[Federal Register Volume 89, Number 82 (Friday, April 26, 2024)]
[Rules and Regulations]
[Pages 32760-32839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07177]



[[Page 32759]]

Vol. 89

Friday,

No. 82

April 26, 2024

Part III





 Department of Transportation





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14 CFR Parts 259, 260, 262, et al.





Refunds and Other Consumer Protections; Final Rule

  Federal Register / Vol. 89 , No. 82 / Friday, April 26, 2024 / Rules 
and Regulations  

[[Page 32760]]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Parts 259, 260, 262, and 399

[Docket No. DOT-OST-2022-0089 and DOT-OST-2016-0208]
RIN 2105-AF04


Refunds and Other Consumer Protections

AGENCY: Office of the Secretary (OST), Department of Transportation.

ACTION: Final rule.

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SUMMARY: The U.S. Department of Transportation (Department or DOT) is 
requiring automatic refunds to consumers when a U.S. air carrier or a 
foreign air carrier cancels or makes a significant change to a 
scheduled flight to, from, or within the United States and the consumer 
is not offered or rejects alternative transportation and travel 
credits, vouchers, or other compensation. These automatic refunds must 
be provided promptly, i.e., within 7 business days for credit card 
payments and within 20 calendar days for other forms of payment. To 
ensure consumers know when they are entitled to a refund, the 
Department is requiring carriers and ticket agents to inform consumers 
of their right to a refund if that is the case before making an offer 
for alternative transportation, travel credits, vouchers, or other 
compensation in lieu of refunds. Also, the Department is defining, for 
the first time, the terms ``significant change'' and ``cancellation'' 
to provide clarity and consistency to consumers with respect to their 
right to a refund. The Department is also requiring refunds to 
consumers for fees for ancillary services that passengers paid for but 
did not receive and for checked baggage fees if the bag is 
significantly delayed. For consumers who are unable to or advised not 
to travel as scheduled on flights to, from, or within the United States 
because of a serious communicable disease, the Department is requiring 
that carriers provide travel vouchers or credits that are transferrable 
and valid for at least 5 years from the date of issuance. Carriers may 
require consumers to provide documentary evidence demonstrating that 
they are unable to travel or have been advised not to travel to support 
their request for a travel voucher or credit, unless the Department of 
Health and Human Services (HHS) publishes guidance declaring that 
requiring such documentary evidence is not in the public interest.

DATES: This rule is effective June 25, 2024. Upon OMB approval of the 
information collection established in this final rule, the Department 
will publish a separate notice announcing the effective date of the 
collection.

FOR FURTHER INFORMATION CONTACT: Clereece Kroha or Blane Workie, Office 
of Aviation Consumer Protection, U.S. Department of Transportation, 
1200 New Jersey Ave. SE, Washington, DC, 20590, 202-366-9342 (phone), 
[email protected] or [email protected] (email).

SUPPLEMENTARY INFORMATION:

Executive Summary

(1) Purpose of the Regulatory Action

    The purpose of this final rule is to ensure that consumers are 
treated fairly when they do not receive service that they paid for or 
are unable or advised not to travel because of a serious communicable 
disease. This rule responds to Executive Order 14036 on Promoting 
Competition in the American Economy (E.O. 14036), which was issued on 
July 9, 2021.\1\ The Executive Order launched a whole-of-government 
approach to strengthen competition and requires the Department to take 
various actions to promote the interests of American consumers, 
workers, and businesses.
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    \1\ Exec. Order No. 14036, 86 FR 36987 (Jul. 9, 2021).
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    Section 5, paragraph(m)(i)(C) of E.O. 14036 directs the Department 
to submit a report to the White House Competition Council on the 
progress of its investigatory and enforcement activities to address the 
failure of airlines to provide timely refunds for flights cancelled as 
a result of the COVID-19 pandemic. The Department submitted its report 
to the White House in September 2021.\2\ In that report, the Department 
explained that the lack of definition regarding cancelled or 
significantly changed flights had resulted in inconsistency among 
carriers on when passengers are entitled to a refund. The Department 
also noted that approximately 20% of the refund complaints received 
during the first 18 months of the COVID-19 pandemic involved instances 
in which passengers with non-refundable tickets chose not to travel 
given the COVID-19 pandemic and stated that it planned to address 
protections for these consumers in a rulemaking.\3\
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    \2\ Report to the White House Competition Council: U.S. 
Department of Transportation's Investigatory, Enforcement and Other 
Activities Addressing Lack of Timely Airline Ticket Refunds 
Associated with the COVID-19 Pandemic (Refund Report) (September 9, 
2021) at https://www.transportation.gov/individuals/aviation-consumer-protection/dot-report-airline-ticket-refunds.
    \3\ Refund Report at pages 11-12.
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    The Executive Order in Section 5, paragraph(m)(i)(D) further 
directs the Department to publish a notice of proposed rulemaking 
requiring airlines to refund baggage fees when a passenger's luggage is 
substantially delayed and to refund other ancillary fees when 
passengers pay for a service that is not provided.

(2) Background

    The FAA Extension, Safety, and Security Act of 2016 (FAA Extension 
Act or Act) requires the Department to issue a rule mandating that 
airlines provide refunds to passengers for any fee charged to transport 
a checked bag if the bag is delayed as specified in the Act.\4\ On 
October 31, 2016, the Department published an advance notice of 
proposed rulemaking (ANPRM) seeking comment on various issues related 
to the requirement for airlines to refund checked baggage fees when 
they fail to deliver the bags in a timely manner as provided by the FAA 
Extension Act.\5\ On July 21, 2021, the Department published a notice 
of proposed rulemaking titled ``Refunding Fees for Delayed Checked Bags 
and Ancillary Services That Are Not Provided'' (Ancillary Fee Refund 
NPRM).\6\ Among other things, the Ancillary Fee Refund NPRM proposed 
that U.S. and foreign air carriers refund the baggage fee paid for a 
checked bag when they fail to deliver the bag to the passenger within 
12 hours of the arrival of a domestic flight and within 25 hours of the 
arrival of an international flight. This NPRM further proposed ways to 
measure the length of the baggage delivery delay for the purpose of 
determining whether a refund is due. In addition, the Ancillary Fee 
Refund NPRM also proposed to implement a provision in the FAA 
Reauthorization Act of 2018 regarding refunding fees for ancillary 
services that are paid for but not provided.\7\
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    \4\ See FAA Extension, Safety, and Security Act of 2016, Pub. L. 
114-190, July 15, 2016; 49 U.S.C. 41704 note.
    \5\ 81 FR 75347 (October 31, 2016).
    \6\ 86 FR 38420 (July 21, 2021).
    \7\ 49 U.S.C. 42301 note prec.
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    The Department received a total of 29 comments on the Ancillary Fee 
Refund NPRM--three comments from consumer rights advocacy groups,\8\ 16 
comments from U.S. and foreign airlines and airline trade 
associations,\9\ three

[[Page 32761]]

comments from ticket agent trade associations,\10\ five comments from 
individual consumers, one comment from the Colorado Attorney General, 
and one comment from an ancillary service provider.\11\ Overall, the 
commenters provided various suggestions on how the Department should 
interpret and implement the statutory mandate. Airlines asserted they 
would face challenges to comply with certain aspects of the proposed 
baggage delivery deadlines and other requirements, while consumers and 
ticket agents supported a more stringent standard under which a refund 
of baggage fees is due.
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    \8\ Business Travel Coalition et. al., FlyersRights.org, and 
Travelers United.
    \9\ Airlines for America, International Air Transport 
Association, Arab Air Carriers' Association, Association of Asian 
Pacific Airlines, National Air Carrier Association, Regional Airline 
Association, Allegiant Air, Air New Zealand, Condor Flugdienst GmbH, 
COPA Airlines, Emirates, Kuwait Airways, Qatar Airways, Spirit 
Airlines, United Airlines, and Virgin Atlantic.
    \10\ American Society of Travel Advisors and Travel Technology 
Association (Travel Technology Association submitted two comments).
    \11\ Panasonic Avionics Corporation.
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    In a separate effort to enhance air travel consumer protection, on 
August 22, 2022, the Department published in the Federal Register a 
notice of proposed rulemaking titled ``Airline Ticket Refunds and 
Consumer Protections'' (Ticket Refund NPRM) to propose measures to 
enhance protections for consumers when airlines cancel or make 
significant changes to the scheduled itineraries to, from, or within 
the United States.\12\ Currently, the Department's regulations in 14 
CFR part 259 require that airlines provide prompt refunds ``when ticket 
refunds are due.'' Further, the Department's regulations in 14 CFR part 
399 require that ticket agents ``make proper refunds promptly when 
service cannot be performed as contracted.'' The Department's Office of 
Aviation Consumer Protection has interpreted these requirements and its 
statutory authority to prohibit unfair and deceptive practices as 
mandating airlines and ticket agents provide prompt refunds to 
passengers of both the airfare and fees for prepaid ancillary service 
fees if a flight is cancelled or significantly changed and the 
passenger does not continue his or her travel. The Ticket Refund NPRM 
proposed to codify the interpretation that when carriers cancel flights 
or make significant changes to flight itineraries and the contracted 
service is not provided, ticket refunds are due if consumers do not 
accept the alternative transportation offered by carriers or ticket 
agents. It also proposed to define ``significant change of flight 
itinerary'' and ``cancelled flight'' to protect consumers and ensure 
consistency among carries and ticket agents regarding when passengers 
are entitled to refunds.
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    \12\ 87 FR 51550 (August 22, 2022). Prior to publication in the 
Federal Register, on August 3, 2022, the NPRM was publicly available 
at https://www.transportation.gov/airconsumer/latest-news and at 
https://www.regulations.gov, docket number DOT-OST-2022-0089.
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    The Ticket Refund NPRM also proposed to require airlines and ticket 
agents to issue non-expiring travel credits or vouchers, and under 
certain circumstances, refunds in lieu of the travel credits or 
vouchers, to consumers when they: (1) are restricted or prohibited from 
traveling by a governmental entity due to a serious communicable 
disease (e.g., as a result of a stay at home order, entry restriction, 
or border closure); (2) are advised by a medical professional or 
determine consistent with public health guidance issued by the Centers 
for Disease Control and Prevention (CDC), comparable agencies in other 
countries, or the World Health Organization (WHO) not to travel during 
a public health emergency to protect themselves from a serious 
communicable disease; or (3) are advised by a medical professional or 
determine consistent with public health guidance issued by CDC, 
comparable agencies in other countries, or WHO not to travel, 
irrespective of any declaration of a public health emergency, because 
they have or may have contracted a serious communicable disease and 
their condition would pose a direct threat to the health of others. 
Under the Department's current regulations, there is no requirement for 
an airline or a ticket agent to issue a refund or travel credit to a 
passenger holding a non-refundable ticket when the airline operated the 
flight and the passenger does not travel, regardless of the reason that 
the passenger does not travel. The Ticket Refund NPRM's proposals were 
intended to protect consumers' financial interests when the disruptions 
to their travel plans were caused by public health concerns beyond 
their control, and also to promote safe and adequate air transportation 
by incentivizing individuals to postpone travel when they are advised 
by a medical professional or determine, consistent with public health 
guidance, not to travel to protect themselves from a serious 
communicable disease or because they have or may have a serious 
communicable disease that would pose a threat to others.
    Between August 2022 and January 2023, the Aviation Consumer 
Protection Advisory Committee (ACPAC) \13\ devoted substantial time in 
three separate meetings to discuss the Ticket Refund NPRM. At an all-
day public meeting on August 22, 2022, the ACPAC heard the perspectives 
of consumer advocates, airline and ticket agent representatives, and 
members of the public. Then, on December 9, 2022, the ACPAC identified 
and deliberated on potential recommendations on the Ticket Refund NPRM. 
The ACPAC voted on these recommendations at a meeting held on January 
12, 2023.
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    \13\ The ACPAC is a statutorily required Federal advisory 
committee that evaluates current aviation consumer protection 
programs. It also provides recommendations to the Secretary for 
improving and establishing additional consumer protection programs 
that may be needed. Information about ACPAC is available at https://www.regulations.gov/docket/DOT-OST-2018-0190.
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    The Department initially provided a comment period of 90 days on 
the Ticket Refund NPRM (i.e., until November 21, 2022). In September 
2022, Airlines for America (A4A), the International Air Transport 
Association (IATA), the Travel Technology Association (Travel Tech), 
the American Society of Travel Advisors (ASTA), and the Travel 
Management Coalition requested an extension of the comment period.\14\ 
The Department extended the comment period to December 16, 2022. In 
extending the comment period for an additional 25 days, the Department 
acknowledged that the NPRM raised important issues that required in-
depth analysis and consideration by the stakeholders. The Department 
also noted that the ACPAC was expected to meet on December 9 to 
deliberate on what, if any, recommendations it would make to the 
Department regarding this rulemaking and its belief that extending the 
comment period of the NPRM for one week after the ACPAC meeting would 
provide the public an opportunity to consider and provide comment on 
any recommendations of the ACPAC.
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    \14\ In the request for extension of comment period by the 
airline representatives, they included various questions arising 
from the NPRM for which they sought clarifications from the 
Department. The Department responded to these questions and placed 
the responses in the docket for this rulemaking at DOT-OST-2022-
0089.
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    On December 16, 2022, A4A and IATA filed a petition to request a 
public hearing on the NPRM pursuant to the Department's regulation on 
discretionary rulemaking relating to unfair and deceptive practices at 
14 CFR 399.75. The Department granted the request and conducted a 
public hearing on March 21, 2023, to afford A4A, IATA, and other 
stakeholders an opportunity to present certain factual

[[Page 32762]]

issues that they asserted are pertinent to the Department's decision on 
the rulemaking. At the hearing, the Department heard from various 
stakeholders and subject matter experts on three issues regarding the 
Ticket Refund NPRM: (1) whether consumers can make reasonable self-
determinations regarding contracting a serious communicable disease; 
(2) whether the documentation requirement (medical attestation and/or 
public health guidance) is sufficient to prevent fraud; and (3) how to 
determine whether a downgrade of amenities or travel experiences 
qualifies as a ``significant change of flight itinerary.'' The 
Department reopened the comment period for seven days after the hearing 
to allow the public the opportunity to provide comments on issues 
discussed at the hearing.
    The Department received over 5,300 comments on the Ticket Refund 
NPRM from consumer rights advocacy groups, airlines and airline trade 
associations, ticket agents and ticket agent trade associations, 
academic researchers, State attorneys general, and individual 
consumers. Of the 5,300 comments, approximately 4,600 comments are from 
individual consumers or consumer organizations, while approximately 24 
comments are from airline representatives and 650 comments are from 
those representing ticket agents. Almost all consumer commenters 
expressed strong support of the Department's proposals to enhance 
aviation consumer protection. The industry commenters raised various 
concerns about the NPRM proposals, supporting some while urging the 
Department to reconsider or revise others.
    The Department has carefully reviewed and considered the comments 
on the Ancillary Fee Refund NPRM and the Ticket Refund NPRM received in 
the rulemaking dockets, as well as comments received during the March 
2023 hearing and the recommendations of the ACPAC. The Department is 
now issuing a combined final rule for the Ticket Refunds NPRM and the 
Ancillary Fee Refund NPRM to significantly strengthen protections for 
consumers seeking refunds of: (1) airline tickets when an airline 
cancels or significantly changes a flight, and the consumer rejects or 
is not offered alternative transportation; (2) checked bag fees when 
bags are significantly delayed; and (3) ancillary services fees when 
consumers pay for services, such as Wi-Fi, that are not provided. In 
addition, this final rule provides protections for consumers who are 
unable or advised not to travel because of a serious communicable 
disease by requiring that carriers provide these consumers travel 
vouchers or credits that are transferrable and valid for at least 5 
years from the date of issuance.

(3) Summary of Major Provisions

------------------------------------------------------------------------
              Subject                            Final rule
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Definition of Cancelled Flight....  Amend 14 CFR part 399 and add 14 CFR
                                     part 260 to define cancelled flight
                                     as a flight that was published in a
                                     carrier's Computer Reservation
                                     System (CRS) at the time of the
                                     ticket sale but not operated by the
                                     carrier.
Definition of Significant Change    Amend 14 CFR part 399 and add 14 CFR
 of Flight Itinerary.                part 260 to define significant
                                     change of flight itinerary as a
                                     change to the itinerary made by a
                                     carrier where:
                                    (1) the passenger is scheduled to
                                     depart from the origination airport
                                     three hours or more (for domestic
                                     itineraries) or six hours or more
                                     (for international itineraries)
                                     earlier than the original scheduled
                                     departure time;
                                    (2) the passenger is scheduled to
                                     arrive at the destination airport
                                     three hours or more (for domestic
                                     itineraries) or six hours or more
                                     (for international itineraries)
                                     later than the original scheduled
                                     arrival time;
                                    (3) the passenger is scheduled to
                                     depart from a different origination
                                     airport or arrive at a different
                                     destination airport;
                                    (4) the passenger is scheduled to
                                     travel on an itinerary with more
                                     connection points than that of the
                                     original itinerary;
                                    (5) the passenger is downgraded to a
                                     lower class of service;
                                    (6) the passenger with a disability
                                     is scheduled to travel through one
                                     or more connecting airports that
                                     differ from the original itinerary;
                                     or
                                    (7) the passenger with a disability
                                     is scheduled to travel on a
                                     substitute aircraft that results in
                                     one or more accessibility features
                                     needed by the passenger being
                                     unavailable.
Entity Responsible for Refunding    Add 14 CFR part 260 to require U.S.
 Airline Tickets.                    and foreign air carriers that are
                                     the merchants of record \15\ of the
                                     ticket transactions to provide
                                     prompt refunds when they are due,
                                     including for codeshare and
                                     interline itineraries.
                                    Amend 14 CFR part 399 to require
                                     ticket agents that are merchants of
                                     record of the airline ticket
                                     transactions to provide prompt
                                     ticket refunds when they are
                                     due.\16\
Notification of Right to Refund...  Amend 14 CFR parts 259 and 399 to
                                     require U.S. and foreign airlines
                                     and ticket agents inform consumers
                                     that they are entitled to a refund
                                     of the ticket if that is the case
                                     before making an offer for
                                     alternative transportation or
                                     travel credits, vouchers, or other
                                     compensation in lieu of refunds.
                                    Add 14 CFR part 260 to require U.S.
                                     and foreign airlines to provide
                                     prompt notifications to consumers
                                     affected by a cancelled or
                                     significantly changed flight of
                                     their right to a refund of the
                                     ticket and ancillary fees due to
                                     airline-initiated cancellations or
                                     significant changes, any offer of
                                     alternative transportation or
                                     travel credit, vouchers, or other
                                     compensation in lieu of a refund,
                                     and airline policies on refunds and
                                     rebooking when consumers do not
                                     respond to carriers' offers of
                                     alternative transportation or
                                     travel credit, vouchers, or other
                                     compensation in lieu of a refund.
``Prompt'' Ticket Refund..........  Amend 14 CFR parts 259 and 399 and
                                     add 14 CFR part 260 to specify
                                     ``prompt'' ticket refund means:
                                    (1) Airlines and ticket agents
                                     provide refunds for tickets
                                     purchased with credit cards within
                                     7 business days of refunds becoming
                                     due; and
                                    (2) Airlines and ticket agents
                                     refund tickets purchased with
                                     payments other than credit cards
                                     within 20 calendar days of refunds
                                     becoming due.
                                    Define ``business days'' to mean
                                     Monday through Friday excluding
                                     Federal holidays in the United
                                     States.

