonetheless impact an
accessibility feature that they need, resulting in them no longer
wishing to travel. As such, the Department cautions that lack of such a
notation is not sufficient on its own as proof that the individual is
not a person with a disability.
5. Entities Responsible for Refunds
The NPRM: The NPRM described the significant volume of refund
complaints against ticket agents received by the Department during the
COVID-19 pandemic and states that this is an indicator that
strengthening protections for consumers purchasing air transportation
from ticket agents is needed. These complaints also illustrated the
difficulty that consumers sometimes encounter in obtaining a refund for
a ticket purchased through a ticket agent when consumers do not have
the means to determine whether the airline or ticket agent needs to
take action to process the refunds and which entity is in possession of
the consumers' money. To address this difficulty, the NPRM proposed
that ticket agents who ``sold'' the tickets would be responsible for
issuing refunds when they are due. It further explained that a ticket
agent would be considered to have ``sold'' the ticket at issue if the
ticket agent is the entity shown in the consumer's financial charge
statements such as debit or credit card charge statements (commonly
known as the ``merchant of record''). Under the proposal, a ticket
agent obligated to provide a refund under this standard would be
required to issue refunds promptly irrespective of which entity has
possession of the funds. In the NPRM, the Department shared that it
considered placing the obligation of providing the refund on the entity
that is in the possession of the funds but did 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.
With respect to airlines' obligations to provide refunds in
codeshare and interline situations, the NPRM proposed that the
marketing carrier of an itinerary involving codeshare or interline
flights
[[Page 32780]]
would be responsible for providing the refund, regardless of whether
the marketing carrier is also the operating carrier of the flight(s)
affected by a cancellation or a significant change or whether the
marketing carrier is the carrier that cancelled or made a significant
change to the flight itinerary. The NPRM explained that this approach
benefits consumers by streamlining the process to obtain refunds and
expects that carriers will be able to develop a system with their
codeshare and interline partners to ensure that refunds are provided in
a timely manner. The NPRM sought 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.
Comments Received: Airline commenters agreed that the refund
requirement should apply to ticket agents when they are the merchants
of record for the ticket sales or have otherwise paid for the ticket on
behalf of the passenger. In supporting this position, airlines argued
that they are incapable of issuing refunds for tickets purchased
through ticket agents or other third parties because airlines may not
be in possession of the passenger's payment information and/or personal
contact information and airlines often do not have full visibility of
the prices paid by consumers, especially in situations where ticket
agents purchase bulk fares from airlines to resell to consumers. IATA
commented that when consumer funds collected by ticket agents are
processed through IATA's settlement system, the Billing and Settlement
Plan (BSP), ticket agents are responsible for filing for reimbursement
from airlines via the settlement system, and the airlines determine
refund eligibility. A4A supported the proposed standard to hold ticket
agents responsible for refunds when the ticket agents are the merchants
of record, or the consumer has paid by cash or check to the ticket
agent. A4A stated that it is the standard practice today and should be
codified in the Department's regulation. Both A4A and IATA as well as
several airline commenters supported applying the refund requirement to
ticket agents globally who sell tickets for covered flights. Several
consumer commenters expressed their support to hold ticket agents
responsible for refunds, describing their frustrations in chasing
refunds between the airline and the ticket agent.
Ticket agents and their trade representatives voiced strong
opposition to the proposal that requires ticket agents who are the
merchants of record to provide refunds irrespective of whether they are
in possession of consumer funds. Many ticket agent commenters
acknowledged that in the vast majority of transactions involving ticket
agents, airlines are the merchants of record.\40\ They argued, however,
that although ticket agents have the technical ability to issue refunds
when they are the merchants of record, they should not be required to
do so because the consumer's funds were often remitted to airlines
through the settlement systems immediately or shortly after ticket
booking, and requiring ticket agents to refund before they receive the
funds back from airlines would significantly impact the cashflow of
ticket agents, especially ticket agents that qualify as small
businesses.\41\ Many commenters opined that such a requirement is
fundamentally unfair because ticket agents have no control over
airlines' cancellation or change of flights, nor do they have any
control over the determination on whether a consumer is eligible for a
refund. Ticket agents also argued that the process of returning funds
from airlines to ticket agents through intermediary settlement systems
such as the Airline Reporting Corporation (ARC) system typically takes
much longer than seven days. Hundreds of small business ticket agent
commenters further argue that the impact of such a requirement on
ticket agents is so profound that many of them would consider stopping
offering airline tickets booking services, which has the potential
consequence of disrupting a major airline tickets distribution channel
and causing consumers to lose the valuable travel advisory services
offered by ticket agents.
