Automatic refunds coming soon for delayed, cancelled US flights
A new United States law will make it easier to obtain refunds from both domestic and international carriers.
By David Flynn, April 26 2024
Frustrated travellers hit by lengthy delays or cancellations may soon be entitled to automatic refunds on flights to, from, or within the United States under a newly-released US government ruling, and it could be a sign of things to come in Australia.
Aimed at strengthening passenger rights, a US Department of Transportation (DOT) rule released earlier this week was created in response to the surge of complaints related to delayed or rejected refund claims during the height of the pandemic.
Designed for simplicity, the new law states refunds must be automatic, prompt, and for the full amount (minus any portions already used) – as well as in the original form of payment.
It was of course a similar story on this side of the Pacific during the pandemic, when travellers with bookings on the likes of Qantas, Virgin Australia and Jetstar were all faced with long waits for refunds or issued credits for future travel.
While those days are mostly behind us, Australian coalition senators Bridget McKenzie and Dean Smith still feel added consumer rights are needed, with their Airline Passenger Protections or ‘Pay on Delay’ bill presented in February aiming to provide just that.
Inspired by the EU261 and UK261 “passenger’s rights” legislation, the local bill would provide “concrete protections for passengers to, from and within Australia and its territories in the event of flight delays, cancellations, or denials of boarding,” according to a joint statement by the senators.
This means that any airline would be forced to pay passengers a set amount under a set of ‘trigger’ conditions in the event flights to or from Australia are delayed or cancelled, though details on exactly what those conditions are have yet to be revealed.
Airlines have six months to comply with the new US mandate, after which both domestic and international carriers will be required to refund in the event of a “significant” delay or cancellation, when the consumer is “not offered or rejects alternative transportation and travel credits, vouchers, or other compensation”.
Those refunds must be processed within seven business days for credit card payments, or up to 20 calendar days for other forms of payment, be it cash or frequent flyer miles.
In addition, airlines and travel agents have to inform passengers if they’re entitled to a refund before offering alternatives, whether that’s a credit, voucher, or another form of transport.
‘Pay on Delay’
If accepted, the Australian ‘Pay on Delay’ bill would also clarify that a passenger’s ticket “is on a particular flight, to a particular destination, at a particular time.”
“Australians deserve an aviation industry where planes take off and arrive on time, and their bags arrive with them,” said the joint statement by McKenzie and Smith.
“A recommendation of last year’s Aviation Senate inquiry was to review airline consumer protections, and this Bill will ensure passengers are being treated fairly by the airline industry in the future.”
At the moment, airlines including Qantas and Virgin Australia set their own compensation guidelines.
The airlines maintain that legally-binding passenger compensation payments would only serve to increase airfares across the board, and “have done nothing to reduce delays and cancellations, or to deliver better outcomes for consumers” in countries where they are in place.
In its December 2023 response to an aviation green paper, Qantas warned “the introduction of mandatory compensation would be a backwards step that will do nothing to reduce delays and cancellations, will increase confusion and complaints and materially increase costs, ultimately leading to higher fares and potentially compromising the viability of marginal routes.”
However, the Australian Competition and Consumer Commission and consumer advocacy body Choice both backed calls for a compensation scheme.
To become law, the Coalition-backed Pay on Delay bill would require the support of cross-bench senators – who are likely to be in favour of the proposal – before it could move to the House of Representatives, where Labor would need to approve the bill in its final form.
EU261 and UK261
Under the equivalent compensation schemes in the UK and Europe, passengers are entitled to between $400 and $1000 for delayed or cancelled flights, based primarily on the distance of their trip and length off the delay, but also allowing for how much notice an airline gives passengers.
Compensation is also required if a delay means a passenger misses a connecting flight on the same reservation. In certain circumstances passengers can also have their airfare fully refunded.
However, allowances would likely be made for factors outside of an airline’s control, such as the impact of weather, with the bill focussing on cases where an airline chooses to cancel or delay flights.
Given passenger compensation schemes are already in place in the European Union, the United Kingdom and Canada, “this issue transcends mere inconvenience,” McKenzie told the Senate. “It’s a matter of fairness, transparency and respect for Australian consumers,” McKenzie told the Senate, who were being “left stranded.”
Additional reporting by Chris Ashton.
QF
11 Jul 2014
Total posts 973
I’ve been lucky about 60-80 flights last year and only caught out once and before that a sudden thunderstorm here and there but it’s going to add to the ticket price of course.
