DOT Proposes Cash Refunds for Flight Cancelations — 5 Ways This Impacts Travelers

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Getting a refund for a canceled flight in the original payment form can be challenging! Airlines often require you to manually request a refund instead of processing it automatically. They heavily delay refund processing and frequently entice travelers with travel credits or vouchers with hidden limitations.

In early August, the U.S. Department of Transportation (DOT) stated current regulations are partly responsible for this and released a notice of proposed rulemaking. If signed into law, the proposal aims to significantly expand airline consumer rights to guarantee fair treatment for all travelers when airlines cancel flights to, from, or within the U.S.

We scrutinized the notice and summarized the DOT proposal into five consequences this rulemaking could have on travelers if it is to become law. Here is a breakdown of everything you’ll find answered on this page:

(This is an ongoing story that we will update after significant rulemaking developments)

New Definitions for Flight Changes and Cancelations
Canceled Flights on a FIDS

New Definitions for Flight Changes and Cancelations

To enforce a stricter policy for airline ticket refunds, the DOT proposes more explicit definitions for “canceled flight” and “significant change of flight” so that airlines are clear when they owe passengers refunds. Here is a simplified version of these definitions:

  • Canceled Flight: A flight for which an airline sold tickets but did not operate, regardless of the reason.

  • Significant Change of Flight: This depends on the circumstances; the DOT proposes that a flight is significantly changed if any of the following occur:

    • A domestic flight departs three hours earlier OR later than initially scheduled.

    • An international flight departs six hours earlier OR later than initially scheduled.

    • An airline changes the departure or arrival location from the original schedule.

    • An airline increases the number of connecting flights.

    • An airline downgrades a passenger’s class.

    • An airline changes the original aircraft type, resulting in significantly fewer amenities.

When Airlines Must Refund Tickets
Money exchange at an airport

When Airlines Must Refund Tickets

The DOT will lean heavily on the newly proposed definitions for canceled and changed flights to enforce when an airline must refund a ticket. All U.S./foreign airlines and ticket agents must provide prompt ticket refunds for “canceled flights” or “significantly changed flight itineraries” for refundable and non-refundable tickets when consumers choose not to accept the airline’s offered alternative transportation. The decision not to take alternative transportation is entirely at the passenger’s discretion.

The DOT proposes that airlines and ticket agents only refund passengers in the original form of payment or cash/cash equivalent. Cash equivalents include prepaid cards or digital payments like Venmo, but NOT travel credits or vouchers. Airlines and ticket agents may offer credits and vouchers but must inform passengers of their rights to a refund. It will then be up to the customer to take a travel credit or voucher instead of a refund.

Additionally, the DOT seeks to curtail refund processing delay by defining prompt as “ within seven days of a refund request for credit card purchases and 20 days for purchases by other forms of payment.”

Travel Vouchers for Health Emergencies
Travel form with COVID-19 flagged

Travel Vouchers for Health Emergencies

The DOT suggests air carriers should be required to provide credits or vouchers to passengers with NON-REFUNDABLE tickets when a passenger cannot travel due to a severe infectious disease event. This change would impact travelers by making it more transparent when passengers are owed vouchers for each kind of disease event. The bottom line: airlines would owe a passenger a travel credit or voucher when that passenger is prohibited or advised not to travel by a government entity, public health emergency or medical professional.

Refunds for On-Schedule Flights
Close up of a positive medical test result

Refunds for On-Schedule Flights

The DOT aims to clarify when airlines owe passengers refunds for “non-refundable” on-schedule flights without significant changes. These instances will require documentation. The following are the two situations in that the DOT proposes airlines must refund passengers for on-schedule flights:

  • A passenger possesses an applicable government order or similar documentation showing the passenger’s ability to travel is restricted.

  • A passenger possesses a written statement from a medical professional that if the passenger traveled, it would endanger the passenger’s or the public’s health.

Fees Airlines Can Still Charge for Canceled Flights
Paper plane made of cash

Fees Airlines Can Still Charge for Canceled Flights

The DOT seeks to clarify that ticket agents can retain a service fee for ticket purchases OR refunds (including vouchers). Ticket agents can only charge fees on a per-passenger basis and only if they disclose the fees when the consumer purchased the ticket.

The only other time the DOT proposes airlines are allowed to charge fees for “canceled flights” is when the passenger requests a refund for an on-schedule flight without significant delays (see Refunds for On-Schedule Flights, above).

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