While airlines already are required to give refunds when they cancel flights, the proposed legislation would go a step further in requiring refunds even if the flight is still scheduled but passengers choose to cancel their tickets.
Airlines have been offering vouchers to customers who cancel their tickets, but Consumer Reports director of financial policy Anna Laitin said such vouchers for future travel are “not appropriate or useful” when people are facing financial hardship.
“These consumers need their money back,” Laitin said. Instead, “they’re required to make no-interest loans to the airlines that many of them can’t afford to make.”
Airlines have objected to the idea of a requirement for refunds to passengers who cancel their tickets.
Nicholas Calio, president and CEO of Airlines for America said during a May 6 Senate committee hearing that refunding everyone who cancels a booking could drive airlines toward bankruptcies.
Refunds are “where we’re bleeding the cash every day,” Calio said. “We want to preserve the jobs in our industry.”
Atlanta-based Delta Air Lines has canceled 85% of its flight schedule, but travel is down more than 90%.
A Delta customer last month filed a proposed class-action lawsuit over refunds for flights canceled by the airline. Other airlines also have been sued.
Jennifer Stansfield, a traveler, started a petition on Change.org calling for airlines to refund all ticket costs to customers who cancel their travel plans because of COVID-19. The online petition has gathered more than 149,000 signatures.
The DOT this week issued a second enforcement notice regarding airline refunds.
U.S. Transportation Secretary Elaine Chao said the DOT “is asking all airlines to revisit their customer service policies and ensure they are as flexible and considerate as possible to the needs of passengers who face financial hardship during this time.”
The DOT posted a document on frequently asked questions saying airlines and ticket agents can offer alternatives to a refund, such as credits or vouchers, "so long as the option of a refund is also offered and clearly disclosed if the passenger is entitled to a refund."
It also said that “airlines and ticket agents are required to make refunds promptly,” defined as within seven business days if a passenger paid by credit card and within 20 days if a passenger paid by cash or check.
Delta Air Lines is telling customers on its website that it may take up to 30 business days, or six weeks, to process refund applications, and that it could take up to two billing cycles for refunds to appear on credit- or debit-card statements.
The DOT said it recognizes that processing refunds may take longer than normal because of high volumes and that it will not take action against airlines if “they are making good faith efforts to provide refunds in a timely manner.”
The agency notes that current regulations do not require airlines to give refunds if travelers choose to cancel their reservations.
“This is true even if the passenger wishes to change or cancel due to concerns related to the COVID-19 public health emergency,” the DOT said.
But the agency also said: “In reviewing refund complaints against airlines, the department will closely examine any allegation that an airline misled a passenger about the status of a flight to avoid having to offer a refund.”