In August 2024, the Department of Transportation (DOT) published a final rule related to the 2024 FAA Reauthorization Act, which was signed into law on May 16, 2024. This new regulation requires airlines to provide automatic cash refunds for airline tickets when owed, aiming to make it easier for passengers to get their money back for canceled or "significantly delayed or changed" flights. 

In the past, it was up to each airline how they handled refunds—it was often a nebulous process to file a claim through a proprietary portal or website over an extended period of time, and airlines were not required to provide a cash refund (instead they typically offered vouchers toward future flights). The new ruling mandates that passengers are refunded automatically for canceled flights, delayed flights, or delayed baggage, either in cash or by their original payment method.  

So, if the airline will refund me for cancellations, this has us wondering: do I still need travel insurance?   

Refund Policy Overview 

As we’ll read, the new policy doesn’t quite replace the many benefits of travel insurance. The new DOT airline refund ruling states that airlines must issue passengers refunds that are:  

• Automatic  

• Prompt  

• Cash or in the original form of payment  

• And for the full amount  

For valid circumstances (see below).  

Previously, it was up to each airline’s discretion how they handled refunds—most were in the form of airline-specific vouchers, and only after customers applied explicitly for a refund request.   

The new airline rules makes it so that passengers receive the full amount on their form of payment (cash reimbursement or whatever form was used, i.e., credit card) promptly. “Promptly” means within 7 days for credit card purchases, within 20 days for other modes of purchase. This rule is intended to make it easier to get money back and to increase transparency in fees through the refund process.  

Under this policy, passengers are entitled to a full airline refund for:   
 

Canceled or significantly changed flights:  

If a flight is canceled or significantly delayed or changed, and they do not accept an alternative transportation (or travel credits) offered. 

"Significantly delayed or changed" is defined as: 

• Arrival at the destination airport 3 or more hours later than the original scheduled arrival time for domestic flights. 

• Arrival 6 or more hours later for international flights. 

• Departure from a different origination airport or arrival at a different destination airport. 

• An increase in the number of connections. 

• Downgrade to a lower class of service. 

• For individuals with disabilities, changes that result in less accessible connections or aircraft lacking needed accessibility features. 
   

Delayed baggage return 

As per the new airline rules, if you file a mishandled baggage report, you’re entitled to a refund for the checked bag fee if it’s not delivered within 12 hours of your domestic flight arriving at the gate (or 30 hours of international flight).   
 

Extra services not provided 

Passengers are entitled to a refund for the fee they paid if an extra service (Wi-Fi, seat selection, or in-flight entertainment) is not provided during the flight.  

Refunds are only available under certain conditions. For example, passengers are entitled to a refund only if they “do not accept alternative transportation or travel credits offered” (DOT, 2024). The intent of the ordinance was to make the refund process more streamlined, although passengers should still be aware of the fine print of the policy.   

When Does New Airline Refund Rules Take Effect? 

Certain provisions became effective on May 16, 2024, the date the FAA Reauthorization Act was signed into law. However, the DOT has set specific compliance dates for various aspects of the new airline refund rules: 

• October 28, 2024: Compliance date for requirements regarding ticket refunds due to airline cancellation or significant change, refunds of baggage fees for significantly delayed bags, and refunds of ancillary service fees when services are not provided. 

• April 25, 2025: Compliance date for requirements regarding issuing travel credits or vouchers to passengers who are affected by a serious communicable disease. 

Because this policy is still new, we recommend checking your consumer rights via Aviation Consumer Protection, as well as checking with your individual airline before booking.  
 

Lack of Enforcement 

In addition to being a slow roll-out, this new ruling does not replace the benefits of travel insurance for an additional reason: lack of enforcement currently.  

While this new law makes airlines responsible for refunding passengers, consumer advocacy groups noted that there is no enforcement policy yet set in place. The Department of Transportation has enforcement authority and has penalized airlines for non-compliance in the past, but enforcement actions can be inconsistent. 

In an AirAdvisor interview, consumer advocate Anton Radchenko said: “The regulation is a step in the right direction, but two critical components are missing for this to become an effective consumer protection mechanism: (1) Prescribed penalties for airlines that […] fail to comply, […] and (2) providing the right to recover attorneys and legal costs for consumers bringing a lawsuit against the airline” (Accesswire, 2024).  

Passengers are entitled to full refunds for canceled or delayed flights, but delays must meet certain criteria, and airlines are also currently operating on a “good faith” agreement to abide by this. 
 

Do I Still Need Travel Insurance? 

While the new airline refund rules significantly enhance passenger rights by mandating refunds for canceled or significantly delayed or changed flights, these provisions apply only under specific circumstances and have staggered implementation dates.  

For instance, the compliance date for requirements regarding ticket refunds due to airline cancellation or significant change, refunds of baggage fees for significantly delayed bags, and refunds of ancillary service fees when services are not provided is October 28, 2024. Other provisions, like issuing travel credits or vouchers to passengers affected by a serious communicable disease, have a compliance date of April 25, 2025. 

It's also important to note that refunds are available only if passengers choose not to accept alternative transportation or compensation offered by the airline. The rule does not cover other unforeseen events that can disrupt your travel plans, such as personal emergencies, medical issues, or travel supplier bankruptcy. 

For these reasons, we still recommend purchasing travel insurance policies to cover your bases. 
 

Under AXA’s travel protection plans, all travelers receive Trip Cancellation Protection, with at least a 100% reimbursement of trip cost. AXA’s travel insurance also covers:  

• Trip interruption  

• Delayed flights  

• Missed connections  

• Emergency medical expenses   

• Baggage delay coverage and baggage reimbursement   

The Platinum Plan offers additional protections for business travelers.  

Unlike the DOT ruling, which only issues refunds for canceled/delayed flights under a certain timeframe, AXA Travel Insurance offers a Cancel For Any Reason benefit, which provides partial reimbursement for non-refundable expenses (like airline tickets) for any reason. This takes the guesswork out of wondering if/when the airline will refund you, knowing that travel insurance plans have you covered, instead.   

It’s important to speak with a licensed professional about travel insurance.  
Click here to learn more about AXA Travel Protection, or contact us to speak with a licensed travel agent.  

In Short  

While the 2024 new airline refund rules are an excellent step toward consumer protection, current evidence shows there is still a way to go in order to implement and enforce it on a broad scale. It doesn’t quite replace the security of travel insurance, although we applaud the efforts to put more responsibility on airlines for passenger protection. Until more regulations follow, it is still recommended that travelers purchase travel protection from authorized travel insurance providers.   

To learn more about AXA’s travel plans, check out our Compare Plans guide or speak with a licensed agent today to get a quote for your next trip.

References: 

The House Committee on Transportation and Infrastructure. “The FAA Reauthorization Act of 2024”. democrats-transportation.house.gov. 

https://democrats-transportation.house.gov/committee-activity/issue/the-faa-reauthorization-act-of-2024  

Accesswire. (2024). “New DOT refund regulations lack the teeth for airline compliance according to airline experts.” Accesswire.com. https://www.accesswire.com/858192/new-dot-refund-regulations-lack-the-teeth-for-airline-compliance-according-to-airline-experts   

Fox, Alison. (2024, April 29). “A Guide to the Department of Transportation's Airline Refund Rules.” TravelAndLeisure.com. https://www.travelandleisure.com/us-airlines-refund-rules-dept-transportation-8640403