Congress Is Trying to Stop Automatic Flight Refunds
Days after the Biden administration announced a rule mandating flight cancelation automatic refunds, four lawmakers overseeing aviation policy in Congress began pushing legislation to reverse it. All of them take substantial airline industry donations.
A departure screen in Terminal 4 at John F. Kennedy International Airport (JFK) in New York. (Shelby Knowles / Bloomberg via Getty Images)
The Biden administration last week announced a new rule promising that when airlines cancel or significantly delay flights, passengers will automatically be given their money back without having to “navigate a patchwork of cumbersome processes to request and receive a refund, searching through airline websites to figure out how make the request, filling out extra ‘digital paperwork,’ or at times waiting for hours on the phone.”
But just days after that announcement generated celebratory headlines, four congressional lawmakers overseeing aviation policy began advancing legislation that includes a provision potentially reimposing those cumbersome processes on passengers, according to the bill text reviewed by us.
The lawmakers are four of the six largest congressional recipients of campaign cash from the airline industry in the current election cycle, according to data from the government transparency group OpenSecrets.
On Monday, Senator Maria Cantwell and Representative Rick Larsen, both Washington Democrats; Senator Ted Cruz, a Texas Republican; and Representative Sam Graves, a Missouri Republican, unveiled a bipartisan version of the must-pass legislation outlining federal aviation policy. Included in the final bill, which must still pass both chambers of Congress, is a line that creates a right to a refund for airline passengers with a nonrefundable ticket, but requires refunds only “upon written or electronic request of the passenger” — an explicit rejection of the Biden administration’s rule.
A shift from automatic refunds to the old system could be a financial boon for airlines that have been lobbying against refund regulation. Instead of having to automatically pay out refunds to all affected passengers, airlines would only have to pay refunds to the subset of passengers who have the disposable time and patience to go through a notoriously arduous refund process.
“The latest deal in Congress could mean that travelers are still bearing the burden of airlines’ mishaps,” Senator Elizabeth Warren, a Massachusetts Democrat, wrote in a tweet on Monday, referencing the provision in the bill. “This would be a gift to the airlines, who know many travelers won’t have the time or resources to navigate the bureaucratic process they designed.”
Some consumer advocates worry that the law would also muddle reform efforts — potentially serving as a tool for the airline industry to legally challenge the US Department of Transportation’s effort to guarantee automatic refunds.
“If the [Federal Aviation Administration Reauthorization bill] is saying ‘No, actually, customers need to go after airlines,’ then that just puts us back to where we were,” said Teresa Murray, the director of the Consumer Watchdog group at the Public Interest Research Group. “It sounds like people again potentially waiting weeks or months or years or never to get their refund that they are entitled to by law — and that’s very worrisome.”
The bill would likely result in many consumers never receiving a refund at all, said Morgan Harper, director of policy and advocacy at the American Economic Liberties Project.
“Congress is using the latest FAA [Federal Aviation Administration] reauthorization to weaken the [Transportation Department’s] hugely popular new rule requiring automatic cash refunds for flight cancellations and delays — a watershed achievement issued just last week to protect passengers against too-big-to-care airlines,” Harper wrote in a press release. “This attempt to undermine the Biden Administration’s pro-consumer rule must be rectified before the FAA’s passage.”
The airline industry has been lobbying intensely around the reauthorization package, which has been pushed back continually over the last seven months since the initial deadline, as industry groups lobbied heavily on the bill.
Airline trade groups have spent millions of dollars lobbying on the FAA reauthorization bill, passenger refund policies, and other issues. The lobbyists are now incensed by the Transportation Department’s new rule guaranteeing automatic refunds.
“These one-size-fits-all all passenger service mandates will raise airline costs which will ultimately be reflected in higher ticket prices,” the International Air Transport Association, an industry trade group representing more than three hundred airlines, wrote in a statement on Saturday after the rules were announced, saying they were “disappointed” with the new refund requirements.
“Why the automatic refund provision wasn’t included in there — I know the airlines have been active in lobbying on this and many other parts of the FAA reauthorization,” said John Breyault, vice president of public policy at the National Consumers League, a consumer advocacy group that supported the Department of Transportation’s new refund rule.
Breyault said that while he didn’t think the new FAA reauthorization bill necessarily conflicted with the Transportation Department rule, consumer watchdogs hoped that lawmakers might still amend the deal to pass a requirement for automatic refunds — potentially as a floor amendment when the bill came up for a vote. That way, the right to an automatic refund would be enshrined in law, and protected from the whims of future administrations.
“We’re hopeful that there’s still time,” he said.
“Without Headaches or Haggling”
When the Biden administration announced the new flight refund rules last week, officials said that they would require refunds to be issued automatically, instead of requiring consumers to jump through hoops to request refunds.
