US DOT fines six airlines to refund $600 million to passengers seeking pandemic refunds

The US Department of Transport (DOT) has ordered six airlines to refund over $600 million combined to travellers whose trips were canceled or significantly delayed since the start of the pandemic. The department has also fined the same airlines for over $7 million for delaying refunds so long that they violated consumer-protection rules.

Frontier was ordered to pay $222 million in refunds and $2.2 million in penalties. TAP Portugal to pay $126.5 million as a refund and a $1.1 million penalty; Avianca was ordered to pay $76.8 million in the refund and a $750,000 penalty, while EI AI needs to pay $ 61.9 million as a refund and $900,000 as a penalty and Aero Mexico has to pay $13.6 million in refund and $900,000 as penalty. Air India was ordered to pay $121.5 million in refunds to its passengers and pay $ 1.4 million as fine.

The US Transport Department’s Office of Aviation Consumer Protection has assessed $8.1 million in civil penalties in 2022, the largest amount ever issued in a single year by that office, according to the media release.

Airlines and ticket agents have a legal obligation to refund consumers if the airline cancels or significantly changes a flight to, from, and within the US, and the passenger does not wish to accept the alternative offered, as per US law.

It is unlawful for an airline to refuse refunds and instead provide vouchers to such consumers, the Department of Transportation added

Pete Buttigieg, US Transportation Secretary, said: “When a flight gets cancelled, passengers seeking refunds should be paid back promptly. Whenever that does not happen, we will act to hold airlines accountable on behalf of American travellers and get passengers their money back. A flight cancellation is frustrating enough, and you shouldn't also have to haggle or wait months to get your refund.”

Consumers crowded the agency with thousands of complaints about their inability to get refunds when the airlines canceled huge numbers of flights after the pandemic hit the US in early 2020

Frontier spokeswoman Jennifer de la Cruz said: “Frontier issued nearly $100 million in “goodwill refunds,” including to people with non-refundable tickets who canceled on their own and were not entitled to a refund under federal law. The refunds “demonstrate Frontier’s commitment to treating our customers with fairness and flexibility.”

Interestingly, Air India's policy of refund is contrary to the US Department of Transportation policy, which mandates air carriers to legally refund tickets in the case of cancellation or change in flight.  The cases in which Air India was asked to pay the refund and agreed to pay the penalty were before its acquisition by the Tatas.

According to an official investigation, Air India took more than 100 days to process more than half of the 1,900 refund complaints filed with the Department of Transportation for flights that the carrier cancelled or significantly changed.

According to the US Department of Transportation, Air India did not provide timely refunds, irrespective of its policy. As a result, consumers experienced significant harm from the extreme delay in receiving their refunds.