Where do you think the cost will come from, the ticket price will go up.
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 710
Or . . . just walking out on a limb here, the frequency of delayed flights, always allegedly for 'operational reasons' (which is code for operational profitability reasons), will suddenly reduce. Even with a 2 hour period of grace by the carpark operator, flights delayed beyond 2 hours hits my pocket with additional airport parking of circa $50.
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 710
Maybe 9 out of 10. 😉
QF
11 Jul 2014
Total posts 973
I've changed my thinking on this; it appears to me if VA or QF does something, the other one follows all in the name of accountants running companies, and I can't wait to be charged $ 0.15 cents to have my ticket printed at the airport. Maybe the government can also add a clause about how many trips or how dependent someone is on the airline to sharpen their customer service.
08 Feb 2018
Total posts 161
Qantas lost the argument themselves when they rolled out the “bundle of rights” rubbish
22 May 2011
Total posts 89
Long overdue. “ Qantas warned “the introduction of mandatory compensation would be a backwards step that will do nothing to reduce delays and cancellations”
Well if you put a further financial cost to delays, that might just reduce delays and cancellations
Qantas - Qantas Frequent Flyer
01 Apr 2017
Total posts 28
If QF has to say that then they should also ask themselves... "should we even be in the business of running an airline?"
08 May 2020
Total posts 41
Most welcome, especially if it covers things like op downgrade and rebooking after flight cancellation, I’ve heard some pretty shocking duty of care stories
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 710
Very rare to get another J-class seat on the alternative flights offered. If I'd wanted an Eco fare I'd have bought one (which I do about 50% of the time when J-class not available). You'd think the airline would telephone J-class ticket holders to assist with the re-schedule - has never happened for 'operational reasons'. Bah Humbug it was.
Qantas - Qantas Frequent Flyer
09 Feb 2015
Total posts 382
If the airlines are not in favour of it, that means it must be good for the travelling public.
Hopefully it is implemented.
09 Nov 2018
Total posts 8
Airfares in Europe seem to be significantly lower on a $/km with the EU261 legislation in place so that argument seems to fall flat, although admittedly there is significantly more competition in Europe.
This legislation might help competition if it opens up access to the capital city airports because Qantas and Virgin can no longer sit on slots they cancel at the last minute without paying appropriate delay/cancellation compensation to affected passengers.
10 Nov 2020
Total posts 4
I'm still laughing at the airlines comment that the compensation payments "have done nothing to reduce delays and cancellations, or to deliver better outcomes for consumers". Wanna bet ? Given all the Qantas cancellations in particular, this means they actually have to think twice about the economic impact of simply cancelling a half full flight so that they have a full flight when merged with the next service. I've benefited many times from the UK/EU 261 compensation scheme. The best thing of course, is that you know exactly where you stand as a consumer and not take the airlines meager offerings - if any. Case in point, albeit a few years ago, a A330 VA flight PER-SYD (I was in flat bed business class) was switched to a B737 - and given the distance travelled by the inbound - they had long notice to let us know not to turn up at the airport. Result - I was bumped and moved to an overnight flight some 12 hrs later. I wasn't going to sit around the airport for this time when there was an A330 going to MEL a hour later than my SYD flight. Result - after a hour of arguing and phone calls to VA, I was put onto the PER-MEL flight, but was firmly told VA would not pay for overnight accommodation, nor would they fly me MEL-SYD the next morning. They expected me to sit around for 12 hours and if I changed, they wouldn't get me there as quickly as otherwise possible, nor actually get me to the destination I'd paid for. More calls and they provided the MEL-SYD leg, and via a complaint, the hotel was paid for. It shouldn't be so difficult. Recently I was on a QF flight from MCY-SYD that was cancelled and I had to wait hours for the next flight. Free cup of coffee or sandwich at airport? No way. Now compare this to my experience at Dusseldorf airport in Sept last year. I was in the BA lounge and the UK air traffic control system went down. Clearly this wasn't BA's fault - but they still paid for 2 nights accommodation, meals and drinks. No compensation per se as it really was out of their hands, but BA did what you'd reasonably expect. Would that happen in Australia at the moment ? No way. I've had cancellations on SAS, Etihad etc, and they paid the cash compensation, and provided meals / drinks etc. Another example, a relative was recently to fly SYD-SIN-CDG-DUS on Qantas (first leg) then Air France. The Qantas flight was several hours delayed (they said a towing issue - but the plane had been on the ground since early morning), which meant a mis-connection in SIN. AF refused to pay compensation as it was QF's fault. QF paid nothing and was off the hook - but since it was QF's responsibility to rebook the pax, QF put them on their flight to LHR (rather than a KL flight to AMS which was 2hrs after landing in SIN). The result - QF had a pax fly further and they were paid more - for their delay that seemed to be caused by anything but the excuse they proffered. So the Qantas delay actually brought in more revenue from this pax. Bring on the well overdue compensation scheme.