[[Page 32763]]

 
Automatic Refunds of Airline        Add 14 CFR part 260 to require
 Tickets.                            carriers who are the merchants of
                                     record to provide automatic ticket
                                     refunds when:
                                    (1) a carrier cancels a flight and
                                     does not offer alternative
                                     transportation or travel credits,
                                     vouchers, or other compensation for
                                     the canceled flight in lieu of a
                                     refund;
                                    (2) a carrier significantly changes
                                     a flight and the consumer rejects
                                     the significantly changed flight
                                     itinerary and the carrier does not
                                     offer alternative transportation or
                                     offer travel credits, vouchers, or
                                     other compensation in lieu of a
                                     refund;
                                    (3) a consumer rejects the
                                     significantly changed flight or
                                     alternative transportation offered
                                     as well as travel credits,
                                     vouchers, or other compensation
                                     offered for a canceled flight or a
                                     significantly changed flight
                                     itinerary in lieu of a refund;
                                    (4) a carrier offers a significantly
                                     changed flight or alternative
                                     transportation for a significantly
                                     changed flight itinerary or a
                                     canceled flight, but the consumer
                                     does not respond to the
                                     transportation offered on or before
                                     a response deadline set by the
                                     carrier and does not accept any
                                     offer of travel credits, vouchers,
                                     or other compensation, and the
                                     carrier's policy is to treat a lack
                                     of a response as a rejection of the
                                     alternative transportation offered;
                                    (5) a carrier does not offer a
                                     significantly changed flight or
                                     alternative transportation for a
                                     significantly changed flight
                                     itinerary or a canceled flight but
                                     offers travel credits, vouchers, or
                                     other compensation in lieu of a
                                     refund, and the consumer does not
                                     respond to the alternative
                                     compensation offered on or before a
                                     reasonable response date in which
                                     case the lack of a response is
                                     deemed a rejection; or
                                    (6) a carrier offers a significantly
                                     changed flight or alternative
                                     transportation for a significantly
                                     changed flight itinerary or a
                                     canceled flight and offers travel
                                     credits, vouchers, or other
                                     compensation in lieu of a refund
                                     and the carrier has not set a
                                     deadline to respond, the consumer
                                     does not respond to the
                                     alternatives offered, and the
                                     consumer does not take the flight.
                                    Carriers may set a reasonable
                                     deadline for a consumer to accept
                                     or reject a significant change to a
                                     flight or an offer of alternative
                                     transportation following a
                                     significant change or a
                                     cancellation.
                                    Carriers that set a deadline must
                                     establish, publish, and adhere to a
                                     policy regarding whether consumers
                                     not responding to a significant
                                     change or an offer of alternative
                                     transportation following a
                                     significant change or cancellation
                                     before the carrier's deadline
                                     would: (1) have their reservations
                                     cancelled and receive a refund; or
                                     (2) maintain their reservations and
                                     forfeit the right to a refund.
Refunding Fees for Significantly    Add 14 CFR part 260 to require U.S.
 Delayed Bags.                       and foreign airlines that are
                                     merchants of record for the checked
                                     bag fee or if a ticket agent is the
                                     merchant of record for the checked
                                     bag fee, the carrier that operated
                                     the last flight segment to provide
                                     automatic refunds of checked
                                     baggage fees when they fail to
                                     deliver checked bags in a timely
                                     manner:
                                    (1) For domestic itineraries, a
                                     refund of baggage fee is due when
                                     an airline fails to deliver the
                                     checked bag within 12 hours of the
                                     consumer's flight arriving at the
                                     gate and the consumer has filed a
                                     Mishandled Baggage Report.
                                    (2) For international itineraries
                                     where the flight duration of the
                                     segment between the United States
                                     and a point in a foreign country is
                                     12 hours or less, a refund of
                                     baggage fee is due when the airline
                                     fails to deliver the checked bag
                                     within 15 hours of the consumer's
                                     flight arriving at the gate and the
                                     consumer has filed a Mishandled
                                     Baggage Report.
                                    (3) For international itineraries
                                     where the flight duration of the
                                     segment between the United States
                                     and a point in a foreign country is
                                     over 12 hours, a refund of baggage
                                     fee is due when the airline fails
                                     to deliver the checked bag within
                                     30 hours of the consumer's flight
                                     arriving at the gate and the
                                     consumer has filed a Mishandled
                                     Baggage Report.
Refunding Ancillary Services Fees   Add 14 CFR part 260 to require U.S.
 for Services Not Provided.          and foreign airlines that are
                                     merchants of record for the
                                     ancillary service or if a ticket
                                     agent is the merchant of record for
                                     the ancillary service, the carrier
                                     that failed to provide the
                                     ancillary service to provide
                                     automatic refunds of ancillary
                                     service fees when a passenger pays
                                     for an ancillary service that the
                                     airlines fail to provide.
Providing Travel Credits or         Add 14 CFR part 262 to require U.S.
 Vouchers to Consumers Affected by   and foreign airlines that are
 a Serious Communicable Disease.     merchants of record for the ticket
                                     transaction or if a ticket agent is
                                     the merchant of record, the carrier
                                     that operated the flight to issue
                                     travel credits or vouchers, valid
                                     for at least five years from the
                                     date of issuance and transferrable,
                                     when:
                                    (1) a consumer is advised by a
                                     licensed treating medical
                                     professional not to travel during a
                                     public health emergency to protect
                                     himself/herself from a serious
                                     communicable disease, the consumer
                                     purchased the airline ticket before
                                     a public health emergency was
                                     declared, and the consumer is
                                     scheduled to travel during the
                                     public health emergency to or from
                                     the area affected by the public
                                     health emergency;
                                    (2) a consumer is prohibited from
                                     travel or is required to quarantine
                                     for a substantial portion of the
                                     trip by a governmental entity in
                                     relation to a serious communicable
                                     disease and the consumer purchased
                                     the airline ticket before a public
                                     health emergency for that area was
                                     declared or, if there is no
                                     declaration of a public health
                                     emergency, before the government
                                     prohibition or restriction for
                                     travel to or from that area is
                                     imposed; or
                                    (3) a consumer is advised by a
                                     licensed treating medical
                                     professional not to travel,
                                     irrespective of a public health
                                     emergency, because the consumer has
                                     or is likely to have contracted a
                                     serious communicable disease and
                                     would pose a direct threat to the
                                     health of others.
Documentation Requirement for       Add 14 CFR part 262 to allow U.S.
 Receiving Credits or Vouchers.      and foreign airlines to require
                                     consumers requesting a credit or
                                     voucher for a non-refundable ticket
                                     when the flight is still scheduled
                                     to be operated without significant
                                     change to provide, as appropriate:

[[Page 32764]]

 
                                    (1) the applicable government order
                                     or other document relating to a
                                     serious communicable disease
                                     demonstrating how the passenger is
                                     prohibited from travel or is
                                     required to quarantine at the
                                     destination for a substantial
                                     portion of the trip; or
                                    (2) a written statement from a
                                     licensed treating medical
                                     professional, attesting that it is
                                     the medical professional's opinion,
                                     based on current medical knowledge
                                     concerning a serious communicable
                                     disease such as guidance issued by
                                     CDC or WHO and the passenger's
                                     health condition, that the
                                     passenger should not travel to
                                     protect the passenger from a
                                     serious communicable disease or the
                                     passenger would pose a direct
                                     threat to the health of others if
                                     the passenger traveled. This
                                     medical statement may only be
                                     required in the absence of HHS
                                     guidance declaring that requiring
                                     such documentation is not in the
                                     public interest.
Service Fees by Ticket Agents for   Amend 14 CFR part 399 to allow
 Issuing Tickets.                    ticket agents to retain the service
                                     fee charged when issuing the
                                     original ticket if the service
                                     provided is for more than
                                     processing payment for a flight
                                     that the consumer found and so long
                                     as the fee is on a per-passenger
                                     basis and the existence, amount,
                                     and the non-refundable nature of
                                     the fee if this is the case, is
                                     clearly and prominently disclosed
                                     to consumers at the time they
                                     purchase the airfare.
Processing Fees for Issuing         Retaining Processing Fee for
 Refunds, Credits, or Vouchers.      Required Refunds: Add 14 CFR part
                                     260 to prohibit carriers from
                                     retaining a processing fee for
                                     issuing required refunds when the
                                     carrier cancels or significantly
                                     changes a flight.
                                    Processing Fee for Issuing Required
                                     Credits or Vouchers: Add 14 CFR
                                     part 262 to allow airlines to
                                     retain a processing fee from the
                                     value of a required travel credit
                                     or voucher provided to a passenger
                                     due to a serious communicable
                                     disease. Airlines (not ticket
                                     agents) are responsible for issuing
                                     travel credits or vouchers to
                                     eligible consumers whose travel is
                                     affected by a serious communicable
                                     disease.
------------------------------------------------------------------------

(4) Costs and Benefits
---------------------------------------------------------------------------

    \15\ Merchants of records are the entities shown in the 
consumer's financial charge statements such as debit or credit card 
charge statements.
    \16\ Comments from ticket agents assert that ticket agents 
appear as merchants of records in less than 10 percent of 
transactions addressed in this final rule.
---------------------------------------------------------------------------

    The final rule will reduce inconsistencies in granting consumers 
airline ticket refunds that stem from the lack of universal definitions 
for cancellation and significant itinerary change. As such, the rule is 
expected to reduce the resources consumers need to expend to obtain the 
refunds they are owed. Consumer time savings are estimated to be about 
$3.8 million annually. The rule also implements 2016 and 2018 statutory 
mandates pertaining to refunds of fees for delayed baggage and 
ancillary services that a consumer does not receive. The expected 
economic impacts of the fee refund provisions consist of $16.0 million 
annually in increased refunds to consumers and $7.1 million annually in 
administrative costs for the airlines.
    The rule also requires airlines to provide five-year transferable 
travel credits or vouchers to passengers who cancel travel for reasons 
related to a serious communicable disease. Expected societal benefits, 
which were not quantified, are from infected air passengers who cancel 
air travel due the option of receiving the five-year travel credit and 
the reduction in exposure of uninfected passengers to serious 
contagious disease. Estimated annual costs range from $3.4 million to 
$482.0 million.

Statutory Authority

    The Department is issuing this rulemaking under its authority to 
prohibit unfair or deceptive practices or unfair methods of competition 
in air transportation or the sale of air transportation pursuant to 49 
U.S.C. 41712, its authority to require safe and adequate interstate 
transportation pursuant to 49 U.S.C. 41702, its authority to mandate 
that airlines refund checked baggage fees to passengers when they fail 
to deliver checked bags in a timely manner pursuant to 49 U.S.C. 41704 
note, and its authority to mandate that airlines promptly provide a 
refund to a passenger of any ancillary fees paid for services related 
to air travel that the passenger does not receive pursuant to 49 U.S.C. 
42301 note prec.
    Under the Department's procedural rule regarding rulemakings 
relating to unfair and deceptive practices, 14 CFR 399.75, the 
Department is required to provide its reasoning for concluding that a 
certain practice is unfair or deceptive to consumers, as defined in 14 
CFR 399.79, when issuing aviation consumer protection rulemakings that 
are not specifically required by statute and are based on the 
Department's general authority to prohibit unfair or deceptive 
practices under 49 U.S.C. 41712. A practice is ``unfair'' to consumers 
if it causes or is likely to cause substantial injury, which is not 
reasonably avoidable, and the harm is not outweighed by benefits to 
consumers or competition.\17\ Proof of intent is not necessary to 
establish unfairness.\18\ The elements of unfairness are further 
elaborated by the Department in its guidance document. \19\
---------------------------------------------------------------------------

    \17\ 14 CFR 399.79(b)(1).
    \18\ 14 CFR 399.79(c).
    \19\ 87 FR 52677 (August 28, 2022).
---------------------------------------------------------------------------

    The Department has determined that it is an unfair business 
practice in violation of section 41712 for airlines or ticket agents to 
refuse to refund passengers when an airline cancels or significantly 
changes a flight and passengers do not accept the offered alternative 
transportation or compensation (e.g., airline credits or vouchers) in 
lieu of a refund, regardless of whether the passenger purchased a non-
refundable ticket. A practice by airlines or ticket agents of not 
providing refunds in such situations substantially harms consumers 
because consumers paid money for services that were not provided when 
the airline cancelled or significantly changed the flight. This harm is 
not reasonably avoidable by consumers as cancellations or significant 
changes to their flights are outside of their control. A reasonable 
consumer would not expect that he or she must pay more to purchase a 
refundable ticket to be able to recoup the ticket price when the 
airline fails to provide the service through no action or fault of the 
consumer. Also, the tangible and significant harm to consumers of not 
receiving a refund is not outweighed by benefits to consumers or 
competition. The Department acknowledges that consumers may benefit 
from the availability of lower cost nonrefundable tickets but does not 
expect that this requirement would result in airlines no longer 
offering

[[Page 32765]]

nonrefundable tickets as the term nonrefundable has generally been 
understood not to apply in cases where airlines cancel or make a 
significant change in the service provided.
    For airlines, this prohibited unfair practice includes a carrier's 
retention of a fee to process a required refund or of a booking fee 
(i.e., a fee for processing payment for a flight that the consumer 
found) because it is the carrier's flight that is significantly changed 
or canceled; the Department is deferring decision on whether the same 
prohibition should apply to ticket agents because ticket agents do not 
operate the flight. Further, the Department has determined that it is 
an unfair and deceptive practice in violation of section 41712 for 
airlines and ticket agents to not inform consumers that they are 
entitled to a refund of the ticket and ancillary fees if that is the 
case before making an offer for travel credits, vouchers, or other 
compensation in lieu of refunds. Also, it is an unfair and deceptive 
practice to not provide proper disclosures and notifications to 
consumers with respect to: the limitations, restrictions, and 
conditions on any travel credits, vouchers, or other compensation 
offered in lieu of refunds; consumers' rights to automatic refunds 
under certain circumstances; and any airline-imposed requirements on 
accepting or rejecting alternative transportation. Additionally, to 
ensure that consumers who purchased their airline tickets from a ticket 
agent receive refunds that are due in a timely manner, the Department 
has determined that it is an unfair practice for airlines to not 
confirm a consumer's refund eligibility in a timely manner. The 
Department's analysis on why these actions by airlines or ticket agents 
violate section 41712 will be provided in each section that discusses 
these matters in substance.
    Similarly, the Department considers it to be an unfair practice for 
an airline to not provide travel credits or vouchers when (1) a 
consumer is advised by a licensed treating medical professional not to 
travel to protect himself/herself from a serious communicable disease 
and the consumer purchased the airline ticket before a public health 
emergency affecting the origination or destination of the consumer's 
itinerary was declared and is scheduled to travel to or from that area 
during the public health emergency; (2) a consumer is prohibited from 
traveling or is required to quarantine for a substantial portion of the 
trip by a governmental entity due to a serious communicable disease 
(e.g., as a result of a stay-at-home order, border closure) affecting 
the origination or destination of the consumer's itinerary and the 
consumer purchased the airline ticket before a public health emergency 
was declared or, if there is no declaration of a public health 
emergency, before the government prohibition or restriction for travel 
to the consumer's destination or from the consumer's origination; or 
(3) a consumer is advised by a licensed treating medical professional 
consistent with public health guidance (e.g., CDC guidance) not to 
travel to protect others from a serious communicable disease. Consumers 
are substantially harmed when they pay for a service that they are 
unable to use because they were directed or advised by governmental 
entities or a medical professional not to travel to protect themselves 
or others from a serious communicable disease, and the airline does not 
provide a travel credit or voucher. More specifically, the loss of the 
value of their tickets is a substantial harm that is not reasonably 
avoidable when consumers purchased their tickets before the declaration 
of a public health emergency and the only way to avoid the loss of the 
ticket value is to disregard a medical professional's advice not to 
travel and risk inflicting serious health consequences on themselves. 
This loss is also not reasonably avoidable when consumers purchased 
their tickets before the declaration of a public health emergency that 
results in the issuance of communicable disease-related travel 
prohibition or restriction or, if there is no declaration of a public 
health emergency, before the government prohibition or restriction for 
travel due to a serious communicable disease and the only way to avoid 
the loss of the ticket value is to disregard direction from 
governmental entities. Finally, this loss of the value of their tickets 
is not reasonably avoidable when the only way to avoid the loss of the 
ticket value is to disregard medical professionals' advice not to 
travel and risk inflicting serious health consequences on others. The 
tangible and significant harm to consumers of losing the value of their 
ticket is not outweighed by potential benefits to consumers or 
competition because the requirement to provide travel credits or 
vouchers would have minimal, if any, impact on nonrefundable fares. A 
public health emergency affecting travel to, within, and from the 
United States in a large scale is infrequent, and this requirement 
applies only to consumers who have been advised or directed not to 
travel by a medical professional or governmental entity in relation to 
a serious communicable disease.
    In addition, the Department considers it to be an unfair practice 
for airlines to not provide travel credits or vouchers to consumers who 
are advised by a medical professional not to travel because they have 
or are likely to have contracted a serious communicable disease, 
regardless of whether there is a public health emergency. Infected 
passengers who are unwilling to incur a financial loss for the airline 
tickets may choose to travel despite the infection, which is likely to 
cause substantial harm to other passengers on the flight by 
significantly increasing the likelihood of these passengers, especially 
those seated within close proximity of the infected passenger, being 
infected by the communicable disease. Such harm cannot be reasonably 
avoided by these passengers because they are assigned to sit close to 
the infected passenger and may have no knowledge about the infection by 
that passenger. The harm to these passengers' health is not outweighed 
by any benefits to consumers or competition. The Department believes 
there would not be any benefit to consumers or competition among 
airlines in infected or potentially infected travelers possibly 
choosing to travel by air and infecting other passengers.
    Further, the Department relies on its authority in 49 U.S.C. 41702 
to require U.S. air carriers to ``provide safe and adequate interstate 
air transportation'' to establish the requirement that an airline 
provide travel credits or vouchers to consumers who are unable or 
advised not travel due to a serious communicable disease. This final 
rule promotes safe and adequate air transportation by reducing 
incentives to travel for individuals who have been advised against 
traveling because they have or are likely to have contracted a serious 
communicable disease or individuals who are particularly vulnerable to 
a serious communicable disease by allowing them to retain the value of 
their tickets in travel credits and postpone travel.
    The Department has received comments from the airlines, ticket 
agents, and their trade associations disputing the Department's 
authority to promulgate the regulation relating to providing travel 
credits or vouchers to passengers whose travel is impacted by a serious 
communicable disease. Those comments and the Department's responses are 
provided in Section IV.1 of this rule preamble.
    The requirements in this final rule regarding airlines refunding 
baggage fees when significantly delayed and refunding ancillary service 
fees when

[[Page 32766]]

the paid for services are not provided are specifically required by 
statute. The requirement for airlines to refund fees for checked bags 
that are significantly delayed is issued pursuant to the Department's 
authority in 49 U.S.C. 41704 note, which was enacted as part of the FAA 
Extension Act (Pub. L. 114-90) and requires the Department to 
promulgate a regulation that mandates that airlines refund checked 
baggage fees to passengers when they fail to deliver checked bags in a 
timely manner.\20\ The requirement to refund ancillary fees for air 
travel related services that passengers paid for but did not receive is 
issued pursuant to the Department's authority in 49 U.S.C. 42301 note 
prec., which was enacted as part of the FAA Reauthorization Act of 2018 
(Pub. L. 115-254) and requires the Department to promulgate a rule that 
mandates that airlines promptly provide a refund to a passenger of any 
ancillary fees paid for services related to air travel that the 
passenger does not receive.\21\
---------------------------------------------------------------------------

    \20\ See Section 2305 of the FAA Extension, Safety, and Security 
Act of 2016, Public Law 114-190 (July 15, 2016)).
    \21\ See Section 421 of the FAA Reauthorization Act of 2018, 
Public Law 115-254 (October 5, 2018).
---------------------------------------------------------------------------

Comments and Responses

I. Refunding Airline Tickets for Cancelled or Significantly Changed 
Flights

1. Covered Entities, Flights, and Consumers

    The NPRM: The existing requirement under 14 CFR 259.5 for carriers 
to adopt and adhere to a customer service plan, which includes a 
commitment to provide prompt ticket refunds to passengers when a refund 
is due, applies to all scheduled flights of a certificated or commuter 
air carrier \22\ if the carrier operates passenger service using any 
aircraft originally designed to have a passenger capacity of 30 or more 
seats, and to all scheduled flights to and from the United States of a 
foreign carrier if the carrier operates passenger service to and from 
the United States using any aircraft originally designed to have a 
passenger capacity of 30 or more seats. The Ticket Refund NPRM proposed 
to expand the applicability of the requirement to provide prompt 
refunds to a certificated or commuter air carrier that operates 
scheduled passenger service to, within, and from the United States 
using aircraft of any size, and to a foreign carrier that operates 
scheduled passenger service to or from the United States using aircraft 
of any size. The Department sought comments on whether the proposed 
expansion of the regulation in section 259.5 to include smaller 
carriers is reasonable, and what obstacles, if any, these smaller 
carriers may encounter to compliance.
---------------------------------------------------------------------------

    \22\ A certificated air carrier is an air carrier holding a 
certificate issued under 49 U.S.C. 41102. A commuter air carrier is 
an air carrier as established by 14 CFR 298.3(b) that carries 
passengers on at least five round trips per week on at least one 
route between two or more points according to a published flight 
schedule, using small aircraft--i.e., aircraft originally designed 
with the capacity for up to 60 passenger seats. See 14 CFR 298.2. 
Commuter air carriers, along with air taxi operators, operating 
under 14 CFR part 298 are exempted from the certification 
requirements of 49 U.S.C. 41102.
---------------------------------------------------------------------------

    As for ticket agents,\23\ the Department's rule in 14 CFR 399.80(l) 
requires that ticket agents of any size ``make proper refunds promptly 
when service cannot be performed as contracted.'' The Ticket Refund 
NPRM proposed that, like the existing rule on ticket agents providing 
refunds, the proposed refund requirements would apply to ticket agents 
of any size but specified that it would only apply to ticket agents 
that sell directly to consumers for scheduled passenger service to, 
from, or within the United States.
---------------------------------------------------------------------------

    \23\ A ``ticket agent'' is defined in 49 U.S.C. 40102(a)(45) to 
mean a person (except an air carrier, a foreign air carrier, or an 
employee of an air carrier or foreign air carrier) that as a 
principal or agent sells, offers for sale, negotiates for, or holds 
itself out as selling, providing, or arranging for, air 
transportation.
---------------------------------------------------------------------------

    In the NPRM, the Department also considered whether the 
applicability of DOT's proposed refund requirements should be limited 
to sellers of air transportation located in the United States and 
whether the beneficiaries should be limited to aviation consumers who 
are residents of the United States based on its review of Regulation Z 
of the Consumer Financial Protection Bureau (CFPB), as codified in 12 
CFR part 1026, and the airline refund regulation in 14 CFR part 374, 
which implements the requirement of Regulation Z with respect to 
airlines. The Department recognized that the regulated entities covered 
by Regulation Z for airline ticket transactions with credit cards may 
be limited to sellers located in the United States and that the 
protection afforded by Regulation Z may be limited to consumers who are 
residents of the United States with credit card accounts located in the 
United States. The Department also noted its broad and independent 
authority to prohibit unfair or deceptive practices in air 
transportation or sale of air transportation,\24\ which enables it to 
cover flights to, within, and from the United States, irrespective of 
whether the consumer holding reservations on those flights is a 
resident of the United States, whether the seller of the airline ticket 
is located in the United States, or whether the transaction takes place 
in the United States. The Department asked for comment on the 
applicability of the proposed requirement.
---------------------------------------------------------------------------

    \24\ Air transportation means foreign air transportation, 
interstate air transportation, or the transportation of mail by 
aircraft. See 49 U.S.C. 40102 (a)(5).
---------------------------------------------------------------------------

    The Department also sought comments on applicability of the rule to 
certain flight segments between two foreign points if they are on the 
same itinerary or ticket with flights to, from, or within the United 
States. If adopting the same itinerary/ticket standard, the Ticket 
Refund NPRM asked whether the refund requirement should only apply when 
the entire itinerary/ticket is sold under a U.S. carrier's code or 
whether it should also apply to itineraries/tickets that combine flight 
segments sold under a U.S. carrier's code and flight segments sold 
under a foreign carrier code pursuant to an interline agreements.
    Comments Received: The Department received one comment from an 
individual stating that including small carriers operating flights to, 
from, or within the United States solely using aircraft originally 
designed to have a passenger capacity of fewer than 30 seats in these 
regulatory proposals would place a considerable burden on these 
carriers, potentially drive many of the smaller carriers that provide 
access to more remote and distant parts of the country out of business. 
The Department received no comments on the proposed scope of covered 
ticket agents in the Ticket Refund NPRM, which incorporates the current 
scope of ticket agents refund rule in 14 CFR 399.80(l), and the 
definition for ``ticket agent'' in 49 U.S.C. 40102(a)(45).
    For the covered tickets/itineraries/flights under the Ticket Refund 
NPRM, IATA and several foreign carriers raised two concerns. First, 
they suggested that applying the rule to all scheduled flights to, 
from, or within the United States is incompatible with regulations from 
other jurisdictions such as the European Union and Canada. They further 
argued that the rule should only apply to flight segments departing a 
U.S. airport. Air Canada argued that the scope of the refund 
regulation, as proposed, would cause confusion as refund rules in other 
jurisdictions typically apply to itineraries departing that 
jurisdiction to a foreign destination. Air Canada contended that the 
Department's proposal represents a misalignment with Canada's Air 
Passenger Protection Regulations (APPR) when both sets of rules apply 
to the same itinerary. Air Canada provides an example that in the

