New Refund Rules Lack Incentives for Airlines to Operate on Time, Keeping the US Behind Europe & Canada

Written By Joanna Teljeur

5 minutes read
Last Updated: April 30, 2024

The DOT announced their new rules on Wednesday requiring airlines to provide automatic refunds to passengers whose flights have been canceled and significantly delayed. Airlines will also be required to inform passengers about fees, but there is no mention of how these rules will be enforced or how airlines will be penalized if they fail to comply.

While the new Regulation is the step in the right direction for improved passenger rights, some consumers may be left wondering how airlines will be held accountable, what penalties the airlines will face for not complying with these rules, and how any of this will be enforced by the DOT and if this is a sufficient protection to start with.

The Experience of Industry Professionals 

As a company that deals with airline compensation on a daily basis, AirAdvisor has lodged hundreds of complaints against airlines with the DOT, which it has largely ignored or failed to enforce. Here is the breakdown of such complaints we initiated:

Out of almost 300 complaints filed during 2023 and 2024 (some were filed more than 9 months ago), DOT has not made any decision or issued enforcement action until today.

Airlines that largely ignored complaints submitted with DOT

Azul, Brazil, EasyJet, Vueling, RyanAir, Olimpic, Air Europa. Air Canada responded only to 2 cases, but still rejected complaints with no action from DOT.

Airlines that resoled complaints submitted with DOT

British Airways, Turkish Airlines, KLM, Brussels Airlines resolved complaints with no enforcement action or decision from the DOT side.

Southwest’s Fines

When Southwest suffered their holiday meltdown in 2022, they violated numerous laws that protect air passengers rights. As a result, the DOT penalized the airline with a $140 million civil penalty in addition to the $600 million it promised to the affected passengers. 

Southwest did comply by finally paying out passenger refunds, but they only agreed to pay $35 million of the $140 million. So, what does this say about the strength of this new rule?

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Expert' Opinions on New DOT Refund Rules

Christopher Elliott, Consumer Advocate and Founder of Elliott Advocacy says:

“Rules are meaningless without enforcement. The Department of Transportation has gone months without an enforcement order. It’s one of the longest stretches without a single enforcement order.” 

“Imagine if the highway patrol stopped writing speeding tickets for more than four months. This may be one of the reasons the airline industry is taking these new rules in stride. They’re probably not that worried about enforcement. By the way, these rules were a long time coming and long overdue. And there’s more to be done.” 

Air passenger consumer advocate and Founder of AirAdvisor Anton Radchenko says: 

“The Regulation is a step in the right direction. But two critical components are missing for this to become an effective consumer protection mechanism: 

1. Prescribed penalties for airlines that ignore or fail to comply with such rules.
2. Providing the right to recover attorneys & legal costs for consumers bringing a lawsuit against an airline.”

“Based on 7+ years of experience in enforcement of air passenger rules in different countries, we can clearly say that those two points would make it economically unfeasible for consumers to seek justice in courts. In both EU & UK, consumers can recover legal costs, and it allows air passenger consumer advocates, such as AirAdvisor, to prosecute such claims in courts. Whereas, in the US every party has to pay its legal costs. This effectively bars consumers to seek justice without losing money.”

“When Covid happened, many airlines did not refund passengers funds for canceled flights for a long time, litigation occurred and resulted in settlement when airlines paid anywhere from 30 to 60 cents on a dollar, which leaves consumers out of pocket after all legal costs and years of wait time.” 

The US would still lag behind EU, UK and Canadian air passenger protections even with these new rules in place

The EU, UK, and Canada all have air passenger rules that provide compensation for controllable flight delays and cancellation. The EU has had these rules since 2012 (EU Regulation 261). The new US Regulations effectively declare the right to have your money spent on inefficient service, but they fall short of providing compensation provisions. 

Picture this: 

Two families are traveling home for the holidays. One family is traveling in the US and the other is traveling in the UK. Both run into terrible delays at the airport resulting in hours long delays. The family in the US is offered a refund for their trouble but only if they don’t accept the rebooking & abandon the travel plans to come home. 

Meanwhile the family in the UK is offered a rebooking, plus meals and refreshments along with complimentary hotel accommodation because their rebooked flight leaves the next day. They get all this in addition to $650 per passenger in compensation just for the inconvenience of having to deal with it all. Note that ticket prices on European carriers remain approximately the same as tickets with US carriers.

This is what the new US regulation fails to address and lacks economic incentives for US carriers to fly on time.

So, given the way in which the DOT has dealt with airlines to date, one can only hope that these new measures will also bring a new level of stricter enforcement, so that travelers in the U.S. can have passenger rights closer to what is enjoyed by passengers in the UK, EU, and Canada. 

But, as it stands, hope is the only thing the new ruling will bring to passengers unless the DOT comes up with ways to force airlines to comply and stiff penalties if they don’t.

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