“Passengers deserve to get their money back when an airline owes them — without headaches or haggling,” declared US transportation secretary Pete Buttigieg in a statement last week. “Our new rule sets a new standard to require airlines to promptly provide cash refunds to their passengers.”
Biden emphasized that the refunds were automatic in his own statements on the rule.
“Too often, airlines drag their feet on refunds or rip folks off with junk fees,” he wrote in a tweet shortly after the rule was announced. “Today, my Administration is requiring that airlines provide automatic refunds to passengers when they’re owed, and protect them from surprise fees.”
The new rule updated old policy around airline refunds that consumer advocates have argued often failed to get customers their money back promptly or at all. The regulations provide additional consumer protection by setting refund standards for passengers with delayed baggage returns, and refund passengers whose flights have been delayed more than three hours domestically, and six hours for international flights. The new rules also provide refund standards for passengers who purchased inflight services — such as Wifi or seat selection — and did not receive them.
In February, the Senate Commerce Committee’s draft FAA legislation included a provision requiring airlines to issue refunds for flights that were significantly delayed or canceled, which lawmakers championed as a new consumer protection.
But the provision directs airlines to issue refunds only when they receive written or electronic notice from consumers. That policy was included in Monday’s FAA reauthorization deal, announced days after the Department of Transportation’s final rule.
It’s not yet clear how the FAA reauthorization — if it is signed into law — may impact the Department of Transportation’s rule. Industry trade groups are already arguing that elements of the bill “supersede” the Transportation Department’s rulemaking.
But Breyault, the consumer advocate, said that while industry interests might adopt that argument, federal regulators could argue that they had the authority to require automatic refunds, regardless of the new law.
“If you look at the final rule that the [Department of Transportation] announced last week, they were relying on other authority that they already had to issue the rule,” he said. “So I don’t see that it necessarily undercuts it.”
If passed, the FAA reauthorization bill could cause a regulatory battle between the Transportation Department and Congress, said former representative Peter DeFazio, an Oregon Democrat and former chair of the House Transportation Committee.
“If the [Transportation Department] lawyers look at the FAA reauthorization bill and say, ‘That’s subject to interpretation, we’re gonna have to go through a major rulemaking,’ then I believe that the existing rule would prevail,” Defazio told us. “But if the DOT [Department of Transportation] lawyers look at it and say, ‘No that overrules clear statutory language,’ then [the law] would go into effect.”
But Congress can always overrule agency rules, he added.
Millions Spent Fighting Consumer Protection
The aviation bill that includes the new refund provision was crafted by the chairs and ranking members of the House and Senate committees overseeing aviation policy — and they have received big money from the airline industry, which has been lobbying on the refund issue.
Senator Cantwell, chair of the Senate Commerce Committee, and Senator Cruz, ranking member of the Senate Commerce Committee, are among the top recipients of airline industry campaign donations for the 2024 election cycle. Cantwell has so far received $143,721 from individuals in the airline industry, and Cruz has received $59,375. Both senators are running for reelection this year.
A similar dynamic is playing out in the House Transportation and Infrastructure Committee: Representative Graves, chair of the committee, has received $131,999 from the airline industry this election cycle, and Representative Larsen, ranking member of the committee, received $88,255. Donate Now
Overall, the airline industry spent more than $33 million lobbying in 2023, an all-time high, according to data compiled by OpenSecrets. This includes Airlines for America, a trade association representing Alaska Airlines, American Airlines, Delta, Southwest, and other top airlines in the country.
Airlines for America has spent more than $12 million since 2022 lobbying Congress, the Executive Office of the President, the Transportation Department, the FAA, and other regulators on passenger refunds, the Airline Passengers’ Bill of Rights, and other issues, disclosures show.
Airlines for America, along with the International Air Transport Association, opposed the Department of Transportation rule change in comments to the department in 2022, and urged the agency to hold hearings on “what constitutes a sufficiently significant downgrade of an available amenity or travel experience that warrants a refund,” the groups wrote.
“The Department has proposed substantial and novel changes to airline credit/voucher and refund requirements that will significantly impact the public and the travel industry,” they added.
Airlines for America issued a press release after the Transportation Department announced its new refund policy, claiming airlines are already going above and beyond to refund passengers.
“[Airlines for America] member carriers abide by — and frequently exceed — [Department of Transportation] regulations regarding consumer protections,” the group wrote in its April 24 press release. “The 11 largest U.S. passenger airlines issued $43 billion in customer refunds, $900 million per month, between January 2020 and December 2023, in addition to issuing other forms of compensation.”
Just four days later, the group was applauding the FAA reauthorization bill, which has language that will potentially roll back the automatic refund rule.
“[Airlines for America] appreciates the work of the House Transportation and Infrastructure Committee and the Senate Commerce Committee — along with countless congressional staff — who have worked for months to advance a bipartisan bill that will reauthorize the FAA for five more years,” the group wrote.