[[Page 32767]]

case of uncontrollable event such as winter storm causing a 
cancellation, the APPR only requires a carrier to refund if the carrier 
is not able to rebook the passenger within 48 hours from the departure 
time, whereas the Department's proposed rule would require a refund 
offer upon flight cancellation. Second, IATA and several foreign 
carriers objected to applying the rule to certain flight segments 
between two foreign points, raising extraterritoriality concerns. Air 
Canada argued that the Department's attempt to apply its refund rule 
extraterritorially would violate the longstanding principles of comity 
and reciprocity of international aviation agreements and the bilateral 
air transport agreement \25\ between the United States and Canada.
---------------------------------------------------------------------------

    \25\ As support for its position, Air Canada references Article 
12.1 of the Air Transport Agreement Between the Government of Canada 
and the Government of the United States, which states ``While 
entering, within, or leaving the territory of one Party, its laws 
and regulations relating to the operation and navigation of aircraft 
shall be complied with by the other Party's airlines.''
---------------------------------------------------------------------------

    Consumers and their representatives are largely in support of a 
broad scope of the Ticket Refund NPRM. Travelers United stated that the 
European regulation, EU261, applies to the scheduled flights of all 
carriers departing the European Union to the United States but only 
applies to the scheduled flights of EU carriers departing the United 
States to the European Union. Travelers United pointed out that, as 
such, a consumer traveling from the United States to the European Union 
on a flight by a U.S. carrier, for example, would not be protected by 
EU 261. Some individual consumer commenters argued that the 
Department's refund rule should cover flights between two foreign 
points in the same itinerary to streamline the refund process for 
international travel.
    Ticket agents also commented on the scope of itineraries/tickets 
covered by the Ticket Refund NPRM. Travel Management Coalition 
suggested that the refund rule should apply only to ticket transactions 
with a point of sale in the United States. Travel Technology 
Association (Travel Tech) echoed the ``point of sale'' approach and 
added that this approach is a bright-line and widely used industry 
standard as the Global Distribution Systems (GDSs) denote the point of 
sale on all their ticket transactions. Travel Tech suggested that this 
approach would make the implementation of any final rules easier for 
the regulated entities.
    U.S. Travel Association stated that the refund requirement should 
be limited to flights to, from, or within the United States purchased 
by consumers residing in the United States. It argued that this 
approach is consistent with CFPB's interpretation of Regulation Z and 
the Department's proposed rule on Transparency of Ancillary Fees, which 
proposes that the consumer protection measures relating to disclosure 
apply to websites ``marketed to United States customers'' and ``tickets 
purchased by consumers in the United States.''
    DOT Response: The Department has determined that it is appropriate 
to include within the scope of covered carriers with respect to the 
ticket refund requirements U.S. and foreign air carriers operating 
scheduled flights to, from, or within the United States solely using 
aircraft originally designed to have a passenger capacity of fewer than 
30 seats. The Department notes that the new ticket refund regulations 
in part 260, which provide clarity on various issues related to 
refunds, do not add new burdens to these carriers as they are already 
covered under 14 CFR part 374 with respect to refunds for credit card 
purchases. The applicability provision in 14 CFR 374.2 states that 
``this part is applicable to all air carriers and foreign air carriers 
engaging in consumer credit transactions.'' Also, the Department's 
Office of Aviation Consumer Protection has for many years interpreted 
49 U.S.C. 41712 as requiring all carriers to provide prompt refunds 
when due irrespective of the form of ticket purchase payment.
    The Department has carefully considered airlines' argument that the 
proposed scope of covered flights for airline ticket refunds (i.e., 
scheduled flights to, from, or within the United States) would 
potentially result in some flights being subject to refund rules of 
multiple jurisdictions, causing complexity to carriers' compliance and 
potential consumer confusion. The Department is not convinced that any 
potential compliance complexity or consumer confusion arising from 
these situations cannot be addressed by carriers offering all the 
accommodations required by the applicable regulations so consumers can 
choose the option that best suits their needs. For instance, the 
Department does not see any conflict of law in the example provided by 
Air Canada. APPR, which applies to all flights to, from, and within 
Canada,\26\ requires airlines to provide a passenger affected by a 
cancellation or a lengthy delay due to a situation outside the 
airline's control with a confirmed reservation on the next available 
flight that is operated by the carrier or a partner airline, leaving 
within 48 hours of the departure time indicated on the passenger's 
original ticket; if the airline cannot provide a confirmed reservation 
within this 48-hour period, it will be required to provide, at the 
passenger's choice, a refund or rebooking. Both the APPR requirement 
and the Department's refund requirement would apply to a flight between 
the United States and Canada. Under the regulation finalized here, the 
carrier would be required to refund the affected passenger if the 
flight is cancelled or delayed for more than six hours and the consumer 
rejects the alternative offered or an alternative is not offered. In 
this situation, the carrier would be expected to offer the passenger 
the choice of a refund and a choice of rebooking on a flight departing 
within 48 hours if such flight exists. Providing consumers such choices 
would satisfy the requirements of both U.S. and Canadian regulations.
---------------------------------------------------------------------------

    \26\ https://otc-cta.gc.ca/eng/publication/application-air-passenger-protection-regulations-a-guide.
---------------------------------------------------------------------------

    The Department notes that airlines operating international air 
transportation are subject to rules from multiple jurisdictions in many 
other areas, such as oversales and disability. The Department does not 
believe there is a conflict of law in ticket refunds which makes it 
impossible for carriers to comply with laws of multiple jurisdictions. 
The Department expects that U.S. and foreign air carriers operating 
scheduled flights to, from, and within the United States will fully 
comply with the refund regulations to which they are subject, 
consistent with the bilateral agreements between the United States and 
other countries. Such compliance will result in consumers benefiting 
from having more choices when their flights are canceled or 
significantly changed by airlines.
    We have also considered the comments on the scope of ``air 
transportation'' for tickets that include flight segments between two 
foreign points. The Department has determined that the refund 
requirements would cover these flight segments that are on a single 
ticket/itinerary to or from the United States without a break in the 
journey. Congress has authorized the Department to prevent unfair or 
deceptive practices or unfair methods of competition in ``air 
transportation,'' 49 U.S.C. 41712(a), and ``air transportation'' is 
defined to include ``foreign air transportation.'' \27\ The

[[Page 32768]]

Department has concluded that ``foreign air transportation'' includes 
journeys to or from the United States with brief and incidental 
stopover(s) at a foreign point without breaking the journey. We believe 
this approach fully addresses the extraterritoriality concerns raised 
by some carriers and is consistent with the Department's general 
approach adopted in this final rule of considering domestic segments of 
international itineraries as a part of the international journey. While 
the Department is not providing an exhaustive list of what a stopover 
that would break the journey is, it is setting an outer limit by 
treating any deliberate interruption of a journey at a point between 
the origin and destination that is scheduled to exceed 24 hours on an 
international itinerary to be a break in the journey.\28\
---------------------------------------------------------------------------

    \27\ Foreign air transportation ``means the transportation of 
passengers or property by aircraft as a common carrier for 
compensation, or the transportation of mail by aircraft, between a 
place in the United States and a place outside the United States 
when any part of the transportation is by aircraft.'' See 49 U.S.C. 
40102(a)(23).
    \28\ See definitions for common terms in air travel at https://www.transportation.gov/sites/dot.gov/files/docs/Common%20Terms%20in%20Air%20Travel.pdf.
---------------------------------------------------------------------------

    Besides this bright-line outer limit, to determine whether a 
stopover under 24 hours at a foreign point breaks the journey between a 
point in the United States and a point in a foreign country, the 
Department would view factors including whether the whole itinerary was 
purchased in one single transaction, whether the segment between two 
foreign points is operated or marketed by a carrier that has no 
codeshare or interline agreement with the carrier operating or 
marketing the segment to or from the United States, and whether the 
stopover at a foreign point involves the passenger picking up checked 
baggage, leaving the airport, and continuing the next segment after a 
substantial amount of time.
    The Department has also determined that it is appropriate to apply 
the refund and other consumer protection regulations finalized here to 
all tickets/itineraries to, from, or within the United States 
regardless of the point of sales or the residency of the consumers. 
While recognizing that Regulation Z applies only to credit card 
transactions that take place in the United States involving residents 
of the United States, the Department's authority to prohibit unfair or 
deceptive practices in air transportation under 49 U.S.C. 41712 goes 
beyond this scope with respect to the type and location of the 
transactions and the residency of consumers. The Department has made 
the policy decision to exercise its broad authority under section 41712 
to ensure that its ticket and ancillary service fee refunds 
requirements and the protections for passengers affected by a serious 
communicable disease provide the maximum protections to consumers as 
permitted by the law. The Department also believes that this broad 
scope would simplify and streamline the refund process by the regulated 
entities and reduce consumer frustration and confusion.

2. Need for a Rulemaking

    The NPRM: The NPRM is intended to prevent unfair or deceptive 
practices by airlines and ticket agents when airlines cancel or make 
significant changes to flights. Under the Department's existing 
regulations, airlines have an obligation to provide prompt refunds when 
refunds are due, but a specific reference to refunding airfare due to a 
canceled or significantly changed flight is not codified in the 
regulations. Also, today, airlines are permitted to adopt their own 
standards for ``cancellation'' and ``significant change,'' which has 
resulted in lack of consistency from airline to airline and passenger 
confusion about their rights, particularly during periods of 
significant air travel disruptions such as the COVID-19 pandemic when 
refund requests overwhelmed the industry. As noted in the NPRM, the 
Department received a significant number of complaints against airlines 
and ticket agents for refusing to provide a refund or for delaying 
processing of refunds during the COVID-19 pandemic. In issuing the 
NPRM, the Department explained that its existing regulations on refunds 
made it difficult to monitor compliance and enforce refund requirements 
and described benefits of strengthening protections for consumers to 
obtain a prompt refund when airlines cancel or significantly change 
flight schedules.
    Comments Received: Virtually all consumers and consumer rights 
advocacy groups that commented on the NPRM are in support of the 
Department exercising its legal authority under section 41712 to codify 
the Department's longstanding enforcement policy requiring airlines and 
ticket agents to provides refunds when airlines cancel or make a 
significant change to a flight itinerary. They also strongly support 
the proposal to define ``cancellation'' and ``significant change'' to 
eliminate the inconsistencies among airline policies that are the main 
sources of consumer frustration. FlyersRights commented that some 
airlines' behavior during the COVID-19 pandemic to retroactively extend 
the length of delay that would qualify affected consumers for a refund 
is strong evidence for the need of rulemaking. In addition to 
supporting the proposals in this area, approximately 500 individual 
consumers expressed their view that the NPRM does not go far enough in 
terms of consumer protection, with over 300 commenters explicitly 
suggesting that the Department adopt regulation mandating airlines to 
compensate consumers for incidental costs (e.g., meals, hotels, ground 
transportation) associated with airline cancellations or significant 
changes, similar to the European Union Regulation EC261/2004 (EC261). 
National Consumers League noted that this additional consumer 
protection measure would mitigate consumer inconveniences and 
incentivize airlines to invest in maintaining operations according to 
the published schedules.
    Among airline commenters, A4A expressed support for codifying the 
refund policy and adopting definitions for ``cancellation'' and 
``significant change'' but disagreed with some components of the 
proposed definitions. The National Air Carrier Association (NACA) 
stated that the Department should simply codify the current policy 
without adopting definitions for ``cancellation'' and ``significant 
change.'' IATA and several airline commenters asserted that it is not 
necessary to promulgate a new rule because airlines were already 
providing refunds pre-COVID-19 pandemic, as evidenced by the relatively 
small numbers of complaints on refunds at that time. They contended 
that the Department should not rely on a once-in-a-lifetime event 
(i.e., the COVID-19 pandemic) as the justification for a rulemaking. 
They pointed out that airlines have issued unprecedented amounts of 
refunds during the pandemic and in cases where they failed to do so, 
the Department's enforcement actions under the current rule have proven 
that rulemaking is unnecessary. IATA's comment recognized that 
standardizing definitions would provide consistency in passenger 
experiences and avoid consumer confusion, although it argued that 
allowing airlines to define these terms provides greater flexibility, 
fosters competition, and helps maximize value for consumers. The 
Association of Asian and Pacific Airlines (AAPA) expressed its view 
that the refund requirement should exempt situations where 
cancellations and significant changes are caused by safety or security-
related reasons including pandemics and when large scale disruptions or 
``force majeure'' such as unannounced border closures and restrictions 
by governments occur.
    Ticket agents and their trade associations are generally in support 
of the proposals on codification of the refund enforcement policy and 
adopting

[[Page 32769]]

definitions for ``cancellation'' and ``significant change.'' Many 
ticket agent commenters share the Department's view that these 
proposals mitigate consumer confusion caused by different airline 
refund policies and enhance predictability regarding refund rights. 
However, U.S. Travel Association, an organization representing various 
components of the U.S. travel industry, including some ticket agents, 
opposed the proposals on refunds due to airline cancellation and 
significant change, arguing that the proposals do not address the root 
causes of flight delays and cancellations and would have unintended 
consequences of higher costs for travel and reduced options for 
consumers.
    The Department also received a joint comment by 32 State Attorneys 
General supporting the Department's proposal but also urging, among 
other things, that the Department: (1) work on a partnership with 
States to enforce consumer protection rules, (2) require airlines to 
sell tickets only for flights they have adequate staff to operate, (3) 
impose significant penalties for airline cancellations or lengthy 
delays not caused by weather or other unavoidable reasons, and (4) 
require airlines to compensate consumers affected by cancellations or 
delays, including compensating for the cost of meals, hotels, flights 
on another airline, rental cars, and issuing partial refunds to 
consumers who took the alternative flight that is later, longer, or 
otherwise of less value.
    The Department's Aviation Consumer Protection Advisory Committee, 
after discussing the Department's proposals on refunds related to 
airline cancellation and significant change during several meetings, 
unanimously recommended that the Department codify its longstanding 
policy to require airlines and ticket agents to provide prompt refunds 
to consumers when airlines cancel or make a significant change to 
flight itineraries and consumers do not accept alternative 
transportation offered by airlines or ticket agents. The member 
representing airlines noted that the airlines' support on this 
recommendation is limited to adopting a rule that codifies the 
Department's current policy.
    DOT Response: The Department continues to be concerned about the 
lack of regulatory clarity regarding airlines' obligation to provide 
prompt refunds when airlines cancel or make significant changes to 
flights and the impact that this lack of regulatory clarity has on 
airlines' compliance and the ability of the Department's Office of 
Aviation Consumer Protection to take enforcement action despite the 
Department's statutory authority to prohibit unfair and deceptive 
practices. As described in the Statutory Authority section, the 
Department believes that an airline's or ticket agent's practice of not 
providing a prompt refund when an airline cancels or significantly 
changes a passenger's flight and the passenger does not accept the 
alternative offered causes substantial harm to consumers, the harm is 
not reasonably avoidable, and the harm is not outweighed by benefits to 
consumers or competition. As such, the Department concludes that its 
existing regulatory structure on refunds should be enhanced to better 
protect consumers.
    The Department also agrees with comments from ticket agent 
representatives and others that definitions for ``cancellation'' and 
``significant change of flight itinerary'' mitigate consumer confusion 
caused by different airline refund policies and enhance predictability 
regarding refund rights. As the Department stated in the Ticket Refund 
NPRM, the consumer complaints received by the Department during the 
COVID-19 pandemic demonstrated that various airline definitions for 
these terms have caused a great level of consumer harm in terms of 
frustration and confusion. The Department agrees with FlyersRights that 
a lack of a uniform standard on the meaning of a cancellation and 
significant change has resulted in certain airlines improperly revising 
and applying less consumer-friendly refund policies during periods when 
flight cancellations and changes spike, which is strong evidence of the 
need of rulemaking. The Department notes, however, that the adoption of 
this final rule is not, as some airline commenters argue, solely based 
on issues arising from an unprecedented pandemic. As we have witnessed 
during the past two years while the air travel industry is recovering 
post-pandemic, disruptions in large scales continue to occur as the 
result of other factors such as weather, technological issues, and 
staffing shortages. The significant number of consumer complaints on 
refunds filed with the Department in recent years demonstrates the need 
to strengthen the current regulation on refunds.
    Regarding the various comments by consumers, consumer right 
advocacy groups, and the State Attorneys General regarding promulgating 
regulations to require airlines to provide compensation to consumers 
when their flights are cancelled or significantly changed to cover the 
incidental costs such as meals, hotels, and ground transportation, the 
Department has initiated another consumer protection rulemaking to 
address these issues.\29\ The Department fully recognizes that the 
measures finalized in this rule on airline ticket refunds are merely 
the first steps towards the Department's goal of strengthening overall 
protections to consumers affected by airline cancellations and changes.
---------------------------------------------------------------------------

    \29\ See, Rights of Airline Passengers When There Are 
Controllable Flight Delays or Cancellations, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202304&RIN=2105-AF20.
---------------------------------------------------------------------------

3. Definition of a Cancelled Flight

    The NPRM: The Ticket Refund NPRM proposed to define a cancelled 
flight to mean a covered flight that was listed in the carrier's CRS at 
the time the ticket was sold to a consumer but not operated by the 
carrier. Under this proposed definition, the reason that the flight was 
not operated (e.g., mechanical, weather, air traffic control) would not 
matter. Also, the removal of a flight from a carrier's CRS would not 
negate the obligation to provide a refund when the alternative offered 
is not accepted.
    Comments Received: A4A and IATA expressed support for the 
Department codifying a definition for ``cancelled flight'', as they 
believe it is necessary to provide clarity and transparency to the 
traveling public. They argued, however, that the definition should 
exclude situations that would technically qualify as a ``cancellation'' 
under the proposed definition but do not affect consumers, such as a 
simple flight number change or a flight that was delayed into the next 
calendar day but does not exceed the delay limits set forth in the 
definition for ``significant change of flight itinerary.'' They further 
argued that when a passenger from any cancelled flight was rebooked on 
a new flight that does not constitute a ``significant change of flight 
itinerary'' when compared to the original flight that was cancelled, 
consumers should not be entitled to a refund. The flight number change 
and overnight delay exemptions argument is supported by the Regional 
Airline Association (RAA) and some foreign airline commenters. The 
National Air Carrier Association (NACA) argued that the definition for 
``cancelled flight'' should exclude cancellations due to situations 
outside of carriers' control. Qatar Airways argued that the definition 
should include only flight operations that are not operated but were 
listed in the carrier's CRS within seven calendar days of the scheduled 
departure. On a similar issue, A4A submitted that the Department should 
clarify that this definition is distinct from the Department's airline 
service quality

[[Page 32770]]

reporting rule, 14 CFR part 234, and it does not change the definition 
for ``cancelled flight'' in that regulation.\30\ Spirit Airlines stated 
that it accepts the Department's proposed definition for ``cancelled 
flight.''
---------------------------------------------------------------------------

    \30\ Under 14 CFR part 234, which sets forth the requirements 
that U.S. carriers must follow when submitting, among other things, 
on-time performance data to the Department, a ``cancelled flight'' 
is defined as a flight operation that was not operated, but was 
listed in a carrier's computer reservation system within seven 
calendar days of the scheduled departure.
---------------------------------------------------------------------------

    Consumers and consumer rights advocacy groups fully support the 
Department's proposed definition for ``cancelled flight.'' National 
Consumers League commented that whether a flight was removed from a 
carrier's CRS one year or one day before its scheduled operation is 
irrelevant for consumers. U.S. Public Interest Research Group Education 
Fund filed comments supporting stronger consumer protections for air 
travelers. It specifically commented that by adopting the proposed 
definition for ``cancelled flight,'' airlines should no longer be 
allowed to categorize cancellations that occur more than seven days 
before the departure as ``discontinued'' flights therefore evading 
being held accountable for the true number of cancellations. It further 
stated that this would encourage airlines to produce more realistic 
flight schedules.
    Ticket agent representatives' positions on this definition are 
split. The United States Tour Operators Association (USTOA) supported 
the airlines' position on exempting situations under which consumers 
are reaccommodated on flights that do not constitute a ``significant 
change of flight itinerary'' when compared to the cancelled flight. 
Global Business Travel Association, on the other hand, supported the 
Department's proposed definition.
    U.S. Chamber of Commerce opposed the proposal based on its 
understanding that the definition would expand the current refund 
entitlement and hold carriers liable for cancellations due to 
situations beyond their control such as weather or air traffic control 
delays. It further argued that this definition would also entitle a 
passenger who is reaccommodated on another flight to a refund. It 
suggested that the Department reconsider the definition to exempt 
cancellations unforeseeable by carriers. On the other hand, the ACPAC 
recommended to the Department that it adopt the proposed definition for 
``cancelled flight.'' \31\
---------------------------------------------------------------------------

    \31\ Three members representing consumer rights advocacy groups, 
State Attorneys General, and airports, respectively, voted for the 
recommendation, and the member representing A4A voted against the 
recommendation, stating that although A4A generally supports DOT 
defining the term, the proposed definition does not address several 
concerns that A4A mentioned in its comments to the rulemaking. 
According to the ACPAC Charter, a quorum must exist for any official 
action, including voting on a recommendation, to occur. A quorum 
exists whenever three of the appointed members are present, whether 
in person and/or virtually. In any situation involving voting, the 
majority vote of members will prevail, but the views of the minority 
will be reported as well.
---------------------------------------------------------------------------

    DOT Responses: The Department has considered the comments 
suggesting the definition of ``cancelled flight'' not include a flight 
cancellation that has no significant impact on a consumer because the 
new flight offered to the consumer does not constitute a ``significant 
change of flight itinerary'' as compared to the original flight. The 
Department is concerned, however, that carving out such an exemption 
would lead to substantial consumer confusion as to whether a consumer 
is entitled to a refund after a flight cancellation, as entitlements to 
a refund would depend on the nature of the new flight offered to each 
affected consumer, a fact-specific and case-by-case analysis that is 
often time-consuming, and complex. For example, if two passengers from 
a cancelled flight were offered different alternative flights, one that 
would be considered a ``significant change'' compared to the cancelled 
flight and the other that would not be considered a ``significant 
change,'' the outcome is that one passenger would be entitled to 
rejecting the alternative flight and receiving a refund, and the other 
would not. The Department believes that the potential complexity and 
confusion associated with a case-by-case determination of when 
passengers are entitled to a refund of a cancelled flight outweighs its 
benefits. Further, the Department believes that consumers who are 
reaccommodated on a flight that is substantially comparable to the 
original flight generally would not typically refuse the re-
accommodation and seek a refund. For these reasons, the Department is 
adopting the proposed definition of ``cancelled flight'' under which a 
consumer would be entitled to a refund with clarification. A cancelled 
flight means a flight with a specific flight number that was published 
in a carrier's Computer Reservation System to operate between a 
specific origin-destination city pair at the time of the ticket sale 
that was not operated. Under this definition, a flight that was 
operated under a different flight number would be considered a new 
flight and the original flight would be considered a canceled flight.
    The Department further clarifies that the NPRM did not propose to 
amend, and this final rule does not amend, the existing definition of 
``cancelled flight'' for airline reporting purposes in 14 CFR part 234. 
U.S. carriers will continue to apply the existing definitions for 
``cancelled flight'' and ``discontinued flight'' in part 234 when 
reporting their on-time performance data to the Department. In response 
to the comment by U.S. Chamber of Commerce, the Department notes that 
its current policy requiring airlines to provide refunds due to flight 
cancellations applies irrespective of the reason for a cancellation, 
and this continues to be the case under this final rule. The Department 
further adds that the final rule adopted here does not require airlines 
or ticket agents to provide a refund to a passenger for a canceled 
flight if that passenger accepts the alternative transportation offered 
and is reaccommodated.

