Do Airlines Owe You Money for Delays or Cancellations?

Should you get paid if your flight is canceled or significantly delayed? The Biden administration thinks so.

The U.S. Department of Transportation said May 8 that it would begin a rulemaking process to require airlines to compensate stranded passengers for expenses like meals, hotels and rebooking in the event of significant disruptions within the airline’s control (that is to say, when it’s not weather-related).

If fully enacted, the changes could see passenger rights in the U.S. begin to look more like those of European Union travelers under EU261, the provision that requires airlines to compensate passengers when they arrive more than three hours late.

“If your flight is very delayed or canceled and the airline could have prevented that, you deserve more than just … getting the price of your ticket [back],” President Joe Biden said May 8. “You deserve to be fully compensated. Your time matters. The impact on your life matters.”

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What happens if an airline cancels your flight?

To be clear, passengers flying in the U.S. are already entitled to refunds when a flight is canceled or significantly delayed.

No matter the cause — weather-related or not — airlines must pay passengers back for the unused portion of their ticket if the passenger ultimately chooses not to fly. It’s worth noting that the DOT does not define what constitutes a “significant delay.”

But Biden feels this DOT policy is not sufficient.

Do airlines owe you money for delayed flights?

Today, U.S. airlines do not technically have to provide passengers with compensation for extra expenses incurred in the event of flight delays or cancellations.

Last fall, the DOT launched a dashboard that lays out benefits guaranteed by 10 U.S. airlines in the event of significant disruptions within an airline’s responsibility — think food, taxi rides and extra hotel nights, expenses passengers often face when stranded.

And when it comes to refunds, lawmakers are pushing for a cash refund or at least the option for it.

Transportation Secretary Pete Buttigieg took to Twitter during last summer’s mass disruptions, urging passengers to check the value of loyalty currency before accepting it instead of money.

Southwest Airlines issued both points and cash refunds to passengers affected by the airline’s meltdown in late 2022 and early 2023. The airline reported about $325 million in losses due to operational costs and customer reimbursements.

Southwest made the customer payouts voluntarily, but the DOT’s proposed rule would make payouts for stranded passenger expenses mandatory.

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Possible downsides to DOT airline compensation

Not everyone is in favor of the changes. In a statement, the International Air Transport Association criticized the decision, arguing that airlines already have a financial incentive not to delay or cancel flights, adding such a rule would “raise the cost of air travel.”

“The added layer of expense that this regulation will impose will not create a new incentive, but it will have to be recouped, which is likely to have an impact on ticket prices,” IATA Director General Willie Walsh said.

A larger push for customer service

For the Biden administration, this move is the latest push in a multiyear pressure campaign on airlines to increase consumer protections.

The administration has criticized seat selection fees and initiated rulemaking requiring airlines to proactively inform customers about their refund rights and defining what constitutes a “significant delay” worthy of a refund.

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As part of a separate federal rulemaking comment period last year, nearly 5,000 people — from customers to travel agents to airline industry advocates — weighed in. Many called for stepped-up consumer protections.

While it remains to be seen how far-reaching any proposed compensation rules ultimately are (if ever adopted), the DOT has, in the meantime, expanded its airline consumer protections dashboard on FlightRights.gov.

There, passengers can check which airlines guarantee which types of reimbursements for food, ground transportation, hotels and the like. And the dashboard addresses fee-free family seating (three airlines meet the DOT’s measuring stick on that issue) and passenger compensation beyond reimbursements or refunds (none do, currently).

For now, choosing a travel insurance plan or travel credit card with protections for flight disruptions or lost luggage can be some of the best ways to offset unexpected expenses incurred during delays or cancellations.