The Next Steps in the DOT Ticket Refund Rulemaking

Two important events occurred on August 22. The Notice of Proposed Rulemaking on ticket refunds was published in the Federal Register, 87 Fed. Reg. 51550, viewable here. Publication started the official clock for submitting comments which are due by November 21, 2022. The options for filing comments are set out in the Federal Register document. Travel advisors should watch for advisories from ASTA that will be urging members and other advisors to support its comments with their own.

The other major event was a day-long meeting of the DOT Aviation Consumer Protection Advisory Committee (ACPAC). The sole purpose of this meeting was to enable DOT staff to explain the NPRM proposals and hear from interested parties. There were no major surprises, but several important clarifications surfaced that suggest the comments may be even more extensive than first thought. The staff presentation to the Committee may be downloaded here. 

For example, the NPRM makes clear that airlines and travel advisors must inform passengers of their entitlement to cash refunds if a booked flight is significantly changed. However, the NPRM does not currently propose to direct the airlines’/advisors’ methods of giving that notice. The NPRM also does not now address how long a consumer can wait to reject alternative transportation offered after being notified of a significant change. This is likely to be a target of airline and advisor comments because it allows the consumer who booked months in advance to wait weeks or even months after notification of the change if the notification is provided far in advance of the actual flight date.

DOT clarified that the ”significance” under the rule of a change in, for example, class of service or amenities will be determined case-by-case based on the individual traveler’s needs. Note also that the reason for a significant change in a booked flight is irrelevant – the refund obligation arises even if the airline, and by extension, the travel advisor, is not responsible for the change (an FAA ground-stop, for example).

Numerous commenters noted the problems with a rule that imposed refund obligations on parties who did not hold the consumer’s money when the change in the flight occurred. DOT staff’s response was essentially that the burden was on travel advisors to show how consumers could still be protected from being shunted back and forth between the advisor who doesn’t have the money and a recalcitrant airline that refuses to make the funds available to the advisor for the refund. How, in other words, does the advisor industry propose to get the consumer “out of the middle?” Consumers typically don’t know how financial flows work in the travel industry and DOT appears to believe that the only viable solution is to impose the refund obligation in some joint fashion on airlines and travel advisors.

History during the pandemic, and for decades before, has clearly shown that travel advisors lack the leverage to compel airlines to make refunds they don’t want to make. The attempt to force them into this role is going to get much attention in the NPRM comments. Some vague references were made to efforts by DOT, outside of the NPRM, to direct or persuade the airlines to assume their rightful burden on this issue, but the details of what that effort entails remain obscure.

One important clarification was made – the new rules will not be retroactive because DOT lacks the legal authority to impose regulations retroactively on past conduct. For that reason, the continuing refusal of multiple airlines to provide refunds for prior cancellations will be addressed in enforcement proceedings. DOT staff stated that ten airlines were facing near-term enforcement complaints while another ten are still under investigation. Several commenters noted during the meeting that some major airlines are still offering vouchers rather than cash refunds in cases that are clearly covered by the existing DOT policy requiring cash refunds.

Many subsidiary, but important, issues were discussed during the meeting. Not least was the question of how “medical professional” will be defined in situations where a consumer claims she was advised not to travel due to susceptibility to infection in a public health emergency. In response to a question from this writer, DOT staff made clear that it was confident that one or two rounds of comments were sufficient for it to go to final regulations at the end of the rulemaking process. This is troubling because there are so many complex questions involving how funds move in travel transactions and other open questions that have not been considered.

DOT in the end was unmoved by concerns that making travel advisors responsible for refunding cash when the money was in the hands of the airline might compel more advisors to stop selling airline travel altogether. Such a result would not be in the public’s interest. It seems clear that DOT is going to be hard to dissuade from the present course unless there is a mass uprising of advisors opposing the imposition of obligations most advisors simply cannot afford. ASTA will, of course, be addressing these concerns but it is very important that advisors provide DOT with specific examples from “real life” to show why the proposed rules are unworkable, unfair, and contrary to the interests of consumers.