4. Definition of ``Significant Change of Flight Itinerary''

    The NPRM proposed to ensure consistency on when passengers are 
entitled to a refund for a significantly changed flight by defining the 
term ``significant change of flight itinerary'' instead of relying on a 
case-by-case analysis on whether a flight change was significant to the 
consumer. The Department proposed that changes that affect departure 
and/or arrival times, departure or arrival airport, a change in the 
type of aircraft that causes a significant downgrade in the air travel 
experience or amenities available onboard the flight, as well as the 
number of connections in the itinerary, would be significant to 
consumers. The NPRM sought comments regarding whether this approach is 
reasonable and fair to passengers while not imposing undue burden on 
carriers and ticket agents, and whether there are any other changes to 
flight itineraries that airlines may make that should also be 
considered a ``significant change of flight itinerary.'' The NPRM also 
sought comments on whether there are any operational concerns from 
airlines and ticket agents when implementing these proposed definitions 
into their refund policies that should be taken into consideration.
A. Types of Significant Changes
(i) Early Departure and Late Arrival
    The NPRM: The NPRM considered three options in defining the extent 
of early departure or delayed arrival that

[[Page 32771]]

would qualify as ``significant changes.'' The first option, which the 
NPRM proposed, is a set timeline of three hours applicable to domestic 
itineraries and another set timeline of six hours applicable to 
international itineraries that would constitute a significant departure 
and arrival time change. The NPRM emphasized that airlines and ticket 
agents would be free to apply a shorter timeframe that constitutes a 
significant departure or arrival change but would not be able to 
increase it beyond three hours for domestic flights and six hours for 
international flights. The NPRM described this approach to be the most 
straightforward, clearly defined standard that would be easily 
understood by airlines and consumers, making it easier to train airline 
and ticket agent personnel on how to respond to refund requests, and 
potentially streamlining and expediting the refund review and issuance 
process. In applying the proposed standard to a refund request, the 
NPRM explained that the proposal's focus is only on the departure time 
of the first flight segment and/or the arrival time of the final flight 
segment. In other words, an early departure of a connecting flight or a 
late arrival of a flight that is not the final flight segment, even if 
exceeding the proposed timeframe, may not necessarily result in a 
passenger being entitled to a refund. In addition, the NPRM clarified 
that the proposed standard for international itineraries would apply to 
the early departure or the late arrival of a domestic segment of those 
itineraries if the domestic segment is the first or the last segment 
and is on the same ticket as the international segment.
    The second option the Department considered in the NPRM is the 
option of not defining the timeframes of early departure and late 
arrival. Under this approach, the Department would continue to use the 
word ``significant'' to describe the amount of time change that would 
justify a refund. The Department stated that it has concerns that this 
option of leaving the determination of refund-qualifying flight 
schedule time changes to individual airlines is not the best way to 
achieve the balance between considering all relevant factors impacting 
consumers on the one hand, and ensuring the efficiency, consistency, 
and certainty of its regulation on the other hand, and may not be in 
the public interest. The NPRM sought comments on whether continuing to 
provide airlines the flexibility to define significant flight schedule 
time change is a better option than the proposed approach (option 1) of 
defining a significant departure or arrival change to mean beyond three 
hours for domestic flights and six hours for international flights.
    A third approach considered by the Department is to define 
significant departure and arrival time change through the adoption of a 
tiered structure based on objective factors such as the total travel 
time of an itinerary. The NPRM provided an example of a tiered standard 
using the illustration below.

------------------------------------------------------------------------
 Original scheduled total travel
     time (measured from the       Projected arrival
 scheduled departure time of the    delay or early
  first flight  segment to the       departure as           Result
  scheduled arrival time of the       offered to
      last flight segment)             passenger
------------------------------------------------------------------------
3 hours or less.................  2 hours or less...  Refund Not
                                                       Required.
                                  More than 2 hours.  Refund Due.
3-6 hours.......................  3 hours or less...  Refund Not
                                                       Required.
                                  More than 3 hours.  Refund Due.
6-10 hours......................  4 hours or less...  Refund Not
                                                       Required.
                                  More than 4 hours.  Refund Due.
More than 10 hours..............  5 hours or less...  Refund Not
                                                       Required.
                                  More than 5 hours.  Refund Due.
------------------------------------------------------------------------

    The NPRM acknowledged that this approach would be more difficult 
for carriers to implement and for consumers to understand because a 
determination on whether a refund is due would be based on each 
individual itinerary. The NPRM asked whether the industry considers the 
adoption of this type of tiered standard to be practical and whether 
consumers believe this type of tiered standard would better reflect the 
inconvenience and disruption caused by a flight schedule change.
    Comments Received: A4A expressed its support for adopting a set 
timeframe standard for determining whether a refund is due. A4A stated 
that, however, the standard should only include late arrivals (delays) 
and not early departures because it is consistent with the Department's 
reporting regulation for U.S. carriers. A4A further suggested that the 
standard should be four hours for domestic itineraries and eight hours 
for international itineraries. A4A also commented that a schedule 
change accepted by the passenger should reset the calculation for 
delays for the purpose of refund. RAA supported A4A's position that the 
standard should only cover delays but not early departures, arguing 
that including both would create potential conflict when the arrival 
time did not exceed the standard, but the departure time did. RAA also 
supported A4A's suggestion on calculation of delay being reset once a 
passenger accepts an alternative flight. RAA suggested that a flight 
diversion should not be treated as a significant change of flight 
itinerary as long as passengers are transported to their final 
destination because safety and security are usually the principal 
reason for diversions. NACA and its member Allegiant Air (Allegiant) 
commented that the three/six-hour standards unduly burden Ultra-Low-
Cost-Carriers (ULCCs) because of their limited networks and the lack of 
interline agreements with the large U.S. airlines that have operated 
for many years. They believed that the proposal would increase 
operating costs and ultimately result in higher airfares. Allegiant 
further suggested that the Department should not require refunds when 
the reason for the cancellation or delay is outside of a carrier's 
control, as long as the carrier makes a good faith effort to rebook the 
passenger. Spirit Airlines, another NACA member, commented that it has 
a two-hour standard for both domestic and international itineraries, 
and it does not object to the proposed three/six-hour standards. IATA, 
AAPA, and Qatar Airways supported the second option, which is to allow 
carriers to set their own standards for flight schedule time change. 
IATA argued that a uniform standard harms consumers who travel with 
airlines that currently have a more generous policy. IATA suggested 
that if the Department adopts a set of uniform standards, it should be 
four hours for domestic itineraries and eight hours for international 
itineraries, with the international standard applying to all segments. 
Air Senegal and SATA

[[Page 32772]]

International--Azores Airlines, S.A. (SATA) also supported an eight-
hour standard for international itineraries. AAPA stated that the 
proposal disregards many contributory factors impacting ultra-long-haul 
operations including weather, safety, security considerations, and 
government restrictions. Among consumer comments, National Consumers 
League supports the proposed three/six-hour standards. However, 
FlyersRights stated that the proposed standards are more lenient than 
many carriers' current policies. FlyersRights believes that the refund 
rule should count for delayed departures (as opposed to late arrivals) 
and the standard should be two hours for domestic and three hours for 
international itineraries. FlyersRights further commented that for 
early departures, the standard should be one hour for domestic and two 
hours for international itineraries. FlyersRights explained that it 
views early departures as being more harmful to consumers because for 
late departures, consumers are usually already waiting at the airports. 
Travelers United shared FlyersRights' view that the proposed standards 
are more generous to airlines than many airlines' policies and suggests 
that the standards should be 90 minutes. Among the over 4,500 
individual consumer commenters, approximately 500 commented on the 
proposed three/six-hour standards, with 85% in support, and 15% 
suggesting shorter hours, such as two hours for domestic and four hours 
for international, or three hours for both.
    Two ticket agent trade associations, the Destination Wedding & 
Honeymoon Specialists Association (DWHSA) and USTOA, expressed their 
support for the proposed three/six-hour standards on early departures 
and late arrivals. Similarly, the ACPAC recommended that the Department 
adopt the proposed three- and six-hour delay standard under which a 
refund is due.\32\ The joint comment filed by 32 State Attorneys 
General also advocated for a three-hour delay benchmark being the floor 
for consumers' entitlement to refunds and stated that this floor will 
result in benefits for consumers on airlines with unclear or lengthier 
delay parameters for refunds. The comment further argued that because 
some airlines currently adopt a short timeframe, the Department should 
take steps to ensure that setting a floor does not cause these airlines 
to loosen their standards to the detriment of consumers. With respect 
to the third option proposed in the NPRM to adopt a standard with a 
tiered matrix based on objective factors such as the total travel time 
of an itinerary, several airline commenters as well as individual 
consumers expressed their opposition, arguing that this approach is not 
workable because there are too many variables.
---------------------------------------------------------------------------

    \32\ Three members representing consumer rights advocacy groups, 
State Attorneys General, and airports, respectively, voted for the 
recommendation, and the member representing A4A voted against the 
recommendation, stating that A4A supports defining ``significant 
delay'' but does not support the three- and six-hour timeframes.
---------------------------------------------------------------------------

    DOT Responses: The Department appreciates the comments by 
stakeholders on the proposed standards for flight departure/arrival 
changes that would constitute ``significant changes of flight 
itinerary.'' The Department agrees with commenters that defining 
significant departure and arrival through the adoption of a tiered 
matrix based on an objective factor such as total travel time to 
determine significance is unworkable because of its complexity. Based 
on the support from the airline and ticket agent industries and 
consumers, the Department has determined that adopting a unified 
standard consisting of set timeframes to determine whether a flight 
schedule change constitutes a significant change is a preferred 
approach as compared to the current policy of allowing airlines to set 
their own timeframes. This approach provides much needed clarity and 
consistency to consumers with respect to their rights to refunds, no 
matter on which airline they travel.
    The Department has further concluded that covering early departure 
of the initial flight segment and late arrival of the final flight 
segment is reasonable and workable for airlines and ticket agents, and 
beneficial to consumers. Commenters have varied perspectives on whether 
the definition of significant change should be based on early or late 
departure of the initial flight segment or the late arrival of the 
final flight segment. We have considered some airlines' comments that 
the timeframes should apply only to flight late arrivals (delays) but 
not early departures, as well as FlyersRights' comment that the 
timeframes should apply to change in flight departure time (early or 
late departures) regardless of whether consumers' arrival time is 
significantly changed. We disagree with these suggestions. The 
Department has concluded that it is important to ensure that the 
definition of significant change includes both early departure as 
consumers may not be available to take the flight significantly earlier 
than scheduled, and late arrivals, because arriving significantly later 
than scheduled may make the trip moot (e.g., job interview) or severely 
disrupt travel plans (e.g., miss embarkation of a cruise). In contrast, 
the Department does not believe that a late departure would cause as 
much disruption, so long as the consumer arrives at the final 
destination without substantial delay. As FlyersRights pointed out, 
consumers are already at the departure airport while waiting for a 
delayed departure flight, and the late departure alone does not add 
significant amount of additional time to the total time that the 
consumers already carved out for travel.
    Regarding the timeline that would constitute a significant 
departure and arrival time change, the Department agrees with the 
comment provided by the State Attorneys General and others that the 
proposed three-hour timeframe for domestic itineraries and six-hour 
timeframe for international itineraries constitute a significant 
departure and arrival time change. The Department acknowledges that 
several airlines' current refund policies adopt shorter timeframes than 
the proposed three/six-hour standards, and the Department notes that 
these airlines are not only permitted under this final rule to continue 
these polices but are encouraged to do so. The Department establishes a 
baseline to set the minimum consumer protection requirement, and the 
Department expects that healthy competition in the marketplace will 
lead to airlines adopting consumer-friendly refund policies that go 
above and beyond the regulatory minimum. The Department will closely 
monitor airlines' implementation of this final rule and the impact on 
consumers to determine whether the three/six-hour timeframes are 
adequate to ensure that consumers who experience significant 
disruptions and inconveniences from airline flight schedule changes 
receive refunds if they so choose.
    The Department is not persuaded by NACA's argument that ULCCs are 
unduly burdened by the three/six-hour standard and it would ultimately 
cause higher airfares. The fact that at least one ULCC has already 
implemented for some time a refund policy with a schedule delay 
threshold lower than the Department's minimum standard indicates that 
the three/six-hour standard can work well with ULCCs' unique business 
model and competition strategies, and it will not be detrimental to 
maintaining ULCCs' fare structure.
    The Department is also not persuaded by comments that a schedule 
change accepted by the passenger should reset the calculation for 
delays for the purpose of refunds. Under the final rule,

[[Page 32773]]

a consumer's acceptance of the flight schedule time change when the 
original flight encounters expected early departure or late arrival or 
a consumer's acceptance of another flight when the original flight was 
cancelled does not reset the clock. The timeframes adopted here are 
measured from the original departure and arrival times offered to 
consumers when they purchased their tickets, and any deviation from 
those times represents a change to the product that they agreed to and 
paid for. By adopting these timeframes in the regulation, the 
Department has deemed that any change to these original times by three 
hours or more for domestic itineraries and six hours or more for 
international itineraries are material and significant to consumers and 
they are entitled to a refund if they do not accept the change, or any 
alternative transportation offered. Although the Department understands 
that flight schedule changes may occur multiple times before the 
flight's actual operation, we believe it is fundamentally unfair to 
consumers and it will defeat the purpose of this rule if we allow the 
clock to reset every time a consumer accepts the time change to a 
flight. In a typical rolling delay scenario, a domestic flight 
initially projected to arrive two hours late could actually be delayed 
for eight hours, with each new projection adding two more hours at a 
time, and if the clock resets each time, the consumer would never be 
entitled to a refund despite the lengthy delay.
    Regarding RAA's comment that the refund requirement should exempt 
situations involving flight diversions due to safety or security 
concerns as long as passengers were ultimately transported to their 
destinations, the Department does not view the refund requirement as 
applying to these diversion situations. Typically, when a decision to 
divert a flight is made, the flight has already departed and from the 
passenger's perspective, the travel already took place. The passengers 
would not have the opportunity to refuse the flight. For those 
passengers, the issue of requesting compensation for their 
inconvenience caused by the diversions will be addressed in the 
Department's forthcoming rulemaking on Rights of Airline Passengers 
When There Are Controllable Flight Delays or Cancellations.\33\
---------------------------------------------------------------------------

    \33\ See https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AF20.
---------------------------------------------------------------------------

(ii) Change of Origination, Connection, or Destination Airport
    The NPRM: The Department proposed to define a significant change 
that would entitle a consumer to a refund to include a change of the 
origination or destination airports. The Department reasoned that most 
consumers are concerned about origin and destination airports when 
booking a flight itinerary because of convenience and stated that a 
carrier-initiated change in the origination or destination airport is 
likely to lead to additional time and cost for consumers. The NPRM did 
not propose to require refunds if a carrier changes the connecting 
airport(s) and instead invited comments on whether a change of 
connecting airports should also be considered a significant change that 
would entitle consumers to a refund. Further, the NPRM asked whether 
special consideration on refund eligibility should be given in 
situations where passengers choose to connect at a particular airport 
with extended layover time for specific purposes beyond connecting to 
the next flight, such as conducting business or visiting family, 
friends, or tourist sites at that location.
    Comments Received: Airline commenters generally supported including 
the change of an origination or destination airport as a ``significant 
change of flight itinerary.'' They contended, however, that the 
definition should exclude a change of airport involving airports 
located in the same metropolitan area. A4A and AAPA suggested that a 
change between two ``co-terminal airports,'' as defined by the 
Transportation Security Administration's (TSA) regulation, should be 
exempted.\34\ Airline commenters argued that these airports are 
sufficiently close in proximity to each other, indicating that a change 
of the airport would not necessarily significantly impact consumers' 
travel plans. Some carriers further argue that allowing this exemption 
would incentivize carriers to provide greater rebooking options. Air 
Senegal provided long-haul international carriers' perspective by 
arguing that these carriers' first and foremost goal is to provide 
transportation between two major metropolitan gateways and a change of 
airport within the same metropolitan area that is necessitated by 
circumstances beyond the carrier's control (e.g., airport staffing 
shortage, government public health restriction) should not trigger the 
refund obligation. Airline commenters also supported the position that 
a change of connecting airport should not be considered a ``significant 
change of flight itinerary.'' IATA commented that if a passenger wishes 
to have a longer layover at a particular airport, airlines should 
accommodate by rebooking on another flight to that layover airport.
---------------------------------------------------------------------------

    \34\ Co-terminal [airport] means an airport serving a multi-
airport city or metropolitan area that has been approved by TSA to 
be used as the same point for purposes of determining application of 
the security service fee imposed under [49 CFR 1510.5]. See 49 CFR 
1510.3.
---------------------------------------------------------------------------

    Consumers, consumer rights advocacy groups, and ticket agent 
representatives who commented on this issue were in support of the 
Department's proposal. Two disability rights advocacy groups, Paralyzed 
Veterans of America (PVA) and United Spinal Association, commented 
that, from passengers with disabilities' perspective, any change to the 
origination, connection, and destination airport should be considered a 
``significant change of flight itinerary.'' They stated that when 
booking flights, passengers with disabilities may rely on the specific 
accessibility features of an airport to select the flights and 
itinerary, and this may include selecting a particular connecting 
airport based on the accessibility features needed to accommodate their 
disabilities during the layover time.
    DOT Responses: There is a consensus from all the comments received 
that a change of the origination or destination airport in general 
would significantly impact a passenger's travel plan and should be 
considered a basis for a refund if the passenger no longer wishes to 
travel. The Department disagrees with airlines' suggestion that the 
regulation should exempt changes of airports located in the same 
metropolitan area. In the Department's view, a change in the 
origination or destination airport when located in the same 
metropolitan area could still significantly impact passengers depending 
on the passenger's specific circumstances including whether the new 
airport is sufficiently close to their residence or the hotel so they 
have the flexibility to navigate to or from the new airport without 
substantial additional cost, whether they have the additional time 
needed to travel to or from the alternative airport, and whether 
affordable ground transportation is available for them to get to or 
from the alternative airport. Given the potential impact, the 
Department believes that the best approach is to require refunds if 
passengers reject the change in origin or destination airport even if 
in the same metropolitan area. The Department also believes that this 
approach would not impose a substantial negative impact on long-haul 
international carriers, who

[[Page 32774]]

stated that the main goal of their operations is to transport 
passengers between two major metropolitan gateways. Passengers carried 
on long-haul international flights who are focused on arriving at the 
destination city as opposed to a specific airport can accept the 
alternative airport offered by the carrier. The Department further 
notes that in the case of flights being directed to a ``co-terminal'' 
airport due to government restrictions, such as a requirement to funnel 
flights for communicable disease screening purposes, it is likely that 
passengers would not have a choice to travel on an alternative flight 
that is destined to the original airport. The Department believes that 
passengers should have the choice of either traveling to the co-
terminal airport, which is likely to be the choice of many passengers, 
and the option of receiving a refund.
    With respect to a change of a connecting airport, the Department is 
defining such a change to be a ``significant change of flight 
itinerary'' only for consumers who are persons with a disability. The 
Department continues to believe that a change in a connecting airport 
would not impact most passengers because travelers' goal is to get to 
the destination, and they generally care less about the connecting 
airport. The Department is also not convinced that imposing a refund 
mandate is necessary for passengers who specifically arranged to have 
an extended layover at a connecting airport for other business or 
leisure purposes. Consumer comments were generally silent on this 
issue, and IATA has stated that airlines generally make such an 
accommodation on their own when requested.
    The Department has decided to require a refund to a passenger with 
a disability \35\ and other passengers on the same reservation who 
choose not to fly when the person with a disability does not accept a 
change in the origination, destination, and connection airport. The 
Department appreciates PVA and United Spinal Association sharing their 
view that not defining a change to the origination, connection, and 
destination airport as a ``significant change of flight itinerary'' 
would negatively impact persons with disabilities. The Department 
accepts that a change of the origination, connection, or destination 
airport may represent a significant change to a person with a 
disability as the layout, design, and the availability of accessibility 
features of these airports are a major consideration for persons with 
disabilities when they select travel itineraries. A change of any of 
these airports could cause great harm to passengers with disabilities 
if the new airports are not as accessible as the original airports. 
This change could affect, for example, a passenger traveling with a 
service animal who carefully selected an airport with a service animal 
relief area located near the passenger's connecting gate to accommodate 
a tight connection timeframe, or a passenger with visual impairment who 
chose a connection, origination, or destination airport that provides 
wayfinding/mapping technologies through a mobile app. Further, the 
Department is of the view that a change of airports, at a minimum, adds 
uncertainties to the person with a disability regarding the 
accessibility of the airport and that the passenger with a disability 
is in the best position to conduct a risk assessment and determine 
whether he or she still wants to travel from, to, or through a 
particular airport.
---------------------------------------------------------------------------

