Refunds and Other Consumer Protections

Federal RegisterApr 26, 2024

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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.

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),

clereece.kroha@dot.gov

blane.workie@dot.gov

(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.

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.

Exec. Order No. 14036, 86 FR 36987 (Jul. 9, 2021).

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.

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.

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

https://www.transportation.gov/individuals/aviation-consumer-protection/dot-report-airline-ticket-refunds.

Refund Report at pages 11-12.

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.

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.

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).

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.

See FAA Extension, Safety, and Security Act of 2016, Pub. L. 114-190, July 15, 2016; 49 U.S.C. 41704 note.

81 FR 75347 (October 31, 2016).

86 FR 38420 (July 21, 2021).

49 U.S.C. 42301 note prec.

The Department received a total of 29 comments on the Ancillary Fee Refund NPRM—three comments from consumer rights advocacy groups,

16 comments from U.S. and foreign airlines and airline trade associations,

three

comments from ticket agent trade associations,

five comments from individual consumers, one comment from the Colorado Attorney General, and one comment from an ancillary service provider.

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.

Business Travel Coalition et. al., FlyersRights.org, and Travelers United.

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.

American Society of Travel Advisors and Travel Technology Association (Travel Technology Association submitted two comments).

Panasonic Avionics Corporation.

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.

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.

87 FR 51550 (August 22, 2022). Prior to publication in the

Federal Register

, on August 3, 2022, the NPRM was publicly available at

https://www.transportation.gov/airconsumer/latest-news

and at

https://www.regulations.gov,

docket number DOT-OST-2022-0089.

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)

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.

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

https://www.regulations.gov/docket/DOT-OST-2018-0190.

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.

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.

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.

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

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

Subject

Final rule

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 of Flight Itinerary

Amend 14 CFR part 399 and add 14 CFR 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 Airline Tickets

Add 14 CFR part 260 to require U.S. and foreign air carriers that are the merchants of record

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.

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.

Automatic Refunds of Airline Tickets

Add 14 CFR part 260 to require 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 Delayed Bags

Add 14 CFR part 260 to require U.S. 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 for Services Not Provided

Add 14 CFR part 260 to require U.S. 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 Vouchers to Consumers Affected by a Serious Communicable Disease

Add 14 CFR part 262 to require U.S. and foreign airlines that are 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 Receiving Credits or Vouchers

Add 14 CFR part 262 to allow U.S. 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:

(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 Issuing Tickets

Amend 14 CFR part 399 to allow 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 Refunds, Credits, or Vouchers

Retaining Processing Fee for 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

Merchants of records are the entities shown in the consumer's financial charge statements such as debit or credit card charge statements.

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.

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.

Proof of intent is not necessary to establish unfairness.

The elements of unfairness are further elaborated by the Department in its guidance document.

14 CFR 399.79(b)(1).

14 CFR 399.79(c).

87 FR 52677 (August 28, 2022).

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

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

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.

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.

See Section 2305 of the FAA Extension, Safety, and Security Act of 2016, Public Law 114-190 (July 15, 2016)).

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

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.

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.

As for ticket agents,

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.

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,

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.

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

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

between the United States and Canada.

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,

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.

https://otc-cta.gc.ca/eng/publication/application-air-passenger-protection-regulations-a-guide.

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.”

The

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.

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).

See definitions for common terms in air travel at

https://www.transportation.gov/sites/dot.gov/files/docs/Common%20Terms%20in%20Air%20Travel.pdf.

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

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.

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.

See,

Rights of Airline Passengers When There Are Controllable Flight Delays or Cancellations, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202304&RIN=2105-AF20.

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

reporting rule, 14 CFR part 234, and it does not change the definition for “cancelled flight” in that regulation.

Spirit Airlines stated that it accepts the Department's proposed definition for “cancelled flight.”

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.”

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

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 scheduled departure time of the first flight

segment to the scheduled arrival time of the last flight segment)

Projected arrival delay or early

departure as offered to passenger

Result

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

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.

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.

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,

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.

See https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AF20.

(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.

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.

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.

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

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

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.

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.

(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

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.

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.

See

Air Passenger Protection Regulation (SOR/2019-150) (APPR), Sections 17-18.

https://laws-lois.justice.gc.ca/eng/regulations/SOR-2019-150/index.html.

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

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

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.

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

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.

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.

See

14 CFR 250.6(c).

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

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

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

Significant change

Is an individual with a disability

entitled to a refund?

Are travel companions on the same reservation entitled to a

refund if an individual with a

disability rejects change?

Aircraft Substitution:

Impacts an accessibility feature needed by a passenger with a disability

Yes

Yes.

Does NOT impact an accessibility feature needed by a passenger with a disability

No.

Downgrade in Class of Service:

Impacts an accessibility feature needed by a passenger with a disability

Yes

Yes.

Does NOT impact an accessibility feature needed by a passenger with a disability

Yes

(NOTE: any passenger downgraded is entitled to refund irrespective of disability)

No.

(NOTE: if travel companion is downgraded then that individual would be entitled to refund).

Change of Connecting Airport:

Does not require analysis of impact on accessibility

Yes

Yes.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

Phocuswright White Paper—Air Sales and the Travel Agency Distribution Channel,

Airline Reporting Corporation, April 2019.

https://www.phocuswright.com/Free-Travel-Research/Air-Sales-and-the-Travel-Agency-Distribution-Channel.

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

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