Your Money Matters: Federal Rules Require Airlines To Offer Refunds For Canceled Or Delayed Flights

This holiday travel season, a new federal policy requires airlines to provide cash refunds for significantly delayed or canceled flights.

Under the new rule, airlines must issue a cash refund within a week for domestic flights delayed by three hours or more, or six hours or more for international flights—if the passenger declines alternate travel options.

The refund policy also applies to changes in arrival or departure airports or if extra connections are added.

The U.S. airline trade group told CBS News its members "support the automatic refund rule and are happy to accommodate customers with a refund when they choose not to be rebooked."

What's a "significant" delay?

For the first time, the new rule sets a standard for what constitutes a "significant change" to a flight. Previously, definitions varied from one carrier to another. A significant change to a flight now includes a three-hour or longer delay for domestic flights, and at least a six-hour delay on international flights. If an airline changes a flight's departure or arrival airport, or adds a connection, that also counts. 

Itinerary changes

Additionally, if a passenger is downgraded to a lower class of service, or to a plane that's less accommodating of passengers with disabilities, they are entitled to an automatic refund, according to the DOT. 

Baggage delays 

Baggage delays are also covered under the new rule. When passengers' checked luggage doesn't arrive within a reasonable amount of time, airlines must refund them any checked bag fees they've paid. However, passengers have to first file a mishandled baggage report with an airline. They are entitled to a refund if their luggage is not delivered within 12 hours of a domestic flight arriving at its gate, or within 15-30 hours of an international flight arriving, depending on its length.

Refunds for nonworking Wi-Fi

If you pay to use an airline's Wi-Fi but it doesn't work, you're entitled to a refund to the cost of the service. Same goes if you paid to select a particular seat but were forced to sit elsewhere. These fees are typically far less substantial than the cost of the flight itself, though. 

DOT's final rule also makes it simple and straightforward for passengers to receive the money they are owed. Without this rule, consumers have to navigate a patchwork of cumbersome processes to request and receive a refund — searching through airline websites to figure out how to make the request, filling out extra "digital paperwork, or at times waiting for hours on the phone," the DOT states on it website. "In addition, passengers would [previously] receive a travel credit or voucher by default from some airlines instead of getting their money back, so they could not use their refund to rebook on another airline when their flight was changed or canceled without navigating a cumbersome request process."

Under the new rule, customer refunds must be issued automatically, without making them jump through hoops. They must also be issued promptly, in cash or to the original form of payment, and in the full amount of the ticket purchase price.