IATA disappointed with US consumer protection rules

Air transport lobby questions Department of Transport authority
2024-04-29
/
/ New Delhi
IATA disappointed with US consumer protection rules
IATA disappointed with US consumer protection rules

Newly finalised rules will mandate automatic, cash refunds for cancelled or significantly delayed flights

Expressing disappointment with the new rules for protection of rights of passengers of scheduled flights in the United States, announced by the White House, IATA has questioned the authority of the Department of Transport to enforce such rules.
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The International Air Transport Association (IATA) has expressed disappointed with the United States Department of Transportation’s two new broad consumer protection rules which, according to IATA, far exceed DOT’s authority to regulate the deregulated airline industry.

The “Refunds and Other Consumer Protection Rule” will force airlines to provide automatic refunds for delays or cancellations, irrespective of the cause of the disruption.

The “Enhancing Transparency of Airline Ancillary Fees Rule” will render online searches less seamless and reduce price competition on optional airline services.

In a press statement on the issue, IATA says that these, one size fits all passenger service mandates, will raise airline costs which will ultimately be reflected in higher ticket prices.   

Newly finalised rules will mandate automatic, cash refunds for cancelled or significantly delayed flights and save consumers over half a billion dollars every year in airline fees.

Earlier, the White House had announced that building on a historic record of expanding consumer protections and standing up for airline passengers, the Biden-Harris Administration announced final rules that require airlines to provide automatic cash refunds to passengers when owed and protect consumers from costly surprise airline fees. These rules will significantly expand consumer protections in air travel, provide passengers an easier pathway to refunds when owed, and save consumers over USD 500 million every year in hidden and surprise junk fees.
 
The first rule requires airlines to promptly provide passengers with automatic cash refunds when owed because their flights are cancelled or significantly changed, their checked bags are significantly delayed, or the ancillary services, like Wi-Fi, they purchased are not provided.
 
Without this rule, consumers have to navigate a patchwork of cumbersome processes to request and receive a refund, searching through airline websites to figure out how to make the request, filling out extra ‘digital paperwork’, or at times waiting for hours on the phone. Passengers would also receive a travel credit or voucher by default from many airlines instead of getting their money back, so they could not use their refund to rebook on another airline when their flight was changed or cancelled without navigating a cumbersome request process.
 
DOT’s rule makes it simple and straightforward for passengers to receive the money they are owed. The final rule requires refunds to be:

  • Automatic: Airlines must automatically issue refunds without passengers having to explicitly request them or jump through hoops.
  • Prompt: Airlines and ticket agents must promptly issue refunds within seven business days of refunds becoming due for credit card purchases and 20 calendar days for other payment methods.
  • Cash or original form of payment: Airlines and ticket agents must provide refunds in cash or whatever original payment method the individual used to make the purchase, such as credit card or airline miles. Airlines may not substitute vouchers, travel credits, or other forms of compensation unless the passenger affirmatively chooses to accept alternative compensation.
  • Full amount: Airlines and ticket agents must provide full refunds of the ticket purchase price, minus the value of any portion of transportation already used. The refunds must include all government-imposed taxes and fees and airline-imposed fees.

The second rules requires airlines and ticket agents to tell consumers upfront what fees they charge for checked bags, a carry-on bag, for changing a reservation or cancelling a reservation. This ensures that consumers can avoid surprise fees when they purchase tickets from airlines or ticket agents, including both brick-and-mortar travel agencies or online travel agencies.

The rule will help consumers avoid unneeded or unexpected charges that can increase quickly and add significant cost to what may, at first, look like a cheap ticket. Extra fees, like checked baggage and change fees, have been a growing source of revenue for airlines, while also becoming more complex and confusing for passengers over time. In total, thanks to the final rule, consumers are expected to save over half a billion dollars every year that they are currently overpaying in airline fees.

DOT’s rule ensures that consumers have the information they need to better understand the true costs of air travel. Under the final rule, airlines are required to:

  • Disclose baggage, change, and cancellation fees upfront: Each fee must be disclosed the first time that fare and schedule information is provided on the airline’s online platform, and cannot be displayed through a hyperlink.
  • Explain fee policies before ticket purchase: For each type of baggage, airlines and ticket agents must spell out the weight and dimension limitations that they impose. They must also describe any prohibitions or restrictions on changing or cancelling a flight, along with policies related to differences in fare when switching to a more or less expensive flight. 
  • Share fee information with third parties: An airline must provide useable, current, and accurate information regarding its baggage, change, and cancellation fees and policies to any company that is required to disclose them to consumers and receives fare, schedule, and availability information from that airline.
  • Inform consumers that seats are guaranteed: When offering an advance seat assignment for a fee, airlines and ticket agents must let consumers know that purchasing a seat is not necessary to travel, so consumers can avoid paying unwanted seat selection fees.
  • Provide both standard and passenger-specific fee information:  Consumers can choose to view passenger-specific fee information based on their participation in the airline’s rewards program, their military status, or the credit card that they use — or they can decide to stay anonymous and get the standard fee information.
  • End discount bait-and-switch tactics: The final rule puts an end to the bait-and-switch tactics some airlines use to disguise the true cost of discounted flights. It prohibits airlines from advertising a promotional discount off a low base fare that does not include all mandatory carrier-imposed fees.
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