SUMMARY OF DOT’S MEETING ON AIRLINE TICKET REFUNDS AND CONSUMER PROTECTION MATTERS (AIRLINE TICKET REFFUNDS NPRM)
September 9, 2022
On August 22, 2022, DOT’s Aviation Consumer Protection Advisory Committee held a meeting on airline ticket refunds and related consumer protection matters, with specific focus on the Department’s recently published Notice of Proposed Rulemaking (“NPRM”) on airline ticket refunds (more fully detailed above). The meeting included a DOT-led presentation on topics addressed in the NPRM including: (1) ticket refunds generally, including a discussion on the new definitions proposed for “cancellations” and “significant changes”; (2) when non-expiring travel credits and vouchers can be provided to passengers unable to fly due to pandemic-related reasons; and (3) the proposed requirement that airlines provide consumers with cash refunds instead of vouchers or flight credits for cancelled or significantly delayed flights if the airline receives significant government financial assistance related to a pandemic. Each presentation was also followed by question and comment periods for each topic. A brief summary of each presentation is as follows:
Part 1:
DOT began the meeting by emphasizing that a major reason for the NPRM is its desire to codify its longstanding interpretation that an airline’s refusal to provide prompt refunds (whether monetary, or through vouchers, etc.) when it cancels or significantly changes a flight amounts to an unfair and deceptive business practice in violation of 49 U.S.C § 41712. DOT then explained the NPRM’s proposed new definitions for the terms “cancellation” and “significant change” to clear up consumer confusion regarding those terms. DOT also indicated that the NPRM would allow airlines to choose to provide a refund in the original form of payment used by a consumer, or by providing consumers with a “cash-equivalent”, which will be defined as a form of payment that can be used in the same ways as cash can (e.g., checks, gift cards that are widely accepted in commerce, and digital platform funds), but that regardless of the type of refund ultimately given out, airlines will be required to clearly communicate to consumers that they are entitled to a refund when this is the case, and must make consumers aware of their options for a refund (i.e., cash, cash equivalent, voucher, etc.). A few interesting points raised during the question and comment portion of the meeting for this part of the presentation were the fact that under the NPRM the refunding entity would be granted the authority to determine the form of the refund to be given to an affected passenger, and discussion of the many undefined terms included in the NPRM such as “comparable amenities” and “significant downgrade”. There were also several scenario-specific questions raised including what airlines should do in terms of refunds as it relates to subscription plans, and whether a cancellation like a ground stop due to severe weather would still be considered to be a cancellation that the airline would be responsible for providing a refund for (to which DOT answered “yes”), DOT encouraged further comments on both of these and similar scenarios.
Part 2:
During the second part of the presentation, DOT began the discussion by noting the three categories of consumers that may receive non-expiring travel credits for voluntary cancellations, including (1) consumers who are physically or legally restricted from traveling or those whose travel would be pointless due to government-imposed measures (i.e., lockdowns); (2) those consumers who are at heightened risk of complications if they were to contract a serious communicable disease, regardless of whether or not a public health emergency is currently in effect; and (3) those consumers who have a serious communicable disease that could potentially be spread to others, regardless of whether or not a public health emergency is currently in effect. On this point, DOT reiterated that the NPRM includes a requirement that airlines provide non-expiring vouchers of equal to greater fare, applicable taxes, fees, and ancillaries to such passengers. In response, there were a few questions on some of the terms used in the NPRM regarding the non-expiring travel credit/voucher requirements, including what the definition of a “medical professional” would be and what the definition of a “serious communicable disease” would be.
Part 3:
Lastly, DOT focused on the requirement currently included in the NPRM that airlines only provide cash refunds for cancellations and significant changes caused by them if they receive “significant government assistance” related to a pandemic. DOT discussed the requirement generally and made a few clarifications such as (1) the fact that as written, the rule would require airlines to pay out cash refunds when passengers are unable to fly due to pandemic related reasons and the airline receives a significant amount of money, even if the money is restricted in its uses (i.e., significant money is granted but a large part of it must be used to pay out employee salaries), and (2) that in the NPRM “financial support” as defined would include cash contributions and stock purchases that airlines receive from the government. DOT also noted that passengers entitled to non-expiring credits or vouchers (as discussed in the second presentation) would also be able to receive cash refunds instead of credits or vouchers if the airline receives significant government financial assistance.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com 202-659-6622) or Drew Derco (dderco@eckertseamans.com 202-659-6665).
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