Transportation Department secures $600 million in delayed airline refunds for passengers

Transportation Secretary Pete Buttigieg said Monday that officials helped airline passengers get $600 million in refunds and imposed $7.25 million in fines in cases where carriers were slow to take action after canceling or delaying flights.

Frontier Airlines faced the steepest fine, according to the Transportation Department, saying tens of thousands of passengers were affected. The budget airline has agreed to a fine of $2.2 million and returned $222 million to ticket holders, the agency said. The department also took action against five foreign airlines for violations of refund rules.

“When Americans buy a ticket on an airline, we expect to get to our destination safely, reliably and affordably,” Buttigieg said. “And our job at DOT is to hold the airlines accountable for these expectations.”

The airline industry has come roaring back as the pandemic has eased, aided by a $54 billion rescue package from Congress beginning in 2020. While some airlines are posting record revenue, the recovery has been bumpier for passengers eager to get back onboard, with periods marred by delays and cancellations on top of growing ticket prices.

Consumer complaints filed with the government spiked at the beginning of the pandemic and are four times higher than 2019 levels, according to the Bureau of Transportation Statistics. Many complaints are tied to securing refunds from foreign airlines.

Blane Workie, a consumer protection attorney at the Transportation Department, said the Frontier policy when the pandemic began was to consider any flight more than three hours late to be significantly delayed. In late March 2020, Workie said Frontier decided it would not consider a passenger to be significantly delayed, and thus deserving of a refund, if traveling the same calendar day. Tens of thousands of passengers were affected, Workie said.

Frontier said in a statement it issued “goodwill refunds” of nearly $100 million since the pandemic began in cases where passengers were not legally entitled to their money back. It said those payouts demonstrate a “commitment to treating our customers with fairness and flexibility.” Frontier said it had received a $1.2 million credit for those refunds from the Transportation Department and would ultimately pay the government $1 million.

The Biden administration has employed a handful of tactics to hold airlines accountable. Ahead of Labor Day, it published a comparison of airline policies for when flights are canceled or significantly delayed, a step officials say led carriers to provide more generous aid.

It also proposed new rules for price transparency and other measures to protect consumers. But some Democratic lawmakers and consumer advocates pushed Buttigieg to take stronger action, including issuing fines, and circulated proposals to allow state attorneys general to take a role in protecting passengers.

William McGee, a senior fellow at the American Economic Liberties Project, said the fines were too late and would not address disruptions at the biggest U.S. carriers. “The USDOT must address widespread flight disruptions amid soaring airfares, and restore confidence in flying ahead of this holiday season, or we all risk a repeat of the summer’s flight debacles,” he said in a statement.

Transportation Department rules mandate airlines to provide a cash refund when they cancel flights or when a flight is significantly delayed. Airlines can offer vouchers for future travel instead, and at the start of the pandemic, it was often passengers who chose to cancel their own plans.

Among the new rules the Transportation Department has proposed is a guarantee of a voucher with no expiration date for passengers who contract the coronavirus or another communicable disease before they travel or who have plans derailed by public health guidance.

Under the Trump administration, the Transportation Department opted at the start of the pandemic not to punish airlines if they did not issue timely refunds, within seven days for tickets purchased using a credit card, as long as it judged them to be making efforts to comply. But in June 2021, the agency took enforcement action against Air Canada on the grounds that it changed its policy after the pandemic began and declined to offer refunds to passengers who had not specifically bought “refundable” tickets.

The agency initially sought to fine the airline $25.5 million. The case was settled in November 2021 for $2.5 million in refund payments and a $2 million fine, a combined sum that officials said was the largest penalty ever paid by an airline. The round of penalties announced Monday are final agreements with the airlines.

The Transportation Department said Air India issued $121.5 million in refunds and will pay a $1.4 million penalty. Tap Air Portugal refunded passengers $126.5 million and will pay a $1.1 million penalty. Aeromexico refunded $13.6 million and will pay a $900,000 penalty. El Al of Israel handed passengers $61.9 million and will pay a $900,000 penalty. Avianca of Colombia refunded $76.8 million and will pay a $750,000 penalty.