The Biden Administration has released new rules requiring airlines to disclose fees upfront and streamline the refund process for passengers. This step is aimed at addressing “junk fees” and ensuring transparency for consumers when booking flights. President Joe Biden has been vocal about cracking down on consumer protections in the airline industry, and the Department of Transportation has taken a hawkish stance against airline consolidation.
The new rules include requirements for airlines to provide automatic cash refunds in cases where flights are significantly delayed or canceled, checked baggage is delayed, or ancillary services are not provided. This is intended to simplify the refund process for consumers, who often face difficulties in receiving refunds from airlines. Airlines will be mandated to issue refunds within a specific timeframe and in the original form of payment, without using vouchers or other forms of compensation unless requested by the passenger.
In addition to automatic refunds, airlines will also be required to disclose all fees upfront, including prices for checked baggage, carry-ons, reservation changes, and cancellations. This rule aims to prevent “bait-and-switch” tactics where airlines advertise discounted fares without disclosing additional fees. Airlines will also need to ensure that passengers are guaranteed seating even if they do not pay a seat selection fee. These measures are intended to provide greater transparency for consumers when booking flights.
Airlines for America, a trade group representing major U.S. airlines, has stated that the industry already offers transparency and choice for consumers. The group emphasized that airlines are committed to providing high-quality service and clarity regarding prices, fees, and ticket terms. According to DOT data, ancillary revenue in the U.S. airline industry was at historic lows, with member carriers complying with regulations and consumer protections.
The airline sector stock index performance year-to-date has been included in the Skift Travel 200 (ST200), which combines the financial performance of nearly 200 travel companies worth over a trillion dollars. This index includes network carriers, low-cost carriers, and other related companies traded in global markets. The performance of airline sector stocks is an important indicator of the overall financial health and stability of the travel industry.
Overall, the new rules set forth by the Biden Administration aim to enhance consumer protections, promote transparency, and streamline the refund process for passengers in the airline industry. By requiring airlines to disclose fees upfront and provide automatic cash refunds in certain circumstances, the administration seeks to address concerns about “junk fees” and ensure a fair and transparent booking process for travelers.