---------------------------------------------------------------------------
\40\ For example, according to American Society of Travel
Advisors (ASTA), it estimates that between five and eight percent of
all airline ticket transactions by credit cards facilitated by its
members have the ticket agents appear as the merchants of record,
with the majority of which involving group bookings, air-inclusive
tour packages, or resale of consolidated fares.
\41\ ASTA states that its data indicates that 98% of travel
agencies qualify as ``small businesses'' under the Small Business
Administration (SBA) size standards.
---------------------------------------------------------------------------
Additionally, several ticket agents trade associations contended
that ticket agents lack information regarding consumers' refund
eligibility and any alternative transportation or compensation offered
by airlines and accepted by consumers. They argued that airlines should
have the sole responsibility to determine refund eligibility and timely
communicate such information to ticket agents. Further, ASTA stated
that to process a refund through settlement systems such as ARC, ticket
agents must first receive an Electronic Authorization Code directly
from airlines, confirming the flight coupon has been changed to a
refund status, which minimizes duplicate refunds and prevents fraud.
Ticket agent commenters suggested that the Department should revise its
proposal and require ticket agents who are the merchants of record to
issue refunds only when they receive confirmation of refund eligibility
and funds from the airlines, and that the Department should not impose
refund deadlines on ticket agents until all these conditions are met.
ASTA also expressed concerns about how to determine which entity is
the merchant of record, commenting that consumers may not know which
entity is the merchant of record by looking at the credit card
statement. ASTA stated that some credit card issuers would identify
both the airline and the ticket agent on the consumers' credit card
statements to reduce the likelihood that consumers mistakenly dispute
the charges because they did not recognize the transactions. ASTA also
asked the Department to clarify that when a ticket agent appears on a
consumer's credit card statement as the merchant of record for charging
a service fee, it would not trigger the ticket refund requirement. ASTA
further stated that more clarity is needed on how to determine which
entity is the merchant of record when tickets are not paid by credit
cards or debit cards.
The ACPAC also discussed the issue of ticket agents' responsibility
to refund and heard from numerous ticket agent representatives about
the potential impact on their businesses should the Department adopt
the proposal. The ACPAC recommended that the Department adopt the
proposed standard to hold ticket agents responsible for refunds when
they ``sold'' the tickets. Further, in recognition of the potential
financial impact on small businesses, the ACPAC recommended that the
Department revise the proposal to provide some relief for ticket
agents.\42\ Specifically, the ACPAC recommended that the Department
impose a requirement on airlines to return the consumer funds to ticket
agents within seven days of receiving the refund requests, and that
ticket agents that qualify as ``small businesses'' under the standard
set forth
[[Page 32781]]
by the Small Business Administration (SBA) be given up to 14 days,
instead of seven days, to issue refunds.
---------------------------------------------------------------------------
\42\ Among the four members of ACPAC, three members voted in
support of this recommendation and the member representing airlines
abstained, expressing concerns about whether the recommendation
regarding refund timeline is consistent with other Federal
regulations, i.e., Regulation Z.
---------------------------------------------------------------------------
On entities responsible for refunds for codeshare or interline
itineraries, IATA indicated that it supports the proposal to require
the marketing carriers be responsible for issuing refunds for codeshare
flights. IATA further commented that the Department should require the
operating carriers to refund any portion of the fare or fees paid by
the marketing carrier in the event a refund is due to passengers.
