“Today, our automatic refund rule goes into full effect,” Transportation Secretary Pete Buttigieg declared in a Monday post on X. “Airlines are required to provide prompt cash refunds without passengers having to ask.” Music to US air travelers’ ears!
Under the new rules, travelers get automatic refunds without being requested. Refunds must be processed within seven days for credit card purchases and 20 days for other payment methods. Airlines previously operated under a system where refunds were provided if the traveler didn’t book alternative flights. However, the window for reimbursement was ambiguous. There’s a neat twist to these refunds: “Airlines may not substitute vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation.” Refunds must be paid in full to the original form of payment “used to make the purchase, such as credit card or airline miles.”
By now, you’re asking for terminology definitions. For example, what is a “significant delay”? A significant flight delay is three hours for a domestic flight and six hours for an international itinerary, and these limits apply to departure and arrival delays. Another twist to refunds: Under the new regulations, travelers who file mishandled baggage reports can get back their checked bag fees if the bag is lost and not delivered within 12 hours of a domestic flight gate arrival. International periods range from 15-30 hours. Even ancillary fees for connectivity, seat selection, and entertainment are refundable.
Good news, right?
Before you rub your hands in glee about the refunds you are now entitled to, some industry data provides the odds of you getting any refunds. Using US DoT’s On-time dataset, we offer the following. Note this covers domestic flights.
Very few flights are canceled, and few flights exceed the delay period limits. But the trend is in consumers’ favor.
Hitting the magic three-hour delay limit is not impossible, but the averages favor the airlines. Since they cannot charge more for delays, they are as incentivized as anyone to save time. Now, the incentive is even greater to avoid delays. The following table lists the number of US domestic flights, by airline, that arrived 180 minutes or more late.
Just as a guide, the average flight had 102 passengers, and the 2024 YTD average fares were $382. A 180-minute or more delay costs the airline ~$39,000. It is a painful chunk of change, and looking at the number of flights that hit the delay metric, it was very painful over a year. Another context data point: through August 2024, Alaska Airlines flights that were over 180 minutes late would cost $46.3m—close to the cost of the 737 MAX 8.
So yes, US airlines have more significant incentives to operate on time. But the details still need to be worked out. What, for example, happens when ATC causes the delay? You can be confident the airlines will find ways to push delays to external factors beyond their control. Industry lawyers should take comfort in the forthcoming work.
Here is a table that lists the reasons airlines report delays.
As an additional resource, please use our data model below to see how the numbers work out for major US city pairs.