The Biden administration on Wednesday imposed new rules on airlines that trigger immediate refunds when flights are canceled and crack down on “surprise junk fees.”
Under the Department of Transportation’s new mandate, airlines will be required to pay if there is a significant delay in returning baggage, if customers are unable to use in-flight facilities such as Wi-Fi, or if a flight is canceled or significantly changed. Full cash refunds must be issued automatically upon customer request, including: It’s what they paid for.
“If passengers owe money to an airline, they have the right to get their money back without any hassle or haggling,” said Transportation Secretary Pete Buttigieg.
Another new rule aims to increase transparency in the cost of booking airline tickets by eliminating so-called “surprise junk fees.”
Airlines must also disclose prepaid fees for checked and carry-on baggage, reservation cancellations and changes, as well as any mandatory airline-imposed fees or government fees.
These costs must be “clearly, conspicuously and accurately” stated on the airline’s respective web platform or when providing fare prices offline.
According to CNBC, the transparency rules include “discount bait-and-switch tactics” in which airlines offer discounts that appear to apply to the entire ticket price but actually apply to only a small portion of the price. It also includes an exclusion clause.
Buttigieg estimated that the disclosure requirements could save consumers more than $500 million a year in unexpected fees.
“Airlines should be competing with each other to secure passenger business, not competing to see who can charge the most surprise fares,” he added, according to CNBC.
The Biden administration is also proposing a ban on additional seat fees for parents who want to sit next to their children.
The administration also wants to mandate certain amenities and expand accommodations for travelers who use wheelchairs, CNBC reports.
The Department of Transportation’s announcement Wednesday about the new rules did not specify which amenities would be covered.
The regulations are part of Biden’s larger effort to crack down on junk fees, which the White House calls “corporate rip-offs.”
Last month, the Democratic presidential administration capped late fees on all credit cards. Regulators say this could save Americans up to $10 billion a year.
Consumer Financial Protection Bureau rules cap late fees on most credit cards at $8 or require banks to show why they charge more than $8.
This mandate will reduce the average late payment fee for credit cards from $32.
For reference, the bureau estimates that banks generate about $14 billion in credit card late fees annually.
Similarly, the Federal Trade Commission late last year proposed a rule that would ban “hidden and bogus” junk fees that hide the total cost of concert tickets, hotel rooms and utilities.
FTC Chair Lina Khan said in October that the proposed rules would prohibit companies from jacking up bills with hidden and bogus fees, require honest pricing, and ensure that companies use honesty rather than deception. It encourages them to compete.” She added, “Violators will be subject to civil penalties and will be required to repay the Americans they defrauded.”
