The Transportation Department will not implement a Biden administration proposal that would have required airlines to pay cash compensation to flyers for canceled flights. The DOT will also begin a process to roll back several consumer-protection rules that were finalized under the previous administration.
The DOT explained that it aims to "ensure the traveling public is treated fairly while also acknowledging the realities of carriers' operations and the impact of overly burdensome regulations on the American people."
The death of the cash-compensation proposal had been anticipated. Biden's DOT under Secretary Pete Buttigieg only formally began developing cash compensation rules in early December, by which time Donald Trump was the president-elect.
Then in April, the DOT formally asked the public to weigh in on regulations that should be modified or repealed -- an action taken in accord with a Trump executive order that 10 regulations be repealed for every new one that is proposed.
Under the Biden administration proposal, cash compensation was to be required in cases of cancellations that were the fault of the airline and not caused by external factors such as weather. The rule was also to have applied to domestic delays of three hours or more.
The Biden administration was early enough in the rulemaking process that it had not developed a specific proposal on compensation amounts, though it said it was considering a tiered approach starting at between $200 and $300 for domestic delays of at least three hours. The DOT was contemplating passenger payments of $375 to $525 for delays of at least six hours and between $750 and $775 for longer delays.
The DOT could rescind the full-fare rule
Among existing rules, the DOT intends to begin a formal process in March to examine rescinding the regulation requiring airlines to disclose full fares, including all ancillary fees, when a flight search is conducted. That rule, which was finalized in April 2024, has yet to take effect due to a court stay issued in a case brought against it by airlines.
The DOT also set February as its target month to begin a regulatory process that could reduce the instances when flight cancellations trigger a refund offer. In a rule that went into effect last October, airlines must inform customers that they are entitled to a refund for canceled flights and for domestic flights delayed by more than three hours and international flights delayed by more than six hours. Flyers whose itineraries are moved forward by three or six hours are also entitled to a refund should they choose not to travel.
In addition, the regulations stipulate several other itinerary changes that entitle airline customers to a refund. They include changes to the arrival or departure airport, the addition of a connection point to the itinerary, cases in which the customer is downgraded to a lower seating class, when an aircraft change downgrades the plane's available amenities, and when the flight number changes.
Baggage delayed by more than 12 hours on domestic flights also triggers refund requirements, as does baggage delayed by more than 15 or 30 hours on international flights, depending on the length of the flight.
The DOT hasn't elaborated on how it might change the cancellation rule. It will consider the definition of timely bag delivery and will look at rules requiring refunds for ancillary services not provided.
"We will faithfully implement all aviation consumer-protection requirements mandated by Congress, including the requirement to refund ticket prices to passengers in case and airline cancels or substantially delays flights when consumers choose not to travel," the department said. "Some of the rules proposed or adopted by the previous administration, however, went beyond what Congress has required by statute, and we intend to reconsider those extra-statutory requirements."
Trade/lobbying group Airlines for America (A4A) has advocated for many of the changes the DOT is now contemplating; it has asked the department to loosen the cancellation rule so that the addition of a connection point or a change in a flight number doesn't trigger a refund entitlement.
"We are encouraged by this Department of Transportation reviewing unnecessary and burdensome regulations that exceed its authority and don't solve issues important to our customers. We look forward to working with DOT on implementing President Trump's deregulatory agenda," A4A said in a statement.
The DOT also said it will review the requirement that airlines provide flight credits to travelers who cancel an itinerary due to a serious communicable disease.
The DOT's various moves drew sharp rebuke from airline consumer advocate Bill McGee of the American Economic Liberties Project.
"At a time when most Americans are already dissatisfied with the state of air travel, the DOT is taking marching orders from deep-pocked lobbyists and ushering in a new era of flying dystopia," he said. "Even by just proposing these rules, before they become official policy, the DOT is telling airlines they can deny refunds, hide fees and strand passengers without consequence. The United States lags much of the world when it comes to passenger rights, but the largest carriers now want to eliminate even the most basic protections."