How US refund rules may impact travellers

US travellers are now owed instant refunds. When will Australia follow suit?

New regulations in the United States now require airlines to automatically refund passengers for significant delays or cancellations. Questions are looming as to whether the changes could impact Aussie travellers and if similar policies may be adopted locally.

What are the current US Airline regulations (effective October 30)?

As of October 30, 2024, new regulations mandate that all U.S. airline passengers are entitled to an automatic cash refund in the event of flight cancellations or significant schedule changes. Specifically, passengers will be refunded if their international flight is delayed by more than six hours, or if their domestic flight is delayed by more than three hours.

Additionally, airlines are required to provide refunds if passengers are downgraded to a lower cabin class or if a paid service, such as Wi-Fi, fails to be delivered. Passengers experiencing delays with checked baggage will also be entitled to compensation.

Impact on Australian travellers

Australian passengers flying with U.S-based airlines will benefit from new protections that ensure automatic refunds in the event of flight cancellations or significant changes, eliminating the need for formal refund requests.

The change is set to raise awareness among Australians about their consumer rights, especially when flying with international airlines. It also sets a precedent, as Australian travellers may begin to expect similar levels of transparency and fairness when flying domestically or with local carriers.

For some time, experts have argued that Australian airlines are falling short in meeting their consumer responsibilities. In November 2022, 45% of flights on some of Australia’s busiest domestic routes were either cancelled or delayed, inconveniencing countless customers.

Adam Glezer of Consumer Champion says that the new US laws have reinforced just how far Australia has to go.

“These are the type of laws that Australia should also have in place. The bottom line is, when it comes to airline protection for consumers, we're well behind other areas of the world, such as the US and UK, in terms of compensation and the automatic right to refunds.”

“Australians should be angry that we are so far behind when it comes to consumer protection in this area.”

Will Australian airlines be forced to step up?

While the U.S regulations won’t apply to Australian airlines, the policy shift could pressure them to improve their customer service standards while placing scrutiny from passengers expecting similar protections.

Currently, Australian airlines are not necessarily obligated to account for the care of delayed passengers. By contrast, passengers in the EU are entitled to up to 600 Euros when delayed for more than three hours. And those eligible for refunds must be compensated within seven days of a flight cancellation.

Travel insurance and flight delays

In light of the changed regulations, travellers are being advised to understand when they are entitled to compensation from their airline. Importantly, passengers should note that when flights delayed due to factors within the airline’s control, such as crew shortages or mechanical issues, airlines are responsible to support their customers.

Glezer says that in his experience, airlines often shift the blame when they are at fault for a delay or cancellation.

“When the cancellation is within the airline's control, they should automatically refund consumers without telling them to go and get a refund from their insurance company. It's the airline's responsibility to refund customers in situations such as these. On multiple occasions, I've had consumers tell me the airline has told them to get a refund from their insurance company, even though it wasn't their responsibility to provide one."

When airlines are not liable

For delays caused by reasons outside of the airline’s control, such as bad weather or civil unrest, airlines may not offer compensation. Under these circumstances, travel insurance benefits will likely kick in, as unpredictable events such as natural disasters, strikes, or extreme weather disruptions are usually coverable.

When in doubt, it's a good idea to purchase travel insurance as soon as you book your airfares as policies won’t cover known events once they’ve been publicly reported.

How to seek compensation for flight delays and cancellations

To ensure they are in the know, travellers should understand their consumer rights when impacted by airline delays or cancellations. All flights should come with automatic consumer guarantees, no matter how cheap your ticket. If your flight has been delayed or cancelled outside a reasonable timeframe, and the airline is responsible, you are within your rights to seek a refund, credit, and/or cover for all reasonable expenses.

Glezer says that consumers should stick to their guns when it comes to pursuing a refund.

“If you are entitled to a refund under our substandard laws make sure you are persistent. From my experience, airlines tend to make the refund process extraordinarily painful and difficult to navigate most of the time. It can take months if not years to get the money back into your account. I believe the airlines hope you'll give up and that you will not pursue it. Just remember, it's your money and you have every right to get it back".

Record everything

As a final note, travellers should take pains to record the cause of their flight disruption, take notes of any communications you have with travel providers and save all email correspondence. If your flight has been delayed or cancelled, you will need written proof from your airline to support a travel insurance claim along with advice on whether they are providing compensation. In the event of a delay, keep all receipts for any purchases made. Without proof of your expenses, you may not be eligible to claim back your costs.