DOT Response: Sales by ticket agents constitute a major airline
ticket distribution channel. According to anecdotal data from the
Airline Reporting Corporation published in 2019, travel agencies
generated 44% of air segment sales.\43\ During the COVID-19 pandemic,
the unprecedented number of consumer complaints on refunds included a
significant number of complaints against ticket agents and tour
operators. In those complaints, consumers expressed frustration at
being sent back and forth between the ticket agent and the airline when
trying to obtain their refunds. As many commenters from the industry
have illustrated, in a typical airline ticket transaction involving
ticket agents as the merchant of record, the consumer funds are
transferred through various entities including intermediary settlement
systems. It is the Department's understanding that for those ticket
sales, the refund process reverses the flow of money among the entities
involved. Thus, focusing on which entity is in possession of the funds
when assigning a refund obligation is impractical and unworkable from a
consumer's perspective because consumers do not know which entity is in
possession of the funds at any given time. The Department continues to
view such uncertainty as a main driving force leading to additional
costs, delay, and confusion to consumers. Given this concern, the
Department declines to adopt the suggestion to assign refund obligation
based on which entity is in possession of consumer funds, and instead,
adopts the proposed standard to hold retail ticket agents responsible
for refunds when they ``sold'' the tickets to consumers as the
merchants of record. This requirement would cover retail ticket agents
of all sizes that conduct business online or via brick-and-mortar
stores that transact directly with consumers. The Department believes
that this bright line standard is the most effective way to address the
potential consumer confusion and frustration when there is more than
one entity involved in the selling of airline tickets. The Department
also agrees with airline commenters that holding ticket agents who sold
the tickets responsible for refunds addresses the issues that arise
when airlines do not have the consumers' payment and/or contact
information, or visibility of how much consumers paid for the tickets
when tickets are sold as consolidated fare or bulk fare, all of which
are necessary for processing refunds promptly and accurately.
---------------------------------------------------------------------------
\43\ Phocuswright White Paper--Air Sales and the Travel Agency
Distribution Channel, Airline Reporting Corporation, April 2019.
<a href="https://www.phocuswright.com/Free-Travel-Research/Air-Sales-and-the-Travel-Agency-Distribution-Channel">https://www.phocuswright.com/Free-Travel-Research/Air-Sales-and-the-Travel-Agency-Distribution-Channel</a>.
---------------------------------------------------------------------------
The refund requirements for ticket agents apply to airfare or
airfare-inclusive travel package transactions in which the ticket
agents are the merchants of record for the transactions irrespective of
whether the ticket agent is in possession of the consumer funds at the
time when the refund is due. The Department defines ``merchant of
record'' as an entity that processes consumer payments for airfare or
airline ancillary service fees and whose name appears on the consumer's
bank or similar transaction statement. Regarding ASTA's comment that
some credit card statements will list both the airline and the ticket
agent for the transaction, the Department understands that this is done
by credit card issuers with the intention to ensure that consumers
recognize the charges. As there is always one merchant processing the
card payment, consumers can contact their credit card issuers and ask
which entity is the merchant of record who imposed the charge. For
transactions paid by a payment other than credit cards or debit cards,
the transaction receipt provided to consumers should list the entity
that is responsible. In that regard, if the consumer purchased the
ticket with cash or check, the entity that issued the receipt should be
responsible for refunds.
The Department appreciates the information from the industry
regarding the flow of funds in ticket agent-involved airline ticket
transactions. It is the Department's understanding that ticket agents'
main concern is not about taking on the obligation to refund when they
are the merchants of record. It seems that their concern, instead, is
the obligation to refund according to the refund timelines even when
the funds have not been returned to them by the airlines. Ticket agents
emphasized that imposing this obligation regardless of whether they
have possession of the funds will place a significant burden on their
cashflow, particularly on ticket agents that are small businesses.
Accordingly, many commenters asked that, should the Department adopt
the merchant of record standard to hold ticket agents responsible for
refunds, ticket agents should be required to provide refunds only when
they receive the funds returned by airlines.
The Department disagrees with the approach proposed by ticket
agents that they would not be required to refund consumers until they
receive the funds from airlines because it would harm consumers should
airlines, who are not directly responsible for refunds, not timely
return the funds to ticket agents. The result of the ticket agents'
proposed approach is that consumers would have no meaningful timeline
within which they can expect to receive refunds. The Department has
considered the ACPAC's recommendation that there be an affirmative
obligation on airlines to return consumer funds back to ticket agents
within seven days of receiving a refund request from a ticket agent
when the airlines are not the merchants of record for the ticket sales.
