New airline refund rules could lead to rising ticket prices, economist warns

The Biden administration issued new rules clarifying when airlines must give passengers refunds.

The Department of Transportation says airlines will be required to provide automatic refunds within a few days for flights that are canceled or significantly delayed. 

This is welcome news for airline customer advocacy groups and passengers FOX 4 spoke with at Dallas Love Field. However, one North Texas economist believes the new federal mandate will end up costing consumers more in the end.


Airline passengers who find themselves grounded due to cancelations or delays will soon be seeing green. 

U. S. Transportation Secretary Pete Buttigieg announced new rules Wednesday that require airlines to give cash refunds to passengers whose flights are canceled or delayed more than three hours for domestic flights and more than six hours for international.

Buttigieg says the big takeaway is passengers do not have to accept alternative transportation or travel credits offered.

SMU Economist Mike Davis believes the new reimbursement rules will help some consumers but fears it could lead to an increase in the cost of an airline ticket due to the forced payout to customers.

"This sort of regulation is going to cost the airlines something," he said.

The federal rules also require airlines to give cash refunds if your bags are lost and not delivered within 12 hours.

"The other thing that I wonder and actually worry about is whether the airlines are going to be adjusting schedules to make it more likely that they can avoid these kinds of delays," Davis said. "It's really hard to tell how they would accommodate this, but whatever the airlines do is going to cost their passengers some money."


Biden's new airline rules could get you cash back for canceled flights

The new rules aim to save consumers half a billion dollars a year in junk air travel fees, the White House said.

The announcement comes nearly a year and a half after Dallas-based Southwest Airlines suffered a systemwide meltdown during a winter storm over the 2022 Christmas holiday weekend.

That led to the cancelation of some 17,000 flights, leaving passengers stranded at airports for days.

Passengers who spoke to FOX 4 at Dallas Love Field Wednesday largely applaud the move.

"Basically, when you force a company to do the right thing, they tend to get better," said passenger Ed McConaha.

Sec. Buttigieg says airlines have six months to get into compliance with the new federal regulations.