ASTA: New DOT Rules Harm Small Agencies that Book Air

This week, the U.S. Department of Transportation (DOT) issued new rules for airline passenger compensation.

The news was largely seen as a win for travelers by consumer media, as flyers who experience significant delays or cancellations, along with issues with baggage, will now be compensated by the airlines, shifting the burden of bad airline behavior from the shoulders of consumers.

“Under the final rule, U.S. and foreign air carriers must provide prompt automatic refunds and ticket agents must provide prompt refunds upon request when airlines cancel or significantly change their flights and consumers do not accept the alternatives offered,” the DOT said in the new rule. 

However, it’s where the DOT is placing that burden that is of concern. According to the American Society of Travel Advisors (ASTA), a lack of understanding from the DOT on how advisors operate has created a rule that while seemingly positive for consumers, harms small travel agencies (the “ticket agents” in the DOT rule) that book air.

“The Department of Transportation made a profound error in this final rule,” ASTA President and CEO Zane Kerby said on Thursday. “Our primary concern for our members has always been the potential that regulations aimed at protecting consumers could harm the small travel agencies who book air tickets. And that is precisely what happened.”

According to ASTA, the way the rule is worded places a burden on travel agencies who will now be tasked with providing refunds to their clients when they are the “merchant of record” on airline tickets. It comes down to that definition of “ticket agents” in the DOT’s language.

ASTA says that the “merchant of record transactions make up a significant portion of business for many small agencies in our industry, especially those who specialize in group travel” even though payment is typically passed immediately to an airline.

ASTA was concerned about this outcome as early as December 2022 when the Notice of Proposed Rulemaking (NPRM) on the new rules was issued by the DOT. Even back then, ASTA was proclaiming that a rule like this “would impose the same refund obligations on ticket agents as the airlines themselves.”

“Holding ticket agents to the same standard as the airlines with respect to refunds will prove to be not only unworkable from a regulatory perspective but manifestly unfair as well,” ASTA said at the time.