While the Department agrees that airlines should return consumer funds
to ticket agents promptly in these situations, it is not persuaded that
DOT intervention into airlines' and ticket agents' business and
contractual arrangements is necessary at this time. The Department's
authority to prohibit unfair or deceptive practices in 49 U.S.C. 41712
is intended to protect consumers. The Department expects that airlines
and ticket agents both have the interest to negotiate, form, and adhere
to a standard procedure in handling consumer funds to ensure that
ticket transactions and refunds are processed smoothly to the benefit
of consumers, as well as the businesses involved.
Although the Department does not believe that ticket agents'
obligation to refund should be dependent upon receiving the return of
the funds from airlines, we acknowledge that before issuing the refund,
the ticket agent may need further information to verify whether a
refund is due under the Department's regulation. The NPRM states that
in most situations involving cancellations or significant changes,
there would be sufficient information (e.g., airlines' publications on
cancellations or flight itinerary change notifications sent to
consumers) to confirm refund eligibility without contacting airlines;
however, after reviewing comments, we realize that even in those
situations, ticket agents may need airlines' confirmation that the
affected consumers did not accept alternative transportation or other
compensation in lieu of refunds.
[[Page 32782]]
Comments submitted by ticket agents also state that airline ticket
settlement systems often incorporate a process under which airlines
need to issue refund authorization codes to prevent duplicate refunds
and fraud. To ensure that refunds to consumers are not unreasonably
delayed because ticket agents are waiting on airlines' confirmation of
refund eligibility, we are requiring airlines to determine whether
consumers are eligible for refunds and if so, inform ticket agents of
the refund eligibility without delay upon receiving the refund request
from the ticket agent. The Department's Office of Aviation Consumer
Protection will determine the timeliness of airlines' response based on
the totality of the circumstances, including how quickly the airline
took steps upon receiving the ticket agent's refund request to
determine refund eligibility and whether the airline informed the
ticket agent of the refund eligibility as soon as it has confirmed it.
The Department expects airlines and ticket agents to work together to
develop and enhance channels of communication to ensure that
information regarding passengers' refund requests and eligibility are
transmitted in an effective, accurate, and efficient manner.
This final rule makes it an unfair practice for airlines to fail to
timely confirm refund eligibility and communicate that eligibility to
ticket agents. Airlines not confirming refund eligibility in a timely
manner slow the refund process and cause substantial harm to consumers.
This harm is not reasonably avoidable by consumers, as they have no
control over how soon airlines inform ticket agents that a refund is
due so the ticket agents can begin to process the refund. The
Department also sees no benefits to consumers and competition from this
conduct. On the contrary, the Department views that not imposing this
requirement on airlines would allow airlines or ticket agents to keep
money that is due to consumers indefinitely, which in turn harms
consumers and competition by penalizing good customer service and
rewarding dilatory behavior.
For codeshare or interline itineraries sold by a carrier, the
Department is requiring the carrier that ``sold'' the airline ticket
(i.e., the merchant of record for the ticket transaction) to provide
the refunds, as this is the most straightforward standard from
consumers' perspective. Consistent with the rationale for the
``merchant of record'' approach that we adopted in determining ticket
agents' refund obligation, we believe the carriers who are the
merchants of record for the ticket transactions are in the best
position to process and issue refunds as they have direct visibility of
the passengers' payment instruments information and the total amounts
paid for the itineraries. The Department further notes that in most
codeshare or interline itineraries, the marketing carriers are the
merchants of record. The Department's focus is on making consumers
whole when their flights are cancelled or significantly changed, and we
decline to regulate how airlines manage the transfer and the return of
funds among themselves in the event of ticket refunds, as we expect
that airlines engaging in codeshare or interline arrangements will work
together on contractual agreements to ensure that account settlements
are conducted through the normal course of business dealing following
refunds provided to consumers.