    \35\ A passenger with a disability means an individual with a 
disability who, as a passenger
    (1) With respect to obtaining a ticket for air transportation on 
a carrier, offers, or makes a good faith attempt to offer, to 
purchase or otherwise validly to obtain such a ticket;
    (2) With respect to obtaining air transportation, or other 
services or accommodations required by this Part,
    (i) Buys or otherwise validly obtains, or makes a good faith 
effort to obtain, a ticket for air transportation on a carrier and 
presents himself or herself at the airport for the purpose of 
traveling on the flight to which the ticket pertains; and
    (ii) Meets reasonable, nondiscriminatory contract of carriage 
requirements applicable to all passengers. See 14 CFR 382.3.
---------------------------------------------------------------------------

(iii) Increase in the Number of Connection Points
    The NPRM: The NPRM proposed that adding to the number of connection 
points in an itinerary qualifies as significant change that entitles a 
consumer to a refund if the consumer no longer wishes to travel. The 
Department explained that the number of connection points in an 
itinerary would significantly affect the value of a ticket because the 
more connection points, the more likely passengers will experience 
flight irregularities, complications, and disruptions, as well as 
mishandled checked baggage. As evidence, the Department pointed out 
that airfares are generally higher for an itinerary with fewer 
connection points than an itinerary with more connection points.
    Comments Received: Airline commenters unanimously opposed 
considering adding connection points as a ``significant change.'' Large 
U.S. airlines argued that connections are a fundamental part of 
carriers' network structure and carriers should be allowed the ability 
to consider all available options to reroute passengers, including 
through additional connecting points. ULCCs argued that because of 
their small networks and the lack of interline partners, they may have 
to rebook passengers with more connections, and this would penalize 
ULCCs and other small carriers despite their best effort to 
reaccommodate passengers. Carriers also argued that adding connections 
does not necessarily mean consumer inconveniences and, in some cases, 
passengers may even arrive earlier than the original schedule. These 
carriers asserted that additional connections without adding more 
travel time or significant delay should not be considered a 
``significant change.'' IATA commented that this proposal directly 
conflicts with the APPR, the Canadian regulation protecting air 
travelers, which includes obligation to reroute passengers on a 
reasonable route, including connections.
    U.S. Chamber of Commerce also opposed the proposal, stating that in 
cases of severe weather or major disruptions at a hub airport, it is 
necessary to rebook passengers on itineraries with more connections to 
ensure that they get to their destinations as swiftly as possible.
    Unlike airlines, National Consumers League and FlyersRights 
supported the Department's proposal to define significant change to 
include additions in the number of connection points on a flight 
itinerary. PVA and United Spinal Association also expressed their 
support for the proposal, stating that adding connections is a 
significant change to passengers with disabilities because additional 
connections mean additional inconveniences, increased chance of 
passenger injury during transfer, boarding, deplaning, and increased 
chance of damage to assistive devices such as wheelchairs, which may 
further lead to passengers being forced to use loaner chairs while 
waiting for their wheelchairs to be repaired, causing other health and 
safety concerns. These disability organizations also commented that 
more harm may occur from extended overall travel time to passengers 
forced to dehydrate themselves during travel because they cannot use 
the lavatories, or passengers who need to minimize the time spent in an 
airport wheelchair. In this regard, PVA suggested that extending the 
layover time by more than one hour is a significant change.
    DOT Responses: The Department has decided to include an increase in 
the number of connections in a flight itinerary in the definition of 
``significant change of flight itinerary.'' The Department finds the 
comments by PVA and United Spinal Association about the substantial 
inconveniences, and in some

[[Page 32775]]

cases, potential harm and injury to passengers with disabilities from 
additional connections to be compelling. The Department further views 
that adding connections may also negatively affect passengers who do 
not have a disability in many ways. It is a common sense that when a 
non-stop itinerary becomes a one-stop itinerary, or a one-stop 
itinerary becomes two-stop itinerary, each added stop indicates 
increased chance of irregularities, including the potential of missed 
flights and/or delayed baggage due to short connecting times, flight 
delays due to weather or air traffic control issues at the additional 
connecting airport, and additional complications related to traveling 
with young children or the elderly.
    The Department disagrees with IATA's comment that considering an 
additional connection as a ``significant change'' under which a refund 
is due conflicts with APPR. Under APPR, carriers are obligated to 
provide passengers the option of rerouting or refunds.\36\ APPR does 
not prohibit carriers from providing a refund if a consumer does not 
wish to be rerouted or does not accept the rerouting offered by 
carriers. Also, this final rule does not require carriers to provide a 
refund if the passenger prefers a rerouting even if that rerouting 
includes additional connections. The Department believes that the APPR 
and this final rule, when working together, increase choices provided 
to consumers affected by cancellations and significant changes and 
empower consumers to choose the best options for themselves, either 
rerouting or receiving a refund.
---------------------------------------------------------------------------

    \36\ See Air Passenger Protection Regulation (SOR/2019-150) 
(APPR), Sections 17-18. https://laws-lois.justice.gc.ca/eng/regulations/SOR-2019-150/index.html.
---------------------------------------------------------------------------

    The Department is also not convinced that allowing additional 
connections to be a basis for a refund would impede carriers' ability 
to offer alternative itineraries including itineraries with additional 
connections. As stated throughout this document, the goal of defining 
``significant flight itinerary'' is to set a baseline for consumers' 
rights to refunds when they are affected by a qualified change by 
providing them an opportunity to evaluate any alternative 
transportation offered by carriers against the option of obtaining a 
refund. The fact that a consumer is eligible for a refund because of a 
significant change does not mean airlines cannot or should not offer 
alternative transportation. In addition, there is nothing in the 
Department's regulation that prevents carriers from fully utilizing 
their networks and offering options with different connecting points to 
passengers. For example, if a passenger's non-stop flight is cancelled 
and the carrier determines that traveling on a set of connecting 
flights would get the passenger to the destination sooner than waiting 
on the next non-stop flight, the carrier is free to make the offer, and 
the passenger will likely accept the offer if the additional connection 
is acceptable and arriving at the destination sooner is more important 
to that passenger than a non-stop flight.
(iv) Change of Aircraft Resulting in Significant Downgrade of Available 
Amenities and Travel Experiences
    The NPRM: While acknowledging that substitution of aircraft is 
often required for operational reasons, and that most substitutions do 
not substantially affect consumers' travel experience, the Department 
proposed that a change of aircraft would be considered a significant 
change entitling the affected passengers to a refund only if it results 
in ``a significant downgrade of the available amenities and travel 
experiences.'' The NPRM recognized that aircraft substitution may 
impact passengers differently, noting that an aircraft change may 
impact a passenger traveling with a wheelchair when the wheelchair no 
longer fits in the cargo compartment of the new aircraft, but it may 
not impact another passenger, even one with a disability. The NPRM 
proposed that the lack of certain disability accommodation features as 
the result of aircraft change, such as onboard wheelchair storage 
spaces and moveable armrests, which negatively impacts the travel 
experiences of persons with a disability and their access to services 
onboard, would be considered a ``significant change'' that entitles the 
passenger to a refund upon request. The Department solicited comments 
on how to determine whether an aircraft downgrade is a significant 
change, whether it should be a case-by-case analysis, and whether there 
are certain types of changes in amenities or air travel experiences 
that should automatically be considered significant irrespective of the 
affected person.
    Comments Received: Airlines and their representatives expressed 
strong concerns about the proposal and argued that the term 
``significant downgrade of available amenities and travel experiences'' 
is too broad, vague, and subjective. U.S. Chamber of Commerce supported 
the airlines' argument that the proposal is too vague and broad. A4A 
suggested that in the absence of clear guidance on this term, 
passengers could assert seat configuration changes, the lack of Wi-Fi, 
a decrease in the number of available movies, and a reduction of seat 
reclining degrees as a significant downgrade. A4A commented that if the 
Department finalizes this category as a significant change, it should 
allow airlines to establish and publish their own criteria and adhere 
to the standard. IATA and Air Canada argued that this proposal would 
significantly impact carriers operating multiple types of aircraft, or 
airlines that are experiencing significant flight disruptions and 
needing the flexibility to fully utilize all available aircraft to 
mitigate total passenger inconveniences across the network. IATA 
pointed out that the proposal does not consider the situations where a 
substitute aircraft provides downgrades to certain amenities and 
upgrades to other amenities. Airline commenters agreed that a change of 
aircraft that impacts a carrier's ability to accommodate mobility aids 
should be considered a significant change.
    National Consumers League and FlyersRights expressed their support 
of the Department's proposal to consider a significant downgrade of 
available amenities and travel experiences to be a significant change 
that would entitle consumers to a refund. FlyersRights added that 
changes in aircraft size, stowage space, or seat size that no longer 
allow passengers with disabilities to travel safely should be 
considered a significant change. Several individual consumer commenters 
also supported this proposal.
    Among ticket agent representatives, USTOA opposed the proposal, 
asserting that it is too subjective and thus unworkable. It further 
commented that a change from a twin-aisle aircraft to a single-aisle 
aircraft, the loss of Wi-Fi, or a change to an older version of 
business class may have little impact on some consumers but more impact 
on others. It opined that to determine whether a passenger is eligible 
for a refund under the proposal may cause extensive and time-consuming 
disputes between consumers and airlines and it is counter to the 
Department's goal of achieving consistency across the industry. Global 
Business Travel Association agreed that aircraft change causing a lack 
of disability accommodation should be considered as a significant 
change. It further stated that a service downgrade such as the lack of 
Wi-Fi would materially impact the value of a flight to business 
travelers.
    Disability rights advocacy groups voiced their strong opinion that 
aircraft changes affecting disability accommodations should be viewed 
as significant changes for passengers with

[[Page 32776]]

disabilities. PVA commented that if a substitute aircraft cannot 
accommodate a passenger's assistive device, carriers should accommodate 
the affected passenger and any caregivers, family members, and other 
companions on another flight of that carrier or other carriers, or 
other mode of transportation without additional cost. All Wheels Up 
commented that the Department should specify that refunds for the 
affected passenger and others in the travel party are required when the 
substitute aircraft cannot accommodate wheelchairs in the cargo 
compartment. United Spinal Association also supported the position that 
a significant change includes downgrade or change of aircraft without 
equal accessibility features. It urged the Department to require 
carriers to find accessible alternative transportation. PVA and United 
Spinal Association also commented on additional accessibility-related 
issues beyond the substitution of aircraft, which will be discussed in 
detail in the next section.
    Public Hearing: In addition to considering the public comments 
filed in the rulemaking docket, at the request of A4A and IATA, the 
Department also conducted a public hearing pursuant to the Department's 
procedural regulation on rulemakings relating to unfair and deceptive 
practices at 14 CFR 399.75. Such hearings are intended to afford 
stakeholders an opportunity to present factual issues that they believe 
are pertinent to the Department's decision on the rulemaking. One of 
the subjects stakeholders raised during the hearing is how to determine 
whether a downgrade of amenities or travel experiences qualifies as a 
``significant change of flight itinerary.'' In the Notice \37\ 
announcing the hearing, the Department requested interested parties to 
provide information on whether there are certain types of amenity 
changes that should be considered ``significant'' changes that would 
entitle a consumer to a refund and if so, whether the determination 
should be made categorically or by airlines on a case-by-case basis. 
The Department also requested information on how different airline 
operational and pricing models affect onboard amenities and travel 
experiences, and subsequently affect consumer expectations.
---------------------------------------------------------------------------

    \37\ 88 FR 13387, Mar. 3, 2023.
---------------------------------------------------------------------------

    During the public hearing, airline representatives reiterated the 
view they expressed in the written comments to the NPRM that the 
proposal undercuts the Department's goal of achieving consistency and 
predictability to consumers who are affected by itinerary changes. They 
pointed out that the proposal relies heavily on the subjective 
expectations of travelers and the vague concept of ``significant 
downgrade of available amenities and travel experiences'' creates 
problems for all parties involved, leading to time-consuming and 
unsatisfactory case-by-case adjudications by the airlines and the 
Department. They suggested that if the Department proceeds to finalize 
this proposal, it should explicitly limit qualifying downgrades to 
those identified in the airlines' customer service plans. They further 
indicated that airlines would support the concept of considering the 
inability to accommodate a passenger's mobility device to be a 
significant change. Representatives from FlyersRights and National 
Consumers League both expressed their support of the proposal to 
consider a change of aircraft that results in ``a significant downgrade 
of the available amenities and travel experiences'' to be a significant 
change that entitles consumers to a refund if they choose not to 
travel. The representative from FlyersRights commented that the guiding 
principle in determining what downgrades are significant should be 
whether a typical passenger would have booked the flight knowing that 
they would receive a downgrade of amenities or travel experiences. That 
representative further commented that allowing airlines the sole 
discretion to make the determination will lead to ever shifting 
standards. The representative from National Consumers League commented 
that if airlines were allowed to determine what downgrades are 
significant, it is highly likely that airlines would define it so 
narrowly as to make the consumers' rights under DOT regulation unusable 
by most consumers. He suggested that the Department should adopt a 
definition that covers as many services as possible to give consumers 
the flexibility to determine what is and is not a significant downgrade 
for them.
    A representative from PVA spoke at the hearing regarding the broad 
impact of flight itinerary changes on passengers with disabilities. In 
addition to the impact of aircraft substitution on the transportation 
of passengers' mobility aids, she also commented on changes of other 
accessibility features that may lead to significant disruption to 
passengers' travel, such as the lack of accessible lavatories. She 
emphasized that passengers with disabilities should not be forced to 
accept flights that cause unnecessary inconveniences or undesirable 
circumstances because the negative impact of air travel extends not 
only to the passengers but also to those who assist them during the 
journey or at the destination. Therefore, she commented that any 
determinations regarding significant changes should be made 
categorically, considering the challenges faced by these passengers.
    Representatives from Travel Tech and Travel Management Coalition 
spoke on behalf of ticket agents. While supporting the Department's 
proposal in principle, they emphasized the importance of designating 
airlines with the responsibility to determine whether a change of 
available amenities or travel experiences caused by aircraft 
substitution is a significant change. They commented that ticket agents 
rely on clear guidance from both the regulatory bodies and airlines to 
make these determinations.
    A public participant provided her opinions as an expert on consumer 
law on this issue by suggesting that the Department should adopt a 
``reasonable consumer'' standard. She commented that the determination 
should be a case-by-case analysis and encouraged the Department to 
provide guidance but not adopt a rigid definition.
    Following the hearing, A4A, IATA, Spirit, USTOA, and PVA filed 
supplemental written comments on this issue. A4A and IATA's joint 
comment emphasizes their position to support a rule requiring refunds 
when aircraft downgrade prevents the transportation of a passenger's 
mobility aid, when an accessible lavatory is no longer available on the 
flight, when an on-board wheelchair requested by a passenger is no 
longer available, or when moveable armrests are not available on the 
aircraft. Spirit commented that a rule consistent with the Department's 
oversales regulation should be adopted to require a refund for the 
amenity not provided, but not a refund for the full fare. USTOA 
comments that, in addition to its written comment on the NPRM, it 
continues to strongly oppose the proposal as it believes that 
consistency and predictability are necessary and crucial elements in a 
final rule which would be lacking if the Department adopts the proposed 
standard. USTOA adds that public interest will not be served by 
adopting the proposal that introduces further confusion into the ticket 
refund process and leaves sellers of travel to grapple with case-by-
case determinations. PVA's comment urges the Department to establish a 
clear definition to include downgrades of amenities and travel 
experiences for passengers using mobility devices. PVA further provided 
examples of downgrades that affect these passengers, including 
circumstances in which the

[[Page 32777]]

mobility aids will not fit in the cargo compartment or in-cabin 
stowage, loss of lavatory access and/or on-board wheelchair, and loss 
of movable armrests.
    DOT Responses: After carefully considering all the comments, the 
Department has determined that adopting the proposal to include in the 
definition for ``significant change of flight itinerary'' any aircraft 
change that leads to ``significant downgrade of available amenities or 
travel experiences'' applicable to all passengers is not practical and 
workable, and as a result, we are modifying the proposal to cover 
specific passengers who are categorically protected and would be 
affected by this ``significant change.'' The Department recognizes the 
ambiguity and subjectivity of the proposed term ``significant downgrade 
of available amenities and travel experience'' and has determined that 
adopting this term and requiring airlines and ticket agents to conduct 
a case-by-case analysis will lead to tremendous confusion among 
consumers, airlines, and ticket agents, who would incur significant 
administrative costs when disputes arise. The Department also believes 
that outside of accessibility features, most discomfort and 
inconvenience caused by aircraft substitution-related changes can be 
addressed between airlines or ticket agents and their customers without 
a regulatory mandate on ticket refunds. In another part of this final 
rule, the Department is adopting the proposal to require airlines to 
provide refunds for any ancillary service fees when the services that 
consumers paid for are not provided. The Department believes that this 
strikes a good balance between ensuring that consumers receive a refund 
of the ancillary service fees for services that they did not receive, 
including due to aircraft substitution, and avoiding the major 
administrative complication related to determining what amenities or 
ancillary services are so significant to a passenger that their loss 
warrants a refund of the entire ticket.
    On the other hand, the Department strongly agrees with the 
disability rights organizations that any change of aircraft that leads 
to the unavailability of an accessible feature needed by a passenger 
with a disability is a significant change and should entitle the 
passenger to a refund. We recognize that for persons with disabilities, 
a downgrade of onboard amenities or travel experiences from aircraft 
substitution may have serious negative implications on the passengers' 
health and safety and may fundamentally change these passengers' 
decision about travel. As such, the Department determines that aircraft 
substitution leading to an accessibility feature being unavailable to a 
passenger with a disability who needs the feature is categorically a 
``significant change'' for that passenger. The Department notes that 
comments from airlines focus on a change involving the inability to 
transport a wheelchair in the cargo compartment, which is an example 
provided in the NPRM. The Department's final rule, however, is broader 
than that example. Under this final rule, airlines and ticket agents 
are required to refund to a passenger with a disability who no longer 
wishes to travel if an aircraft change leads to the loss of one or more 
accessibility feature needed by that passenger. Such features would 
include, but are not limited to, in-cabin stowage of assistive devices, 
a movable armrest, accessible lavatories, on-board wheelchairs, and 
cargo stowage of mobility aids. The Department is also requiring 
airlines and ticket agents to provide refunds to other individuals 
traveling with the passenger with a disability in the same reservation, 
if the passenger with a disability no longer wishes to travel due to a 
significant change impacting accessibility. Details of this requirement 
will be discussed in Section B below.
    The Department also notes that although the rule does not 
specifically require airlines to provide refunds to passengers who are 
affected by aircraft substitution outside of the disability 
accommodation grounds, we expect that airlines will continue to assess 
the impact of aircraft substitution on each passenger based on the 
passenger's situation and consider providing refunds when appropriate.
(v) Downgrade in the Class of Service
    The NPRM: The NPRM proposed that a carrier-initiated downgrade in 
the class of service is a ``significant change of flight itinerary'' 
and would entitle a passenger to a refund if the passenger decides not 
to continue travel. The NPRM noted that under the Department's 
oversales regulation, when a passenger on an oversold flight is offered 
accommodation or is seated in a section of the aircraft for which a 
lower fare is charged, the passenger is not entitled to be denied 
boarding compensation but is entitled to an appropriate refund for the 
fare difference, assuming the passenger traveled on the flight in the 
downgraded class of service.\38\ Here, the NPRM proposed that when a 
passenger is downgraded to a lower class of service, either on the 
originally booked flight or on an alternative flight offered by the 
carrier, and the passenger declines to take the downgraded flight, a 
refund of the entire unused portion of the ticket must be offered. The 
NPRM explained that the Department views a downgrade in the class of 
service as significantly changing the passenger's ticket value and 
travel experience and entitling the consumer to a refund of the ticket 
price and any unused ancillary services if the consumer does not 
travel. The NPRM further clarified that the proposal is not limited to 
situations where the entire flight or the class of service the 
passenger was initially booked on was oversold. Downgrade of a 
passenger's class of service could occur for other reasons such as 
weight and balance or change of aircraft. The NPRM asked whether the 
Department should require airlines to provide a refund of only the 
ticket price difference, and not mandate a full refund if the passenger 
does not accept the downgrade, similar to the existing oversales 
regulation.
---------------------------------------------------------------------------

    \38\ See 14 CFR 250.6(c).
---------------------------------------------------------------------------

    Comments Received: Airline representatives opposed the Department's 
proposal of considering a downgrade of the class of service a 
significant change, arguing that it would disincentivize carriers from 
rebooking affected passengers on the same aircraft but in a lower class 
of service. They expressed their belief that a downgrade to a lower 
class of service should only result in a refund of the fare differences 
because the passenger would be provided with the flight as scheduled. 
IATA stated that if this proposal is adopted, minors and companions 
traveling with the downgraded passenger should not be eligible for a 
refund if they were not downgraded as well. This position was supported 
by Qatar Airways. IATA further requested that the Department define a 
change in ``class of service'' as a change of cabin to avoid any 
confusion. Air Canada suggested that the proposal, if adopted, would 
conflict with certain provisions of EC 261/2004, which requires 
compensation as opposed to refunds for certain downgrades. SATA 
suggested that the Department should adopt a similar requirement as EC 
261/2004 that requires a percentage of refund according to the amount 
of fare paid and the flight distance.
    DOT Responses: The Department has carefully considered this issue 
and determined that although not all passengers view a downgrade to a 
lower class of service so significantly that they would prefer to not 
travel on the flight, there are a substantial number of passengers who 
would be impacted significantly by a downgrade and would

