DOT Provides Additional Guidance on Carrier Obligations to Provide Refunds During "Unprecedented" Drop in Travel
Citing the "unprecedented impact" of COVID-19 on air travel demand, the U.S. Department of Transportation (DOT) on May 12, 2020, issued a document that provided answers to frequently asked questions (FAQs) concerning air carrier refund obligations.1 The FAQs refine the policies stated in DOT's April 3, 2020, Enforcement Notice, which addressed the requirement of carriers to provide refunds, not just vouchers or credits, when a flight cancellation is not initiated by the passenger.2 While DOT acknowledged that the FAQs did not have the force of law, it noted that carriers that complied with the policies set forth in the FAQs would enjoy a "safe harbor" from DOT enforcement.
The FAQs include two notable highlights:
- First, DOT acknowledged that carriers may develop their own reasonable interpretations of the terms "cancellation" and "significant change," but must honor those reasonable interpretations, including following the refund policy in place at the time the ticket was purchased.3 Accordingly, carriers that altered their refund policies during the COVID-19 crisis must ensure their employees apply the correct ticket terms and conditions when reviewing refund requests. Carriers failing to do this could face enforcement action with an established record of DOT warnings on the subject.
- Second, departing from what has been a bright-line rule since its inception, DOT will not strictly enforce deadlines for prompt refunds by air carriers.4 DOT acknowledged that refund processing might take longer than normal given the "significant volume of refund requests resulting from the COVID-19 public health emergency."5 DOT will look at the "totality of the circumstances" to determine whether carriers "are making good faith efforts to refunds in a timely manner."6
The FAQs also addressed the rights of consumers who cancel their own travel due to COVID-19 concerns, carriers that misrepresent a flight's status to avoid offering a refund and how carriers can properly offer flight credits as an alternative to refunds.
DOT also issued a press release related to its additional guidance. The Holland & Knight aviation team is closely monitoring this issue and can offer further guidance if needed.
DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the authors of this blog for timely advice.
1 See Frequently Asked Questions Regarding Airline Ticket Refunds Given the Unprecedented Impact of the COVID-19 Public Health Emergency on Air Travel (May 12, 2020). DOT acknowledged that the FAQs did not have the force of law, but stated that carriers compliant with the policies in the FAQs would enjoy a "safe harbor" from DOT enforcement.
3 See FAQs, p. 1-2.
4 See 14 CFR § 259.5(b)(5)(establishing refund deadlines of seven business days for credit card purchases and 20 days for cash and check purchases).
5 FAQs, p. 3.
6 Id. (The FAQs do not list specific factors DOT will consider for air carriers; however, in relation to ticket agents DOT states it will look at the volume of refund requests and the steps taken to address the increased volume.)