6. Timing of Refunds
The NPRM: As explained in the NPRM, the Department's current refund
timeframes are based on the form of payment used for the ticket
purchase, i.e., seven days for credit card purchases and 20 days for
cash and other forms of payment. 14 CFR part 374 is the Department's
regulation implementing the Consumer Credit Protection Act and its
regulations, including Regulation Z of the Consumer Financial
Protection Bureau (CFPB) regulation, 12 CFR part 1026 (Regulation Z),
with respect to airlines issuing refunds for credit card purchases.
Regulation Z, in relevant provision under 12 CFR 1026.12(e)(1) provides
that ``when a creditor other than the card issuer accepts the return of
property or forgives a debt for services that is to be reflected as a
credit to the consumers' credit card account, that creditor shall,
within 7 business days [emphasis added] from accepting the return or
forgiving the debt, transmit a credit statement to the card issuer
through the card issuers' normal channels for credit statements.'' The
Department's own regulation in 14 CFR 259.5(b)(5) imposes a refund
timeline of 20 days on airlines for purchases made by cash or check. It
also specifies that the refund timeline starts after airlines receive
the complete refund request. With respect to ticket agents, the
Department's regulation in 14 CFR 399.80 requires that they make
``proper refund promptly'' when services cannot be performed as
contracted. Because Regulation Z impacts all consumer credit, ticket
agents are also subject to the refund requirement of Regulation Z (12
CFR 1026.12(e)(1)) with respect to refunds of credit card purchases.
Under its authority against unfair or deceptive practices, 49 U.S.C.
41712, the Department also requires that ticket agents provide refunds
for purchases by payments other than credit cards within a reasonable
time.
The NPRM's proposal on ``prompt'' refunds when they are due
requires airlines to issue refunds ``within 7 days of a refund request
as required by 14 CFR 374.3 for credit card purchases, and within 20
days after receiving a refund request for cash or check or other forms
of purchases.'' \44\ Similarly, the proposed rule on ticket agents
defines ``a prompt refund'' as ``one that is made within 7 days of
receiving a refund request as required by 12 CFR part 1026 for credit
cards purchases, and within 20 days after receiving a refund request
for cash or check or other forms of purchases.'' \45\ The NPRM sought
comments on whether these timeframes are appropriate 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 to be unacceptable.
---------------------------------------------------------------------------
\44\ See proposed rule text for 14 CFR 259.5(b)(5), 87 FR 51550,
51576.
\45\ See proposed rule text for 14 CFR 399.80(l), 87 FR 51550,
51579.
---------------------------------------------------------------------------
Comments Received: IATA supported the 7/20-day refund timelines
under normal circumstances but argued that during public health
emergencies, airlines should have at least 30 days to process a refund
request. IATA stated that due to spikes of refund requests, some
airlines facing financial difficulties had to choose between delaying
refunds or going out of business. Air Canada argued that carriers
should have no less than 30 days to issue refunds in the original form
of payment, and the refund timeline should be suspended during major
crises. Air Canada stated that the proposed timelines are disconnected
from the actual time needed for refund processing by various parties
involved, and the situation can be more complex when the original
ticket was sold through a ticket agent. Air Canada further argued that
the refund timelines should consider situations that trigger the need
for more time, such as the original form of payment no longer being
valid, and the time needed to calculate the refund amount when the
ticket is partially used. A4A commented that the Department should
ensure that the 7/20-day refund timelines are consistent with
longstanding DOT enforcement precedent and Regulation Z by clarifying
that they are in reference to business days and not calendar days.
[[Page 32783]]
USTOA representing tour operators commented that the 7/20-day
timelines are reasonable so long as the sellers are in possession of
the funds. It further elaborated that for ticket agents, counting of
the timelines should not begin until the ticket agents are in
possession of the funds and have received refund eligibility
confirmation from airlines.