[[Page 32778]]

prefer a refund. The Department believes that affected passengers 
should be given the choice of either accepting the change and 
continuing to travel or receiving a refund. The Department notes that 
many passengers with disabilities select a certain class of service 
when booking tickets for reasons related to their disabilities. For 
example, a higher class of service may provide extra legroom needed by 
passengers with a mobility impairment or traveling with service 
animals. Besides passengers with disabilities, other passengers may 
find a downgrade not acceptable because it substantially affects their 
travel experiences. For instance, a passenger of size being downgraded 
to a lower class of service may no longer wish to travel because of the 
discomfort associated with the reduced seat pitch and width, and this 
is particularly a concern for these passengers on long flights.
    The Department is not convinced that this requirement would 
disincentivize airlines and ticket agents from offering to rebook 
passengers in a lower class of service, either on the original flight 
or another flight. As in all the other scenarios involving significant 
changes, carriers and ticket agents are free to offer a variety of 
other options to affected consumers so long as they are informed about 
their right to a refund. Consumers can choose the option that best 
meets their needs, including traveling in a lower class of service. 
Carriers and ticket agents are incentivized to make these offers to 
passengers to fill vacant seats on aircraft.
    The Department clarifies that this final rule requiring carriers 
and ticket agents to provide a refund to passengers who choose to not 
travel when being downgraded to a lower class of service does not 
negate carriers' and ticket agents' obligation to refund the fare 
differences when passengers choose to travel in a lower class of 
service. This will continue to be the requirement regardless of whether 
the downgrade was due to an oversales situation or any other situation.
    The Department does not believe that requiring airlines and ticket 
agents to provide a refund to passengers who are downgraded to a lower 
class of service conflicts with the laws of other jurisdictions, 
including EC261. Like the Department's oversales rule that requires 
carriers to refund the fare differences to passengers who are 
continuing to travel on a lower class of service, EC261 requires that 
carriers refund between 30% to 75% of the ticket price, depending on 
the distance of the flight, to a downgraded passenger who is continuing 
the flight. In contrast, this final rule simply addresses the situation 
in which the passenger chooses not to travel on the original or 
rebooked flight in a lower class of service, a situation that is not 
directly addressed in EC261.
    As suggested by IATA, the Department is also adopting a definition 
of class of service in the final rule to avoid any confusion. A class 
of service is defined as seating in the same cabin class such as First, 
Business, Premium Economy, or Economy class, based on seat location in 
the aircraft and seat characteristics such as width, seat recline 
angles, or pitch (including the amount of legroom). Premium Economy 
would be considered a different class of service from standard Economy, 
while Basic Economy would not. Basic Economy seats do not differ in 
pitch size or legroom from standard Economy.
    In situations where a group of passengers are traveling under the 
same reservation, the Department generally is not requiring airlines to 
offer refunds to all passengers in the group if not all passengers are 
affected by a downgrade of class of service, except when the affected 
passenger is a qualified individual with a disability and the downgrade 
of class of service affects an accessibility feature needed by that 
passenger, in which case refunds must be offered to all passengers in 
the group upon notification by the passenger with a disability or 
someone authorized to act on behalf of the passenger with a disability 
that the person with a disability does not intend to continue travel on 
that flight.
B. Individuals Entitled to Refunds When a Significant Change Impacts 
Accessibility
    The Department agrees with comments received from disability rights 
organizations and is requiring a refund to a passenger with a 
disability and other passengers on the same reservation who choose not 
to fly because the person with a disability does not accept a 
significant change of flight itinerary resulting from a change in 
aircraft or class of service that results in the unavailability of one 
or more accessibility features needed by the person with a disability. 
The Department is also requiring a refund to person with a disability 
and others on the same reservation who do not wish to continue to 
travel because the person with a disability does not accept a 
significant change in flight itinerary resulting from a change in 
connecting airport. The Department believes that a change in the flight 
itinerary that reduces the accessibility of the air travel to a person 
with a disability must entitle not only that individual to a refund but 
also all other individuals on the same reservation.
    The Department notes that being a qualified individual with a 
disability alone may not necessarily entitle travel companions to 
refunds. This final rule requires carriers to provide passengers with a 
disability affected by a change in aircraft or downgrade of a class of 
service a refund if they do not continue travel. That refund is limited 
to the individual being downgraded, however, unless the downgrade 
results in the unavailability of one or more accessibility features 
needed by the person with a disability. In that case, individuals who 
are not directly affected by the downgrade of class of service are also 
entitled to a refund. For example, if a passenger with a hearing 
impairment was downgraded to a lower class of service and it is 
determined that the downgrade does not impact any accessibility feature 
needed by that passenger, that passenger is entitled to a refund if he 
or she does not accept the downgrade, but airlines and ticket agents 
are not required to extend the refund offer to other persons in the 
same reservation who are not downgraded. Conversely, if a passenger 
needing extra legroom to accommodate a disability was downgraded and 
the extra legroom is no longer available as a result, that passenger is 
entitled to a refund and so are any other persons in the same 
reservation. For an aircraft change to entitle travel companions of a 
person with a disability to a refund, the aircraft change must result 
in the unavailability of one or more accessibility features needed by 
the person with a disability and that person with a disability must 
reject the significant change.
    The Department believes that extending refund eligibility to travel 
companions of passengers with disabilities whose ability to travel 
comfortably or safely is significantly impacted by a flight itinerary 
change that affects accessibility is appropriate because family members 
or other individuals with whom the person with a disability is 
traveling may not wish to continue travel without that person. Also, 
the person with a disability may be traveling with a personal care 
assistant. The requirement that refunds must be offered to all 
passengers in the same reservation is intended to provide flexibility 
for passengers to determine whether the group wants to travel together, 
decline travel and receive refunds together, or split up with some 
continuing to travel and some (including the passenger with a 
disability) canceling travel and receiving refunds. Airlines and ticket

[[Page 32779]]

agents may not mandate that all members of the group make the same 
decision about refunds but may refuse refunds if the only passengers 
requesting refunds are those who would not have qualified for a refund 
but for traveling with the passenger with a disability.
    The Table below summarizes the rights to a refund by individuals 
with disabilities and their travel companions on the same reservations 
under certain significant changes that may impact accessibility.

 Table 1--Rights to a Refund by Individuals With Disabilities and Travel
                               Companions
------------------------------------------------------------------------
                                                          Are travel
                                                       companions on the
                                   Is an individual    same reservation
                                   with a disability     entitled to a
       Significant change            entitled to a       refund if an
                                        refund?        individual with a
                                                      disability rejects
                                                            change?
------------------------------------------------------------------------
Aircraft Substitution:
    Impacts an accessibility      Yes...............  Yes.
     feature needed by a
     passenger with a disability.
    Does NOT impact an            No................  No.
     accessibility feature
     needed by a passenger with
     a disability.
Downgrade in Class of Service:
    Impacts an accessibility      Yes...............  Yes.
     feature needed by a
     passenger with a disability.
    Does NOT impact an            Yes...............  No.
     accessibility feature        (NOTE: any          (NOTE: if travel
     needed by a passenger with    passenger           companion is
     a disability.                 downgraded is       downgraded then
                                   entitled to         that individual
                                   refund              would be entitled
                                   irrespective of     to refund).
                                   disability).
Change of Connecting Airport:
    Does not require analysis of  Yes...............  Yes.
     impact on accessibility.
------------------------------------------------------------------------

    The Department acknowledges that the disability organizations also 
requested that the rule impose a requirement on airlines and ticket 
agents to rebook passengers with disabilities and their travel 
companions on another flight or ground transportation that would 
accommodate the disability without additional cost. The Department is 
examining the issue further in its rulemaking on Ensuring Safe 
Accommodations for Air Travelers with Disabilities Using 
Wheelchairs.\39\ The Department is committed to continuing its efforts 
to protect the rights of air travelers with disabilities and is further 
exploring how to accommodate their needs during flight disruptions in 
this separate rulemaking.
---------------------------------------------------------------------------

    \39\ See 89 FR 17766 (Mar. 12, 2024).
---------------------------------------------------------------------------

    The Department recognizes that the special considerations given to 
passengers with disabilities and their travel companions due to a 
significant change of flight itinerary impacting disability 
accommodations may lead to some passengers falsely claiming that they 
have a disability that was impacted by a change of connecting airport 
or an aircraft substitution, as well as to an entire travel group 
requesting refunds based on a false claim that one passenger in the 
group has a disability the accommodation of which was affected by a 
significant flight itinerary change. Consistent with the Department's 
Air Carrier Access Act regulation, when conducting inquiries regarding 
how a passenger's disability accommodation needs are impacted by a 
significant change, carriers should never ask about the nature or the 
extent of a passenger's disability. Carriers can ask questions about an 
individual's ability to perform specific air travel-related functions 
that may be impacted by the change. For example, carriers should not 
ask ``what is your disability?'' but may ask ``what is the 
accessibility feature that is needed that is no longer available 
because of the aircraft substitution or change in class of service?'' 
Also, the Department notes that an advance request for disability 
accommodation recorded in the passenger's reservation before the 
significant change occurred can serve as evidence that the passenger is 
a qualified individual with a disability and the significant change 
indeed impacts the accommodation for that disability. However, some 
individuals with disabilities may not request assistance in advance, 
but a significant change of flight itinerary may nonetheless impact an 
accessibility feature that they need, resulting in them no longer 
wishing to travel. As such, the Department cautions that lack of such a 
notation is not sufficient on its own as proof that the individual is 
not a person with a disability.

5. Entities Responsible for Refunds

    The NPRM: The NPRM described the significant volume of refund 
complaints against ticket agents received by the Department during the 
COVID-19 pandemic and states that this is an indicator that 
strengthening protections for consumers purchasing air transportation 
from ticket agents is needed. These complaints also illustrated the 
difficulty that consumers sometimes encounter in obtaining a refund for 
a ticket purchased through a ticket agent when consumers do not have 
the means to determine whether the airline or ticket agent needs to 
take action to process the refunds and which entity is in possession of 
the consumers' money. To address this difficulty, the NPRM proposed 
that ticket agents who ``sold'' the tickets would be responsible for 
issuing refunds when they are due. It further explained that a ticket 
agent would be considered to have ``sold'' the ticket at issue if the 
ticket agent is the entity shown in the consumer's financial charge 
statements such as debit or credit card charge statements (commonly 
known as the ``merchant of record''). Under the proposal, a ticket 
agent obligated to provide a refund under this standard would be 
required to issue refunds promptly irrespective of which entity has 
possession of the funds. In the NPRM, the Department shared that it 
considered placing the obligation of providing the refund on the entity 
that is in the possession of the funds but did not propose this 
approach because which entity is in possession of the funds would not 
necessarily be clear to the consumer because multiple entities may be 
involved in the transaction process.
    With respect to airlines' obligations to provide refunds in 
codeshare and interline situations, the NPRM proposed that the 
marketing carrier of an itinerary involving codeshare or interline 
flights

[[Page 32780]]

would be responsible for providing the refund, regardless of whether 
the marketing carrier is also the operating carrier of the flight(s) 
affected by a cancellation or a significant change or whether the 
marketing carrier is the carrier that cancelled or made a significant 
change to the flight itinerary. The NPRM explained that this approach 
benefits consumers by streamlining the process to obtain refunds and 
expects that carriers will be able to develop a system with their 
codeshare and interline partners to ensure that refunds are provided in 
a timely manner. The NPRM sought comments on the costs associated with 
establishing such a system for interline and codeshare partners to 
process refunds according to this proposal and whether there are 
technical obstacles that should be considered.
    Comments Received: Airline commenters agreed that the refund 
requirement should apply to ticket agents when they are the merchants 
of record for the ticket sales or have otherwise paid for the ticket on 
behalf of the passenger. In supporting this position, airlines argued 
that they are incapable of issuing refunds for tickets purchased 
through ticket agents or other third parties because airlines may not 
be in possession of the passenger's payment information and/or personal 
contact information and airlines often do not have full visibility of 
the prices paid by consumers, especially in situations where ticket 
agents purchase bulk fares from airlines to resell to consumers. IATA 
commented that when consumer funds collected by ticket agents are 
processed through IATA's settlement system, the Billing and Settlement 
Plan (BSP), ticket agents are responsible for filing for reimbursement 
from airlines via the settlement system, and the airlines determine 
refund eligibility. A4A supported the proposed standard to hold ticket 
agents responsible for refunds when the ticket agents are the merchants 
of record, or the consumer has paid by cash or check to the ticket 
agent. A4A stated that it is the standard practice today and should be 
codified in the Department's regulation. Both A4A and IATA as well as 
several airline commenters supported applying the refund requirement to 
ticket agents globally who sell tickets for covered flights. Several 
consumer commenters expressed their support to hold ticket agents 
responsible for refunds, describing their frustrations in chasing 
refunds between the airline and the ticket agent.
    Ticket agents and their trade representatives voiced strong 
opposition to the proposal that requires ticket agents who are the 
merchants of record to provide refunds irrespective of whether they are 
in possession of consumer funds. Many ticket agent commenters 
acknowledged that in the vast majority of transactions involving ticket 
agents, airlines are the merchants of record.\40\ They argued, however, 
that although ticket agents have the technical ability to issue refunds 
when they are the merchants of record, they should not be required to 
do so because the consumer's funds were often remitted to airlines 
through the settlement systems immediately or shortly after ticket 
booking, and requiring ticket agents to refund before they receive the 
funds back from airlines would significantly impact the cashflow of 
ticket agents, especially ticket agents that qualify as small 
businesses.\41\ Many commenters opined that such a requirement is 
fundamentally unfair because ticket agents have no control over 
airlines' cancellation or change of flights, nor do they have any 
control over the determination on whether a consumer is eligible for a 
refund. Ticket agents also argued that the process of returning funds 
from airlines to ticket agents through intermediary settlement systems 
such as the Airline Reporting Corporation (ARC) system typically takes 
much longer than seven days. Hundreds of small business ticket agent 
commenters further argue that the impact of such a requirement on 
ticket agents is so profound that many of them would consider stopping 
offering airline tickets booking services, which has the potential 
consequence of disrupting a major airline tickets distribution channel 
and causing consumers to lose the valuable travel advisory services 
offered by ticket agents.
---------------------------------------------------------------------------

    \40\ For example, according to American Society of Travel 
Advisors (ASTA), it estimates that between five and eight percent of 
all airline ticket transactions by credit cards facilitated by its 
members have the ticket agents appear as the merchants of record, 
with the majority of which involving group bookings, air-inclusive 
tour packages, or resale of consolidated fares.
    \41\ ASTA states that its data indicates that 98% of travel 
agencies qualify as ``small businesses'' under the Small Business 
Administration (SBA) size standards.
---------------------------------------------------------------------------

    Additionally, several ticket agents trade associations contended 
that ticket agents lack information regarding consumers' refund 
eligibility and any alternative transportation or compensation offered 
by airlines and accepted by consumers. They argued that airlines should 
have the sole responsibility to determine refund eligibility and timely 
communicate such information to ticket agents. Further, ASTA stated 
that to process a refund through settlement systems such as ARC, ticket 
agents must first receive an Electronic Authorization Code directly 
from airlines, confirming the flight coupon has been changed to a 
refund status, which minimizes duplicate refunds and prevents fraud. 
Ticket agent commenters suggested that the Department should revise its 
proposal and require ticket agents who are the merchants of record to 
issue refunds only when they receive confirmation of refund eligibility 
and funds from the airlines, and that the Department should not impose 
refund deadlines on ticket agents until all these conditions are met.
    ASTA also expressed concerns about how to determine which entity is 
the merchant of record, commenting that consumers may not know which 
entity is the merchant of record by looking at the credit card 
statement. ASTA stated that some credit card issuers would identify 
both the airline and the ticket agent on the consumers' credit card 
statements to reduce the likelihood that consumers mistakenly dispute 
the charges because they did not recognize the transactions. ASTA also 
asked the Department to clarify that when a ticket agent appears on a 
consumer's credit card statement as the merchant of record for charging 
a service fee, it would not trigger the ticket refund requirement. ASTA 
further stated that more clarity is needed on how to determine which 
entity is the merchant of record when tickets are not paid by credit 
cards or debit cards.
    The ACPAC also discussed the issue of ticket agents' responsibility 
to refund and heard from numerous ticket agent representatives about 
the potential impact on their businesses should the Department adopt 
the proposal. The ACPAC recommended that the Department adopt the 
proposed standard to hold ticket agents responsible for refunds when 
they ``sold'' the tickets. Further, in recognition of the potential 
financial impact on small businesses, the ACPAC recommended that the 
Department revise the proposal to provide some relief for ticket 
agents.\42\ Specifically, the ACPAC recommended that the Department 
impose a requirement on airlines to return the consumer funds to ticket 
agents within seven days of receiving the refund requests, and that 
ticket agents that qualify as ``small businesses'' under the standard 
set forth

[[Page 32781]]

by the Small Business Administration (SBA) be given up to 14 days, 
instead of seven days, to issue refunds.
---------------------------------------------------------------------------

    \42\ Among the four members of ACPAC, three members voted in 
support of this recommendation and the member representing airlines 
abstained, expressing concerns about whether the recommendation 
regarding refund timeline is consistent with other Federal 
regulations, i.e., Regulation Z.
---------------------------------------------------------------------------

    On entities responsible for refunds for codeshare or interline 
itineraries, IATA indicated that it supports the proposal to require 
the marketing carriers be responsible for issuing refunds for codeshare 
flights. IATA further commented that the Department should require the 
operating carriers to refund any portion of the fare or fees paid by 
the marketing carrier in the event a refund is due to passengers.
    DOT Response: Sales by ticket agents constitute a major airline 
ticket distribution channel. According to anecdotal data from the 
Airline Reporting Corporation published in 2019, travel agencies 
generated 44% of air segment sales.\43\ During the COVID-19 pandemic, 
the unprecedented number of consumer complaints on refunds included a 
significant number of complaints against ticket agents and tour 
operators. In those complaints, consumers expressed frustration at 
being sent back and forth between the ticket agent and the airline when 
trying to obtain their refunds. As many commenters from the industry 
have illustrated, in a typical airline ticket transaction involving 
ticket agents as the merchant of record, the consumer funds are 
transferred through various entities including intermediary settlement 
systems. It is the Department's understanding that for those ticket 
sales, the refund process reverses the flow of money among the entities 
involved. Thus, focusing on which entity is in possession of the funds 
when assigning a refund obligation is impractical and unworkable from a 
consumer's perspective because consumers do not know which entity is in 
possession of the funds at any given time. The Department continues to 
view such uncertainty as a main driving force leading to additional 
costs, delay, and confusion to consumers. Given this concern, the 
Department declines to adopt the suggestion to assign refund obligation 
based on which entity is in possession of consumer funds, and instead, 
adopts the proposed standard to hold retail ticket agents responsible 
for refunds when they ``sold'' the tickets to consumers as the 
merchants of record. This requirement would cover retail ticket agents 
of all sizes that conduct business online or via brick-and-mortar 
stores that transact directly with consumers. The Department believes 
that this bright line standard is the most effective way to address the 
potential consumer confusion and frustration when there is more than 
one entity involved in the selling of airline tickets. The Department 
also agrees with airline commenters that holding ticket agents who sold 
the tickets responsible for refunds addresses the issues that arise 
when airlines do not have the consumers' payment and/or contact 
information, or visibility of how much consumers paid for the tickets 
when tickets are sold as consolidated fare or bulk fare, all of which 
are necessary for processing refunds promptly and accurately.
---------------------------------------------------------------------------

    \43\ Phocuswright White Paper--Air Sales and the Travel Agency 
Distribution Channel, Airline Reporting Corporation, April 2019. 
https://www.phocuswright.com/Free-Travel-Research/Air-Sales-and-the-Travel-Agency-Distribution-Channel.
---------------------------------------------------------------------------

    The refund requirements for ticket agents apply to airfare or 
airfare-inclusive travel package transactions in which the ticket 
agents are the merchants of record for the transactions irrespective of 
whether the ticket agent is in possession of the consumer funds at the 
time when the refund is due. The Department defines ``merchant of 
record'' as an entity that processes consumer payments for airfare or 
airline ancillary service fees and whose name appears on the consumer's 
bank or similar transaction statement. Regarding ASTA's comment that 
some credit card statements will list both the airline and the ticket 
agent for the transaction, the Department understands that this is done 
by credit card issuers with the intention to ensure that consumers 
recognize the charges. As there is always one merchant processing the 
card payment, consumers can contact their credit card issuers and ask 
which entity is the merchant of record who imposed the charge. For 
transactions paid by a payment other than credit cards or debit cards, 
the transaction receipt provided to consumers should list the entity 
that is responsible. In that regard, if the consumer purchased the 
ticket with cash or check, the entity that issued the receipt should be 
responsible for refunds.
    The Department appreciates the information from the industry 
regarding the flow of funds in ticket agent-involved airline ticket 
transactions. It is the Department's understanding that ticket agents' 
main concern is not about taking on the obligation to refund when they 
are the merchants of record. It seems that their concern, instead, is 
the obligation to refund according to the refund timelines even when 
the funds have not been returned to them by the airlines. Ticket agents 
emphasized that imposing this obligation regardless of whether they 
have possession of the funds will place a significant burden on their 
cashflow, particularly on ticket agents that are small businesses. 
Accordingly, many commenters asked that, should the Department adopt 
the merchant of record standard to hold ticket agents responsible for 
refunds, ticket agents should be required to provide refunds only when 
they receive the funds returned by airlines.
    The Department disagrees with the approach proposed by ticket 
agents that they would not be required to refund consumers until they 
receive the funds from airlines because it would harm consumers should 
airlines, who are not directly responsible for refunds, not timely 
return the funds to ticket agents. The result of the ticket agents' 
proposed approach is that consumers would have no meaningful timeline 
within which they can expect to receive refunds. The Department has 
considered the ACPAC's recommendation that there be an affirmative 
obligation on airlines to return consumer funds back to ticket agents 
within seven days of receiving a refund request from a ticket agent 
when the airlines are not the merchants of record for the ticket sales. 
While the Department agrees that airlines should return consumer funds 
to ticket agents promptly in these situations, it is not persuaded that 
DOT intervention into airlines' and ticket agents' business and 
contractual arrangements is necessary at this time. The Department's 
authority to prohibit unfair or deceptive practices in 49 U.S.C. 41712 
is intended to protect consumers. The Department expects that airlines 
and ticket agents both have the interest to negotiate, form, and adhere 
to a standard procedure in handling consumer funds to ensure that 
ticket transactions and refunds are processed smoothly to the benefit 
of consumers, as well as the businesses involved.
    Although the Department does not believe that ticket agents' 
obligation to refund should be dependent upon receiving the return of 
the funds from airlines, we acknowledge that before issuing the refund, 
the ticket agent may need further information to verify whether a 
refund is due under the Department's regulation. The NPRM states that 
in most situations involving cancellations or significant changes, 
there would be sufficient information (e.g., airlines' publications on 
cancellations or flight itinerary change notifications sent to 
consumers) to confirm refund eligibility without contacting airlines; 
however, after reviewing comments, we realize that even in those 
situations, ticket agents may need airlines' confirmation that the 
affected consumers did not accept alternative transportation or other 
compensation in lieu of refunds.

