DOT Effort to Secure Airline Refunds is an Important Change for Consumers

August 3, 2022 Press Release

New Rule Short on Retroactive Action, Must be Coupled With Stronger Enforcement

Washington, D.C. — The American Economic Liberties Project released the following statement in response to news that the Department of Transportation is proposing a rule to aid consumers seeking refunds for canceled or significantly changed flights.

“The Department of Transportation’s proposed rule makes important and welcome changes to existing law to ensure consumers receive the refunds they are owed,” said William J. McGee, Senior Fellow for Aviation at the American Economic Liberties Project. “However, while the proposed rule is a crucial change of pace for the airline industry, it is not retroactive. It will do nothing to address $10 billion in refunds still owed to consumers unable to fly due to Covid-19 and this summer’s operational meltdowns, and it will not have a tangible impact until two years or more from now.”

“With an airline industry in crisis, the Department of Transportation desperately needs to embrace a more muscular approach to governing,” said McGee. “So far, Secretary Buttigieg has declined to impose so much as a $1 fine against any U.S. airline for unpaid refunds or excessive flight cancellations, which has created a pliable regulatory environment for the airlines to take advantage of.”

“Across federal, state and local governments, politicians from both sides of the aisle are calling on the Department of Transportation — the only regulator with any substantive authority — to hold the airlines accountable for this summer’s self-imposed travel crisis,” added McGee. “Secretary Buttigieg must heed these calls, and start to govern to secure fair, consistent and economically reasonable access to air travel for all Americans. Congress must also eliminate federal preemption so that the DOT is not the only actor responsible for holding the airlines accountable.”

Just the other day, Senators Ed Markey (D-MA), Elizabeth Warren (D-MA), Richard Blumenthal (D-CT), Sheldon Whitehouse (D-RI), along with Representatives Steve Cohen (TN-09), Jesús G. “Chuy” García (IL-04), and Jamie Raskin (MD-08), introduced the Cash Refunds for Flight Cancellations Act, which would provide consumers an enforceable right to a full cash refund for flight and ticket cancellations. The proposed legislation would prohibit the airlines’ current practice of providing rebookings, meal vouchers, and other unsuitable forms of compensation for cancelled or significantly delayed flights. Last month, Senators Elizabeth Warren (D-MA)and Alex Padilla (D-CA) asked the Department of Transportation to fine airlines that delay or cancel flights due to staffing issues and to use the its power to address rampant consolidation in the industry. Senator Bernie Sanders (D-VT) has separately made similar calls for the Department of Transportation to implement robust fines on airlines for chronic flight cancellations.

Other government officials at the state level, including New York Attorney General Letitia James and Colorado Attorney General Phil Weiser, have echoed their urgency, demanding the Department of Transportation step in to address airline refunds, cancellations and delays, as well as broader issues with the industry and marketplace.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.