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 710
I've been luckier with VA in a similar scenario (circa 2012). Let's hope the next CEO has better CRM skills than the current one.
30 Jul 2015
Total posts 4
Long overdue, this is excellent news. If this gets over the line, watch the cancellation rate for "operational reasons" fall as a result.
18 Nov 2015
Total posts 118
So in the UK and EU, the compensation is only for operational delays (flights cancelled due to scheduling, not enough staff etc). So bad weather would not qualify for a payment (which makes sense: the airline can't control the weather).
BA Gold
01 Apr 2012
Total posts 192
This is what annoys me most about the whole OZ Govt grilling of Qantas and giving out to them. It is all a smokescreen! Why don't you just bring in legislation that protects the consumer from what the airlines are accused of doing??
I am an aussie in the UK and they are just light years ahead in that respect. Not only EU/UK261 with air travel but even rail travel. The train operators are bound by a 'delay repay' scheme. Your train delayed 15-29min? 25% refund of your ticket. 30-60min. 50%. etc. No ifs, no buts.
The Australian govt is just a joke. Whether it be airlines, supermarkets or any big business. Love getting up on their soap box calling them out but too scared to confront them and invoke legislation.
BA Gold
01 Apr 2012
Total posts 192
It is also worth mentioning that EU/UK261 is only payable on delays or cancellations where you will reach your destination three hours or more after originally booked.
So in all likelihood if QF/VA cancel your SYD-MEL or BNE and book you on a flight an hour or two later you would still not be entitled to compensation.
There are still test cases going on in the UK about what DOES constitute 'within an airlines control'. An example is a recent case is Lipton vs BA in the Supreme Court. The passengers flight Milan - London was cancelled due to one of the pilots calling in sick. The passenger lodged a claim for a 3hr+ delay and was refused as BA said sickness downroute/away from its base was outside its control. The Supreme court however ruled in the passengers favour that the airline could in fact have mitigated the situation (how exactly, I don't know). The point is, it is often still being tested and debated as to what is and isn't within the airlines control.
Personally, my experience has been that when I apply for UK261 the airlines either don't reply to the claim or they reject it. I have taken to just using one of the many many 'no win no pay' legal services available which do all the hard graft, send letters/legal threats and then take around 25% of the compensation.
03 Oct 2023
Total posts 2
The EU/UK261 schemes don't work that well. Many delays in Europe are due to weather, French ATC strikes, ATC scheduling, ATC IT failures etc - all considered to be beyond airlines' control. They also only kick-in if the arrival is more than three hours late - not much use for an over-and-back business day.
I have claimed three times in the past couple of years with three separate airlines (BA, AF and LX) - each time due to missed, same carrier, connections (due to "delays earlier in the day", not an acceptable reason according to EU/UK261) resulting in overnight stays somewhere I didn't plan to be. Even finding where to claim on airlines' websites is a task in itself. Each of these has been rejected and when challenged the airlines have simply stopped responding. This seems to be the default starting position. I did engage with one of the agents who take-on these cases (for a 25% fee) but they declined on the basis that the airline and country involved (Swiss and Switzerland) are far too difficult to deal with!
Yes, I could go legal, but chasing for a few hundred euros? And that is what they all bargain on - most of us will give-up as we do actually have lives to live!
The UK rail scheme works well - no excuses, no quibbles, money back in a day or so. I have probably paid in full for only about half of my perhaps 50 rail trips in the UK over the past couple of years, with quite a number of them being fully refunded. But... the UK rail system is basically governement owned, so it is actually the UK taxpayer (fortunately not me) that is making the refunds. And another but... I would have preferred to have arrived on time!
25 Sep 2013
Total posts 1245
Still better to have a scheme than none at all.
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