[[Page 32782]]

Comments submitted by ticket agents also state that airline ticket 
settlement systems often incorporate a process under which airlines 
need to issue refund authorization codes to prevent duplicate refunds 
and fraud. To ensure that refunds to consumers are not unreasonably 
delayed because ticket agents are waiting on airlines' confirmation of 
refund eligibility, we are requiring airlines to determine whether 
consumers are eligible for refunds and if so, inform ticket agents of 
the refund eligibility without delay upon receiving the refund request 
from the ticket agent. The Department's Office of Aviation Consumer 
Protection will determine the timeliness of airlines' response based on 
the totality of the circumstances, including how quickly the airline 
took steps upon receiving the ticket agent's refund request to 
determine refund eligibility and whether the airline informed the 
ticket agent of the refund eligibility as soon as it has confirmed it. 
The Department expects airlines and ticket agents to work together to 
develop and enhance channels of communication to ensure that 
information regarding passengers' refund requests and eligibility are 
transmitted in an effective, accurate, and efficient manner.
    This final rule makes it an unfair practice for airlines to fail to 
timely confirm refund eligibility and communicate that eligibility to 
ticket agents. Airlines not confirming refund eligibility in a timely 
manner slow the refund process and cause substantial harm to consumers. 
This harm is not reasonably avoidable by consumers, as they have no 
control over how soon airlines inform ticket agents that a refund is 
due so the ticket agents can begin to process the refund. The 
Department also sees no benefits to consumers and competition from this 
conduct. On the contrary, the Department views that not imposing this 
requirement on airlines would allow airlines or ticket agents to keep 
money that is due to consumers indefinitely, which in turn harms 
consumers and competition by penalizing good customer service and 
rewarding dilatory behavior.
    For codeshare or interline itineraries sold by a carrier, the 
Department is requiring the carrier that ``sold'' the airline ticket 
(i.e., the merchant of record for the ticket transaction) to provide 
the refunds, as this is the most straightforward standard from 
consumers' perspective. Consistent with the rationale for the 
``merchant of record'' approach that we adopted in determining ticket 
agents' refund obligation, we believe the carriers who are the 
merchants of record for the ticket transactions are in the best 
position to process and issue refunds as they have direct visibility of 
the passengers' payment instruments information and the total amounts 
paid for the itineraries. The Department further notes that in most 
codeshare or interline itineraries, the marketing carriers are the 
merchants of record. The Department's focus is on making consumers 
whole when their flights are cancelled or significantly changed, and we 
decline to regulate how airlines manage the transfer and the return of 
funds among themselves in the event of ticket refunds, as we expect 
that airlines engaging in codeshare or interline arrangements will work 
together on contractual agreements to ensure that account settlements 
are conducted through the normal course of business dealing following 
refunds provided to consumers.

6. Timing of Refunds

    The NPRM: As explained in the NPRM, the Department's current refund 
timeframes are based on the form of payment used for the ticket 
purchase, i.e., seven days for credit card purchases and 20 days for 
cash and other forms of payment. 14 CFR part 374 is the Department's 
regulation implementing the Consumer Credit Protection Act and its 
regulations, including Regulation Z of the Consumer Financial 
Protection Bureau (CFPB) regulation, 12 CFR part 1026 (Regulation Z), 
with respect to airlines issuing refunds for credit card purchases. 
Regulation Z, in relevant provision under 12 CFR 1026.12(e)(1) provides 
that ``when a creditor other than the card issuer accepts the return of 
property or forgives a debt for services that is to be reflected as a 
credit to the consumers' credit card account, that creditor shall, 
within 7 business days [emphasis added] from accepting the return or 
forgiving the debt, transmit a credit statement to the card issuer 
through the card issuers' normal channels for credit statements.'' The 
Department's own regulation in 14 CFR 259.5(b)(5) imposes a refund 
timeline of 20 days on airlines for purchases made by cash or check. It 
also specifies that the refund timeline starts after airlines receive 
the complete refund request. With respect to ticket agents, the 
Department's regulation in 14 CFR 399.80 requires that they make 
``proper refund promptly'' when services cannot be performed as 
contracted. Because Regulation Z impacts all consumer credit, ticket 
agents are also subject to the refund requirement of Regulation Z (12 
CFR 1026.12(e)(1)) with respect to refunds of credit card purchases. 
Under its authority against unfair or deceptive practices, 49 U.S.C. 
41712, the Department also requires that ticket agents provide refunds 
for purchases by payments other than credit cards within a reasonable 
time.
    The NPRM's proposal on ``prompt'' refunds when they are due 
requires airlines to issue refunds ``within 7 days of a refund request 
as required by 14 CFR 374.3 for credit card purchases, and within 20 
days after receiving a refund request for cash or check or other forms 
of purchases.'' \44\ Similarly, the proposed rule on ticket agents 
defines ``a prompt refund'' as ``one that is made within 7 days of 
receiving a refund request as required by 12 CFR part 1026 for credit 
cards purchases, and within 20 days after receiving a refund request 
for cash or check or other forms of purchases.'' \45\ The NPRM sought 
comments on whether these timeframes are appropriate when a carrier has 
cancelled or made a significant change to a scheduled flight to, from, 
or within the United States and consumers found the alternative 
transportation offered to be unacceptable.
---------------------------------------------------------------------------

    \44\ See proposed rule text for 14 CFR 259.5(b)(5), 87 FR 51550, 
51576.
    \45\ See proposed rule text for 14 CFR 399.80(l), 87 FR 51550, 
51579.
---------------------------------------------------------------------------

    Comments Received: IATA supported the 7/20-day refund timelines 
under normal circumstances but argued that during public health 
emergencies, airlines should have at least 30 days to process a refund 
request. IATA stated that due to spikes of refund requests, some 
airlines facing financial difficulties had to choose between delaying 
refunds or going out of business. Air Canada argued that carriers 
should have no less than 30 days to issue refunds in the original form 
of payment, and the refund timeline should be suspended during major 
crises. Air Canada stated that the proposed timelines are disconnected 
from the actual time needed for refund processing by various parties 
involved, and the situation can be more complex when the original 
ticket was sold through a ticket agent. Air Canada further argued that 
the refund timelines should consider situations that trigger the need 
for more time, such as the original form of payment no longer being 
valid, and the time needed to calculate the refund amount when the 
ticket is partially used. A4A commented that the Department should 
ensure that the 7/20-day refund timelines are consistent with 
longstanding DOT enforcement precedent and Regulation Z by clarifying 
that they are in reference to business days and not calendar days.

[[Page 32783]]

    USTOA representing tour operators commented that the 7/20-day 
timelines are reasonable so long as the sellers are in possession of 
the funds. It further elaborated that for ticket agents, counting of 
the timelines should not begin until the ticket agents are in 
possession of the funds and have received refund eligibility 
confirmation from airlines.
    Ticket agent representatives also provided comments during the 
ACPAC meetings regarding the financial difficulties they face if they 
are required to issue refunds before receiving the funds back from 
airlines. In recognition of the potential financial impact on small 
businesses, the ACPAC recommended that the Department revise the 
proposal to provide some relief for ticket agents. Specifically, the 
ACPAC recommended that the Department impose a requirement on airlines 
to return the consumer funds to ticket agents within seven days of 
receiving the refund requests, and that ticket agents that qualify as 
``small businesses'' under the standard set forth by the Small Business 
Administration (SBA) be given up to 14 days, instead of seven days, to 
issue refunds to consumers. \46\ In a joint comment filed by A4A and 
IATA, the carrier representatives stated that this ACPAC recommendation 
conflicts with Federal Reserve regulation (12 CFR 1026.11) and the 
Department's rule (14 CFR 374.3). They further commented that the NPRM 
did not propose to change the Department's refund regulations or 
discuss a different refund standard and therefore adopting a different 
refund standard in a final rule would violate the notice and comment 
requirements of the Administrative Procedure Act.
---------------------------------------------------------------------------

    \46\ Among the four members of ACPAC, three members voted in 
support of this recommendation and the member representing airlines 
abstained, stating that he is unclear about whether this 
recommendation is consistent with other Federal regulations, i.e., 
Regulation Z.
---------------------------------------------------------------------------

    Furthermore, airline commenters expressed concerns about passengers 
not informing carriers of their decisions to reject the alternative 
transportation offered until close to the flight's departure, therefore 
depriving airlines the opportunity to resell those seats. IATA and Air 
Canada argued that passengers should have the obligation to take 
positive steps to inform airlines within a reasonable time after the 
passenger is notified of a significant change and offered alternative 
transportation. During an ACPAC meeting, the member representing 
airlines also expressed similar concerns.
    Some consumer commenters urged the Department to require airlines 
to issue ``automatic'' refunds. They argued that airlines have the 
incentive to adopt complex refund processes that make requesting 
refunds cumbersome and difficult for consumers, engineered to dissuade 
consumers from receiving their due compensation. Some commenters 
provided examples of inefficient and complex refund request procedures 
currently adopted by airlines, including hidden refund request links on 
their websites, excessive data input requirements from consumers, 
lengthy and confusing refund request forms, and excessive hold time for 
requesting refunds over the telephone. In addition, PVA and United 
Spinal Associates commented that when alternative transportation does 
not provide the same or similar accessibility features or seating 
arrangements, this deficiency should prompt an automatic refund offer.
    DOT Responses: Based on the comments received, the Department is 
addressing--(i) the meaning of prompt refunds, including during public 
health emergencies; (ii) automatic refunds as a way to reduce 
cumbersome refund request processes for consumers and ensure consumers' 
rejection of the alternative transportation offered do not deprive 
airlines of the opportunity to resell those seats; (iii) commencement 
of refund deadlines; and (iv) the meaning of business day for purpose 
of providing refunds.
(i) Prompt Refunds
    In this final rule, we are requiring that airlines and ticket 
agents provide prompt refunds when due. Prompt is defined to mean 
within 7 business days of refunds becoming due for credit card 
purchases, and within 20 calendar days of refunds becoming due for 
purchases by cash, check, or other forms of payment. To the extent the 
purchase is made by a debit card, the Department has reviewed the 
relevant definitions in CFPB's regulations, including Regulation Z, and 
has determined that a typical debit card does not fall under the 7-day 
refund timeline that only applies to ``credit card'' and therefore 
would be subject to the 20-day timeline.\47\
---------------------------------------------------------------------------

    \47\ The CFPB regulation defines a ``credit card'' as any card, 
plate, or other single credit device that may be used from time to 
time to obtain credit. See 12 CFR 1026.2(a)(15)(i). The term 
``credit'' is defined as the right to defer payment of debt or to 
incur debt and defer its payment. See 12 CFR 1026.2(a)(14). In 
contrast, ``debit card'' is defined as any card, plate, or other 
single device that may be used from time to time to access an asset 
account other than a prepaid account. See 12 CFR 1026.2(a)(15)(iv).
---------------------------------------------------------------------------

    The Department has considered airlines' suggestion of additional 
time to provide refunds including one airline's request for no less 
than 30 days to issue refunds and to suspend the refund deadlines 
during major crisis. The Department believes that maintaining the 7/20-
day refund timeline is reasonable as airlines and ticket agents have 
been required to comply with these timeframes for decades. The 
Department is also not convinced that extending or suspending the 7-day 
timeline for credit card purchases during large-scale air travel 
disruptions is either permissible under Regulation Z or warranted. 
Taking the COVID-19 pandemic as an example, although the Department 
recognizes the challenges airlines and ticket agents faced when dealing 
with a significant increase of refund requests, the Department also 
recognizes the financial difficulties average consumers faced during 
the pandemic, including the impact of not receiving timely refunds of 
airline tickets they paid for when the service is cancelled or 
significantly changed. During such an event, the Department considers 
consumers to be in need of the regulatory protection afforded by the 
prompt refund requirements specified in this final rule. As discussed 
earlier, the Department is adopting the proposal to hold ticket agents 
responsible for refunds when they are the merchants of record for the 
ticket transactions. We have considered comments by numerous small 
ticket agents and the ACPAC's recommendation to provide small ticket 
agents additional times to issue refunds by credit cards. After a 
careful review of Regulation Z and relevant interpretations by CFPB, we 
have determined that the Department does not have the discretion to 
extend the 7-day refund timeline for credit card purchases, which would 
contradict Regulation Z. The Department acknowledges the concerns of 
small ticket agents regarding the financial burden to issue refunds 
before receiving the funds back from airlines. We note that, as several 
ticket agent commenters point out, that less than 10% of ticket 
transactions involving air travel have ticket agents as the merchants 
of record, for which they will be obligated to issue refunds. The 
Department expects that outside of a massive disruption to air 
transportation on a national or global scale, ticket refund requests 
made to small ticket agents due to airline cancellation or significant 
change should be rare. In addition, the Department is mandating that 
airlines confirm refund eligibility before a

[[Page 32784]]

refund is due by ticket agents.\48\ We expect that this requirement, 
along with the tolling of the refund timeline discussed below, will 
alleviate the financial burden on small ticket agents.
---------------------------------------------------------------------------

    \48\ In an enforcement notice issued by the Department's Office 
of Aviation Consumer Protection (OACP) on March 12, 2020, the 
Department states that it interprets the requirement for ticket 
agents to provide refunds to include providing refunds in any 
instance when the following three conditions are met: (1) an airline 
cancels or significantly changes a flight, (2) an airline 
acknowledges that a consumer is entitled to a refund, and (3) 
passenger funds are possessed by a ticket agent. See, https://www.transportation.gov/airconsumer/FAQ_refunds_may_12_2020. The 
Department has reconsidered this issue and determined that the final 
rule appropriately ensures that consumers receive prompt refunds as 
required by the rule and are not caught in the middle between 
airlines and ticket agents, but also provides safeguards for ticket 
agents in the requirement for airlines to verify refund eligibility 
before the refund timeline starts.
---------------------------------------------------------------------------

(ii) Automatic Refunds
    The NPRM proposed that the 7/20-day refund timelines start upon 
airlines or ticket agents ``receiving a complete refund request'' from 
consumers. After considering the comments from consumers and the 
industry, the Department has determined that under certain 
circumstances where consumers' rights to refunds and their intention to 
receive a refund are unequivocal, using consumers' explicit refund 
requests as the starting point for computing the refund timelines is an 
approach that imposes an unnecessary burden on consumers. Consumers in 
comments expressed their frustrations about the cumbersome process to 
request and receive a refund following a flight cancellation or 
significant change, at times waiting for hours on the phone, digging 
through cumbersome airline websites to find a link for requesting a 
refund, or having to navigate through extra ``digital paperwork'' to 
complete a refund request form. The Department is persuaded by 
consumers that in these circumstances automatic refunds are warranted. 
For example, if a flight is cancelled and no alternative transportation 
or compensation is offered to the passenger in lieu of a refund, the 
carrier must refund the consumer because the contracted service was not 
provided. Similarly, if a flight is significantly changed and the 
consumer rejects the significantly changed flight and no alternative 
transportation or compensation is offered to the passenger in lieu of a 
refund, the carrier must refund the consumer because the contracted 
service was not provided. It is inefficient and unreasonable for the 
carrier to wait to receive an explicit refund request from the consumer 
in such situations. Also, if alternative transportation or a travel 
credit, voucher, or other compensation is offered to a consumer for a 
canceled flight or a significantly changed flight and the consumer 
rejects the alternative transportation or compensation offered, then 
the carrier should refund the consumer without further delay because 
the contracted service was not provided and the consumer rejected the 
alternative offered. It should not be necessary for the consumer to 
separately request a refund because the rejection of the alternatives 
offered is tantamount to a request for a refund.
    The Department acknowledges airlines' concerns about consumers not 
rejecting a significantly changed flight or a booked alternative flight 
itinerary after being notified of such an offer until closer to flight 
operation, thus depriving airlines the opportunity to sell the seats 
for revenue. Under this final rule, airlines may set a deadline that 
provides reasonable time for a consumer to decide whether to accept the 
existing itinerary with a significant change or an airline's offer of 
alternative transportation in lieu of a refund. To determine whether a 
carrier provided consumers reasonable time to consider the options and 
make a decision, the Department will look primarily at when the 
cancellation or significant change occurred, how soon after the carrier 
became aware of the flight cancellation or significant change that the 
carrier notified affected consumers of this event and made an offer of 
alternative transportation, and how close the consumer notification is 
to the scheduled departure date of the significantly changed flight or 
the alternative transportation offered.
    The Department recognizes that some consumers may not respond to a 
carrier's offer of a significantly changed flight or an alternative 
flight by the deadline. To ensure that consumers understand the 
potential consequences of not responding by the deadline, the 
Department is also requiring airlines when notifying affected consumers 
of a significantly changed flight or offering alternative flight to 
inform consumers whether the carrier will treat the lack of response by 
the deadline as a rejection (i.e., prompt refund to be provided but 
reservation is no longer held for passenger) or an acceptance (i.e., 
reservation held for passenger but passenger forfeits right to a 
refund) of the offer. A carrier may determine whether it will treat the 
lack of response by the deadline as a rejection or an acceptance of the 
offers, but such determination must be adopted as a customer service 
policy applicable universally to all passengers of the carrier. Any 
change to the policy applies only to passengers who booked their 
tickets after the effective date of the change. If a carrier chooses 
not to set a deadline for the consumer to respond to the offer, the 
carrier is essentially giving the consumer the option to decide until 
the date of the significantly changed flight or the alternative flight 
as to whether to accept or decline the offer. Under these 
circumstances, the consumer taking the significantly changed flight or 
the alternative flight is an acceptance of the offer and the consumer 
not taking the flight is a rejection of the offer. Again, if the 
consumer has rejected an offer of alternative transportation (informed 
airline of rejection of alternative transportation, failed to respond 
within the timeframe provided by the carrier after carrier notified 
passenger that lack of a response to offer of alternative 
transportation would be deemed a rejection, or did not take the flight 
when the carrier did not set a deadline for a response to an offer of 
alternative transportation), there is no need for the consumer to send 
a separate request for a refund.
    To ensure consumers have reasonable time to consider and respond to 
the options offered by a carrier, the Department is requiring carriers 
to notify consumers of the options available to them in a timely 
manner. It is an unfair practice for airlines to not timely notify 
consumers of their options yet impose a short deadline to respond. Such 
a practice harms consumers by depriving them of a reasonable time to 
consider their options. The failure to fully inform consumers of the 
consequence of not responding by the deadline (i.e., losing their money 
paid for the ticket or losing their seats on the booked flights) is 
also an unfair practice. Such a practice harms consumers by omitting a 
material matter in the notification, and the omission would negatively 
affect consumers' conduct. Both harms are not reasonably avoidable by 
consumers because consumers would not have known about material matters 
unless they were informed. These practices do not benefit consumers or 
competition--rather these practices would hinder transparency and 
causes inefficiency in airlines' inventory management. As such, the 
Department is requiring carriers to provide timely notification to 
affected consumers about the options available to consumers when a 
flight is canceled or significantly changed, any responsive deadline, 
and the consequence of not responding by the deadline. For carriers 
that have in

[[Page 32785]]

place notification subscription services, this notification must be 
provided through media that the carriers offer and the subscribers 
choose, including emails, text messages, and push notices from mobile 
apps. As the content of the notification may be over the size limits of 
text messages or mobile app push notices, carriers may include in a 
text message or push notice a link to the consumer's reservation page 
on its website, where the full content of the notification is 
displayed.
    In addition to notifying affected consumers, this final rule 
requires that carriers provide clear, conspicuous, and accurate 
information in their customer service plan regarding the carriers' 
policies and procedures on refunds and rebooking including when 
consumers are non-responsive to carriers' offers of significantly 
changed or alternative flights. More specifically, the Department is 
amending 14 CFR 259.5 to require carriers to incorporate into their 
Customer Service Plans a commitment to disclose relevant refund and 
cancellation policies as provided in 14 CFR part 260, including 
policies related to consumers' right to a refund due to airline-
initiated cancellations or significant changes, consumers' right to 
``automatic refunds'' under certain circumstances, consumers' right to 
refunds and rebooking when consumers are non-responsive to carriers' 
offers of significantly changed or alternative transportation. This 
information is intended to better inform consumers about their rights 
before purchasing tickets and whenever questions arise later. The 
Department considers any misrepresentation or omission of material 
matters regarding a consumer's rights when airlines and ticket agents 
publish their refund polices or notify consumers affected by a canceled 
or significantly changed flight to constitute an unfair practice in 
violation of 49 U.S.C. 41712. Consumers who are not provided complete 
and accurate information about their rights are not likely to choose 
the options that best suit their needs. For example, consumers who are 
offered alternative transportation but not notified of the need to 
respond before an airline-imposed deadline may lose their rights to a 
refund or lose the flight reservations that they intend to keep. This 
is a substantial harm that cannot be reasonably avoided by consumers 
because consumers have no way to fully understand their rights without 
being notified by airlines or ticket agents. Airlines or ticket agents 
not providing clear, accurate, and complete notifications to consumers 
harms competition because it hinders the development of open and fair 
competition that maximizes consumer choices based on information 
transparency. The Department further views such misrepresentation or 
omission as a deceptive practice because misrepresenting or omitting a 
material fact relating to a consumer's right to a refund or other 
options available in lieu of a refund in the carrier's customer service 
plan is likely to deprive that consumer of important information that 
could impact which carrier the consumer selects for the air 
transportation and similar misrepresentation or omission in 
notifications provided to consumers affected by significant change and 
cancellation could impact the choice that the consumer makes between a 
refund and another option.
(iii) Commencement of Refund Timelines
    The Department's existing refund regulation requires that a refund 
must be provided within the required timelines after receiving a 
``complete refund request.'' The Department did not use this language 
in the proposed rule but ``acknowledge[d] that for transactions in 
which a ticket agent would be responsible for issuing a refund if due, 
before issuing the refund, the ticket agent may need further 
information to verify whether a refund is due under the Department's 
regulation.'' \49\ After carefully reviewing the comments received, the 
Department is of the view that the obligation of a ticket agent to 
provide refunds should begin when the ticket agent receives 
confirmation about the passengers' refund eligibility from airlines. 
Under this final rule, the 7/20-day refund timelines start at the time 
the ticket agent receives the eligibility confirmation from the 
airline. For example, if an airline confirms that the passenger is 
eligible for a refund on day 3, the 7 or 20-day refund timeline for the 
ticket agent starts on day 3. Airlines and ticket agents are encouraged 
to establish effective communication channels and airlines are expected 
to work expeditiously to confirm refund eligibility. The Department 
does not view tolling the refund timelines for lack of essential 
information needed for refunds to be contradictory to Regulation Z, as 
Regulations Z's 7-day refund timeline starts from the time a ``creditor 
other than the card issuer'' ``accepting the return [of property] or 
forgiving the debt.'' In the Department's view, an airline or ticket 
agent should not be expected to accept the return of property or 
forgive the debt until it can be confirmed that the consumer is 
eligible.
---------------------------------------------------------------------------