Ticket agent representatives also provided comments during the
ACPAC meetings regarding the financial difficulties they face if they
are required to issue refunds before receiving the funds back from
airlines. In recognition of the potential financial impact on small
businesses, the ACPAC recommended that the Department revise the
proposal to provide some relief for ticket agents. Specifically, the
ACPAC recommended that the Department impose a requirement on airlines
to return the consumer funds to ticket agents within seven days of
receiving the refund requests, and that ticket agents that qualify as
``small businesses'' under the standard set forth by the Small Business
Administration (SBA) be given up to 14 days, instead of seven days, to
issue refunds to consumers. \46\ In a joint comment filed by A4A and
IATA, the carrier representatives stated that this ACPAC recommendation
conflicts with Federal Reserve regulation (12 CFR 1026.11) and the
Department's rule (14 CFR 374.3). They further commented that the NPRM
did not propose to change the Department's refund regulations or
discuss a different refund standard and therefore adopting a different
refund standard in a final rule would violate the notice and comment
requirements of the Administrative Procedure Act.
---------------------------------------------------------------------------
\46\ Among the four members of ACPAC, three members voted in
support of this recommendation and the member representing airlines
abstained, stating that he is unclear about whether this
recommendation is consistent with other Federal regulations, i.e.,
Regulation Z.
---------------------------------------------------------------------------
Furthermore, airline commenters expressed concerns about passengers
not informing carriers of their decisions to reject the alternative
transportation offered until close to the flight's departure, therefore
depriving airlines the opportunity to resell those seats. IATA and Air
Canada argued that passengers should have the obligation to take
positive steps to inform airlines within a reasonable time after the
passenger is notified of a significant change and offered alternative
transportation. During an ACPAC meeting, the member representing
airlines also expressed similar concerns.
Some consumer commenters urged the Department to require airlines
to issue ``automatic'' refunds. They argued that airlines have the
incentive to adopt complex refund processes that make requesting
refunds cumbersome and difficult for consumers, engineered to dissuade
consumers from receiving their due compensation. Some commenters
provided examples of inefficient and complex refund request procedures
currently adopted by airlines, including hidden refund request links on
their websites, excessive data input requirements from consumers,
lengthy and confusing refund request forms, and excessive hold time for
requesting refunds over the telephone. In addition, PVA and United
Spinal Associates commented that when alternative transportation does
not provide the same or similar accessibility features or seating
arrangements, this deficiency should prompt an automatic refund offer.
DOT Responses: Based on the comments received, the Department is
addressing--(i) the meaning of prompt refunds, including during public
health emergencies; (ii) automatic refunds as a way to reduce
cumbersome refund request processes for consumers and ensure consumers'
rejection of the alternative transportation offered do not deprive
airlines of the opportunity to resell those seats; (iii) commencement
of refund deadlines; and (iv) the meaning of business day for purpose
of providing refunds.
(i) Prompt Refunds
In this final rule, we are requiring that airlines and ticket
agents provide prompt refunds when due. Prompt is defined to mean
within 7 business days of refunds becoming due for credit card
purchases, and within 20 calendar days of refunds becoming due for
purchases by cash, check, or other forms of payment. To the extent the
purchase is made by a debit card, the Department has reviewed the
relevant definitions in CFPB's regulations, including Regulation Z, and
has determined that a typical debit card does not fall under the 7-day
refund timeline that only applies to ``credit card'' and therefore
would be subject to the 20-day timeline.\47\
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\47\ The CFPB regulation defines a ``credit card'' as any card,
plate, or other single credit device that may be used from time to
time to obtain credit. See 12 CFR 1026.2(a)(15)(i). The term
``credit'' is defined as the right to defer payment of debt or to
incur debt and defer its payment. See 12 CFR 1026.2(a)(14). In
contrast, ``debit card'' is defined as any card, plate, or other
single device that may be used from time to time to access an asset
account other than a prepaid account. See 12 CFR 1026.2(a)(15)(iv).
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The Department has considered airlines' suggestion of additional
time to provide refunds including one airline's request for no less
than 30 days to issue refunds and to suspend the refund deadlines
during major crisis. The Department believes that maintaining the 7/20-
day refund timeline is reasonable as airlines and ticket agents have
been required to comply with these timeframes for decades. The
Department is also not convinced that extending or suspending the 7-day
timeline for credit card purchases during large-scale air travel
disruptions is either permissible under Regulation Z or warranted.
Taking the COVID-19 pandemic as an example, although the Department
recognizes the challenges airlines and
[…truncated; see source link]Indexed from Federal Register on April 26, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.