U.S. warns airlines to quickly refund tickets after canceled flights

By David Shepardson

WASHINGTON (Reuters) – The U.S. Transportation Department on Friday issued a notice to airlines reminding them they are obligated to refund tickets when they cancel a flight or make a significant flight schedule change that passengers opt not to accept, but will not take any immediate action against airlines.

U.S. and foreign airlines have canceled hundreds of thousands of flights and eliminated millions of seats in the wake of a massive falloff in travel demand because of the coronavirus pandemic.

The Transportation Department said it is receiving a rising number of complaints and inquiries from passengers seeking refunds. Earlier this week, nine Democratic U.S. senators urged the chief executives of 11 major airlines to issue full cash refunds to customers who cancel their flights.

The department said the “longstanding obligation of carriers to provide refunds for flights that carriers cancel or significantly delay does not cease when the flight disruptions are outside of the carrier’s control.”

The department said it could take an enforcement action when airlines deny refunds when a “carrier cancels a flight, makes a significant schedule change, or significantly delays a flight to be a violation of the carriers’ obligation.” But the department said given the massive crisis it “will exercise its prosecutorial discretion and provide carriers an opportunity to become compliant before taking further action.”

Airlines must contact in a timely manner passengers who were given vouchers “to notify those passengers that they have the option of a refund” and they must update refund policies to make it clear that they give refunds after a significant schedule change or canceled flight.

On Friday, Delta Air Lines and Southwest Airlines Co both extended the amount of time travelers have to use unused travel funds to rebook travel for flights. Delta will give passengers up to two years to rebook flights that are or were scheduled through May.

Airlines for America, an industry trade group representing American Airlines and other major airlines, said earlier this week that “each airline has crafted an approach it believes will best address the concerns and interests of its passengers, crew and other stakeholders, including announcing travel policies to accommodate customers.”

(Reporting by David Shepardson; Editing by Chris Reese)