    \49\ 87 FR 51550, 51563.
---------------------------------------------------------------------------

(iv) Business Days
    In this final rule, the Department is requiring refunds be provided 
within seven business days of when it is due for credit card purchases 
and within 20 calendar days of when it is due for cash and other forms 
of payment. The Department agrees with A4A's comment that the 7-day 
refund timeline should be consistent with CFPB's Regulation Z. The CFPB 
regulation defines ``business days'' as a day on which the creditor's 
offices are open to the public for carrying on substantially all of its 
business functions.\50\ CFPB's Official Interpretation of its 
definition explains that ``[a]ctivities that indicate that the creditor 
is not open for substantially all of its business functions include a 
retailer's merely accepting credit cards for purchases. . . .'' \51\ 
CFPB also explains that ``activities that indicate that the creditor is 
open for substantially all of its business functions include the 
availability of personnel to make loan disbursements, to open new 
accounts, and to handle credit transaction inquiries.'' \52\
---------------------------------------------------------------------------

    \50\ 12 CFR 1026.2(a)(6).
    \51\ https://www.consumerfinance.gov/rules-policy/regulations/1026/interp-2/#2-a-4-Interp-3.
    \52\ Id.
---------------------------------------------------------------------------

    Based on CFPB's Official Interpretation of its definition, the 
Department has decided not to use the days that airlines and ticket 
agents accept credit cards for purchases of airline tickets and related 
services to determine business day. Instead, the Department is focusing 
on the days on which the offices of airlines and ticket agents are 
typically open to process refund requests and defining business day to 
be Monday through Friday, excluding Federal holidays in the United 
States. By defining business day in this simplified manner, the 
Department is providing regulatory clarity to airlines and ticket 
agents regarding their obligations to provide prompt refunds. 
Importantly, consumers can also easily understand their rights and 
advocate for themselves when regulations are defied or disregarded. The 
Department expects that this clarification regarding refund timeline 
for credit card payment refunds will enhance transparency and 
consistency in the airline ticket refund process but will revisit this 
issue in the future should it be necessary.
    The Department notes that the CFPB regulation is not applicable to 
the DOT

[[Page 32786]]

requirement concerning providing refunds within 20 days for purchases 
paid by a payment other than a credit card. As is the case currently, 
the Department is continuing to require airlines and ticket agents to 
provide refunds for non-credit card purchases within 20 calendar days. 
The Department has amended the regulation text accordingly.

7. Amount and Form of Refunds

    The NPRM: Under the NPRM, when ticket refunds are due because of a 
significantly changed or canceled flight, a passenger would be entitled 
to receive a full refund equal to the ticket purchase price including 
government-imposed taxes and fees and carrier-imposed fees and 
surcharges (such as fuel surcharges), minus the value of any air 
transportation that is already used by the passenger. To calculate the 
value of any used portion of the air transportation when determining 
the amount of refunds, the Department suggested that airlines rely on 
established industry practices and guidelines.
    On the form of refunds, the NPRM explained that the Department 
intends to explore ways to provide consumers, carriers, and ticket 
agents more flexibility in issuing and receiving refunds. As such, the 
NPRM proposed to allow airlines and ticket agents to choose whether to 
refund passengers by returning the money in the original form of 
payment or by providing the refund in cash or a form of cash 
equivalent, including prepaid cards, electronic fund transfers to 
passengers' bank accounts, or digital payment methods such as PayPal or 
Venmo. The NPRM stated that a carrier- or ticket agent-issued travel 
credit or voucher or a store gift card is not considered a cash 
equivalent form of payment because these forms of compensation are not 
widely accepted in commerce. Further, the Department considered that 
when a carrier or ticket agent issues a prepaid card, any maintenance 
or usage related fees should be prepaid into the card by the issuer in 
addition to the full amount of refund that is due. The NPRM asked 
whether this proposal would be beneficial to consumers, carriers, and 
ticket agents as intended and whether there are any unintended negative 
impacts.
    Comments Received: Airlines generally did not object to the 
proposal to require a refund of the full ticket price including taxes 
and fees. However, A4A and IATA commented that the refund amount should 
exclude any government taxes and fees that are non-refundable. This 
position was supported by the U.S. Chamber of Commerce.
    FlyersRights argues that amount of refunds for cancelled or 
significantly changed flights should include a premium if the 
cancellation or significant change occurs close to the scheduled 
departure date as consumers will likely have to pay a much higher price 
for another ticket. Also, hundreds of consumer commenters stated that a 
refund of the ticket is inadequate to address the costs and 
inconvenience to passengers when a flight cancellation or significant 
change occurs mid-journey. PVA stated that a refund by itself is 
useless when a passenger with a disability is stranded.
    On the form of refunds, most airlines commenters supported the 
proposal to allow carriers and ticket agents to choose between the 
original form of ticket payment and another form that is cash-
equivalent, stating that this would provide flexibility to carriers, 
ticket agents, and consumers. Spirit Airlines argued that refunds 
should be in the original form of payment, expressing concerns about 
the privacy of cash equivalent payments that potentially expose 
consumers to scam and confusion. Qatar Airways also supported the 
position that the default refund form should be in the original form of 
payment and stated that only when the original form of payment service 
declines the refund should another form of payment be used. Travel 
Management Coalition also favored the refund being issued in the 
original form of payment and added that if the Department directs 
another form of refund, the refund timeframe should be extended. Global 
Business Travel Association commented that refunds should be directed 
back through the original form of payment for business travelers to 
ensure that the business, not the traveler, is refunded.
    DOT Response: After carefully considering the comments, the 
Department is finalizing the proposal to require airlines and ticket 
agents to provide full refunds to eligible passengers of the ticket 
purchase price, minus the value of any portion of transportation 
already used. The refunds must include all government-imposed taxes and 
fees and airline-imposed fees, regardless of whether the taxes or fees 
are refundable to airlines. The Department disagrees with the airlines' 
position that consumers should bear the burden of any non-refundable 
government taxes and fees when consumers have not initiated, caused, or 
contributed to the cancellation or significant changes to their flight 
itineraries.
    Regarding how best to calculate the value of any portion of 
transportation already used, the Department emphasizes that carriers 
are expected to adhere to established industry practice and treat 
consumers fairly. The Department will view any arbitrary deviation from 
industry practice in calculating the value of the unused portion to the 
detriment of the consumer to be indicative of an unfair practice. 
Further, any assigned value to a used or unused segment that is 
significantly disproportionate to the distance covered by that segment 
(e.g., assigning 10% of the total ticket value to the unused segment 
that covers 50% of the total travel distance) will be viewed as a prima 
facie unfair practice unless carriers can justify the assignment with 
established and verifiable industry practice.
    Although the final rule requires carriers to refund only unused 
portion of the ticket price if a passenger has used a part of the 
ticket, the Department acknowledges the comment from a consumer 
organization regarding consumers having to pay a premium to purchase a 
new ticket when their flights are cancelled or significantly changed 
close to the scheduled departure date, as well as comments that flight 
cancellations or significant changes impact consumers more 
significantly when they have already traveled a portion of the 
itineraries, particularly persons with disabilities. Consumers stranded 
at a connecting airport by a cancellation or significant change face 
not only the challenge of limited choices for continuing travel or 
returning to their origination airport, but also increased cost of 
food, lodging and other expenses. These comments reflect consumers' 
concern that simply refunding the ticket price may not adequately 
compensate the actual cost to consumers from airline cancellations or 
significant changes. The Department's rulemaking on Rights of Airline 
Passengers When There Are Controllable Flight Delays or Cancellations 
\53\ intends to examine how best to ensure passengers' needs are 
addressed beyond refunds including essential services such as meals, 
rebooking, and hotel as well as compensation to mitigate passenger 
inconveniences when there is a controllable cancellation or delay.
---------------------------------------------------------------------------

    \53\ See fn. 29, supra.
---------------------------------------------------------------------------

    To reduce the likelihood of consumers embarking on a journey 
without knowledge of a downstream cancellation or significant change, 
the Department reminds carriers of their obligation under 14 CFR 259.8 
to

[[Page 32787]]

promptly provide to passengers who are ticketed or hold reservations, 
and to the public, information about a change in the status of the 
flight within 30 minutes after the carrier becomes aware of a change in 
the status of a flight. These notifications are important to ensure 
that consumers are aware of any known flight itinerary or schedule 
changes and cancellation that would affect their travel downstream 
before they begin the journey to avoid being stranded mid-travel and 
facing difficult choices. Also, the Department reminds carriers of 
their obligation under 14 CFR 259.8 to identify and adhere to the 
services that it promises to provide consumers in their customer 
service plan to mitigate passenger inconveniences resulting from flight 
disruptions. Beginning in September 2022, the large U.S. carriers have 
made significant changes to their customer service plans to improve 
services provided to passengers when their flights are canceled or 
delayed because of an airline issue (i.e., controllable cancelations 
and delays). As a result, many U.S. customers impacted by controllable 
cancellations and delays are entitled today to receive reimbursements 
for expenses such as meals, hotels, and ground transportation.\54\ On 
the form of refunds, the Department is convinced by commenters that the 
best approach is to require that refunds be in the original form of 
ticket purchase, and allow airlines and ticket agents to offer, in 
addition to the original form of payment, other cash-equivalent 
payments. The Department views that making the original form of payment 
the default refund form has several benefits. First, it ensures that 
all passengers, as a minimum, can receive their money back in the same 
way they paid for the tickets, therefore avoiding the situations where 
consumers are forced to accept an alternative payment form through 
which they have no way to access cash directly. Second, it expedites 
and streamlines the process of refunds in most situations by simply 
reversing the ticket purchasing process using the payment information 
already available to airlines or ticket agents. Thirdly, it avoids 
complications in business travel by ensuring that businesses, as 
opposed to travelers, receive the refunds. The Department notes that 
under this final rule, all airlines and ticket agents are required to 
provide refunds in the original form of payment, unless the passenger 
has agreed to a different form of payment. Airlines and ticket agents 
are permitted, but not required, to offer other forms of refunds that 
are equivalent to cash, but only if it is made clear to the customer 
that they have the right to receive a refund in the original form of 
payment. Having received no comments on the proposed definition for 
``cash equivalent,'' the Department is adopting the definition as 
proposed, including the prohibition on requiring consumers to bear the 
burden for maintenance fees, usage fees, or transaction fees related to 
a cash equivalent payment method.
---------------------------------------------------------------------------

    \54\ See https://www.transportation.gov/airconsumer/airline-customer-service-dashboard, an easy-to-use dashboard that displays 
airlines' commitments.
---------------------------------------------------------------------------

8. Offers of Travel Vouchers, Credits and Other Compensation and 
Notification to Consumers of Their Right to a Refund

    The NPRM: The Department proposed to allow airlines and ticket 
agents to offer but not require other compensation choices such as 
travel credits or vouchers and store gift cards in lieu of refunds. The 
NPRM recognized that while a refund in the original form of payment or 
cash or a cash equivalent form of payment would be preferred by many 
passengers, some passengers may prefer receiving travel credits or 
vouchers or store gift cards. The proposal would allow airlines and 
ticket agents the flexibility, at their discretion, to work with 
passengers by offering more choices of compensation for interrupted 
travel plans.
    To ensure consumers know their right to a refund, the Department 
also proposed to require carriers and ticket agents inform consumers 
that they are entitled to a refund if that is the case before making an 
offer for travel credits, vouchers, or other compensation in lieu of 
refunds. Further, under the Department's proposal, the option for 
carriers and ticket agents to offer compensation other than refund of 
cash or cash equivalent when a carrier cancels or makes a significant 
change to a flight itinerary must not be misleading with respect to the 
passengers' rights to receive a refund. Under the proposal, airlines 
and ticket agents must clearly disclose any material restrictions, 
conditions, and limitations on the compensation they offer, so 
consumers can make informed choices about which types of compensation 
and refunds would best suit their needs.
    Comments Received: FlyersRights and several consumer commenters 
expressed their support for the proposal to require airlines to notify 
consumers of their rights to a refund before offering other 
compensation. Some commenters also stated that such disclosure should 
be in clear language, using terms that ordinary individuals would 
understand. All airline commenters who commented on non-cash equivalent 
compensation supported the proposal to allow airlines and ticket agents 
to offer these types of compensation to consumers who are eligible for 
refunds. IATA and SATA also commented that the Department should allow 
carriers to offer refunds when travel credits or vouchers are required 
by the regulation. National Consumers League supported the proposal to 
allow airlines and ticket agents to offer non-cash equivalent 
compensation but argues that any travel credits or vouchers offered 
should never expire.
    DOT Response: This final rule is requiring airlines and ticket 
agents to inform passengers entitled to receive a refund of their right 
to a refund before making an offer for travel credits, vouchers, or 
other compensation in lieu of refunds. The Department is persuaded by 
comments of the importance of disclosing to consumers their rights to a 
refund up front in plain language. Passengers lacking this information 
may not be able to make an informed decision as to whether to obtain a 
refund or accept other compensation. For similar reasons, the 
Department is also requiring airlines and ticket agents to inform 
passengers of their rights to a refund, if this is the case, when 
offering a significantly changed flight or alternative transportation 
for a significantly changed or cancelled flight.
    To provide more flexibilities and choices to consumers, the 
Department is allowing airlines and ticket agents to offer, in addition 
to refunds, other compensation to eligible consumers. The Department 
emphasizes the importance of carriers and ticket agents providing 
clear, prominent, and accurate disclosures to consumers of their rights 
to refunds when offering these options, and of any material 
restrictions, limitations, and conditions on any compensation offered 
as an alternative to refunds. The Department views any 
misrepresentation or omission of these matters to be unfair and 
deceptive practices in violation of 49 U.S.C. 41712. A consumer's 
entitlement to a refund and restrictions, limitations, and conditions 
on alternatives offered such as travel credits and vouchers in lieu of 
a refund are material matters that are likely to affect consumers' 
decisions with respect to whether they accept the offered voucher or 
credit. The Department views misrepresenting or omitting the consumer's 
right to a refund or the restrictions, limitations, and conditions that 
apply on the compensation offered

[[Page 32788]]

as an alternative to refunds to be a deceptive practice because it 
deprives that consumer of important information that could impact the 
choice that the consumer makes between a refund and another option. 
During the COVID-19 pandemic, the Department became aware of many 
consumers who accepted travel credits and vouchers from airlines for 
canceled or significantly changed flights because they were not aware 
of their right to a refund or because they were not aware of the 
restrictions that applied on their travel credits and vouchers. This 
conduct is also an unfair practice because it causes substantial 
consumer harm by depriving consumers of the knowledge that they are 
entitled to a refund, which is not reasonably avoidable by consumers as 
they are unable to obtain this knowledge unless they are informed by 
the airlines or ticket agents. This conduct also harms competition 
because, by avoiding issuing refunds to consumer, entities engaging in 
this conduct gain unfair advantages over entities providing full 
disclosure to consumers about their right to a refund.

9. Service Charges

    The NPRM: The NPRM proposed that airlines may not charge a fee when 
issuing a refund following a carrier-initiated cancellation or 
significant change and that the terms or conditions in airline 
contracts of carriage should be consistent with the proposed 
regulation. With respect to refunds issued by ticket agents, the NPRM 
proposed that ticket agents are permitted to retain the service fee 
they charged for ticket issuance at the time of purchase in recognition 
that ticket agents are providing a service apart from airfare purchase 
and that service has been completed regardless of whether the passenger 
took the flight. The NPRM further proposed that ticket agents may also 
charge a fee for issuing refunds, reasoning that, unlike airlines, 
ticket agents do not initiate the cancellation or significant changes 
that result in a refund being due, nor do the ticket agents have any 
control over the cancellation or significant changes to a flight 
itinerary. The NPRM emphasized that the amount of the ticket issuance 
service fee or refund processing fee that ticket agents may retain must 
be on a per-passenger basis and the existence of the fee must be 
clearly and prominently disclosed to consumers at the time they 
purchased the airfare.
    Comments Received: The Department received comments from consumers, 
ticket agents, and airlines regarding service fees. Several consumers 
opposed allowing refund processing fees charged by airlines. One 
commenter noted that if airlines are allowed to charge such a fee, 
there is nothing to prevent them from charging $100 or more. The same 
commenter added that processing refunds is computerized and can be done 
with a few keystrokes. Qatar Airways asserted that airlines should be 
permitted to collect service fees, including fees for processing 
refunds. Ticket agent representatives supported the proposal to allow 
ticket agents to retain the ticket issuance service charge and refund 
service fee, agreeing with the Department's rationale that issuing 
tickets and processing refunds are separate services provided by ticket 
agents independent of the value of the ticket. Travel Management 
Coalition commented that when additional paperwork is involved to 
verify refund eligibility, ticket agents should be allowed to charge a 
service fee and it would be disclosed in a client agreement.
    DOT Response: The Department reaffirms its belief that ticket 
agents offer valuable services to the traveling public apart from 
booking airfare, such as providing specialized knowledge of suitable 
travel options in accordance with consumers' wants and capabilities, 
offering access to limited availability fares or tools to comparison 
shop across various airlines to find the best value for consumers, and 
researching and booking activities at consumers' destinations (e.g., 
sightseeing tours, events). The Department is of the view that, even in 
situations where the consumer did not travel because of a canceled or 
significantly changed flight, it is reasonable for ticket agents to 
retain service charges related to issuing the original tickets to the 
extent the service charge is not simply for processing payment for a 
flight that the consumer found. The Department views this service as 
being independent of the value of the ticket. Also, regardless of 
whether the passenger travels, the fee represents the cost of service 
already provided by ticket agents. Under this final rule, ticket agents 
may retain this type of service charge even if the passenger did not 
travel due to an airline cancellation or significant change so long as 
the nature and amount of these fees are clearly and prominently 
disclosed to consumers when they purchase the tickets, and they are 
assessed on a per-passenger basis.
    The Department's Office of Aviation Consumer Protection would 
consider undisclosed fees to be a deceptive practice in violation of 49 
U.S.C. 41712. Pursuant to 14 CFR 399.79, a practice is ``deceptive,'' 
within the meaning of 49 U.S.C. 41712, to consumers if it is likely to 
mislead a consumer, acting reasonably under the circumstances, with 
respect to a material matter. A matter is material if it is likely to 
have affected the consumer's conduct or decision with respect to a 
product or service. A ticket agent's failure to disclose that the 
service fee charged at the time of reservation is nonrefundable should 
a ticket refund be due would likely mislead a consumer to reasonably 
conclude that the entire amount paid for the ticket is refundable when 
a ticket refund is due. Similarly, a ticket agent's failure to disclose 
the existence and the amount of a fee for issuing a refund is likely to 
mislead a consumer to reasonably believe that no such fee would apply 
when a ticket refund is due. Failing to provide either disclosure would 
be an omission of material information that may affect the consumer's 
purchase decision because a consumer might choose not to purchase the 
ticket if the consumer was aware that if a refund is due the amount of 
the refund would be for less than the purchase price.
    The Department does not address in this final rule whether a ticket 
agent can retain a booking fee (i.e., a fee for processing payment for 
a flight that the consumer found) when processing a refund for an 
airline ticket because the passenger's flight was canceled or 
significantly changed and the passenger no longer wishes to travel. The 
Department notes that it is addressing the issue of whether carriers 
can charge a booking fee separately from the ticket price as part of 
another rulemaking.\55\ While that rulemaking is pending, the 
Department's Office of Aviation Consumer Protection will focus on 
whether the nature and amount of the booking fee was clearly and 
prominently disclosed to a consumer at time of ticket purchase in 
determining if an airline or ticket agent engaged in an unfair or 
deceptive practice in violation of 49 U.S.C. 41712.\56\
---------------------------------------------------------------------------

    \55\ In that rulemaking, the Department is examining whether 
fees for basic airline services such as booking a ticket should be 
included in the advertised fare and prohibited as a separate charge. 
See https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AF15.
    \56\ The Department's full-fare advertising rule requires all 
mandatory fees to be paid by the customer to the carrier, or agent, 
for air transportation to be included in the advertised fare. See 14 
CFR 399.84. To the extent that a booking fee is not avoidable and is 
a mandatory fee, it must be included in the advertised fare.
---------------------------------------------------------------------------

    Regarding the issue of whether airlines or ticket agents can retain 
a fee for processing refunds, the Department remains of the view that 
airlines must refund the entire ticket price and not be permitted to 
retain a fee for processing

[[Page 32789]]

refunds when airlines cancel or significantly change a flight and the 
passenger no longer wishes to travel. The Department received consumer 
comments objecting to refund processing fees by airlines for flights 
that the airlines cancel or significantly change, and limited industry 
comment in support of allowing such fees. In the Department's view, 
airlines charging a service fee for processing refunds caused by an 
airline-initiated cancellation or significant change is an unfair 
practice in violation of section 41712. Consumers are substantially 
harmed by having to pay a fee to receive their money back after 
services they paid for were not provided. This harm is not reasonably 
avoidable by consumers because consumers have no control over the 
cancellation, significant change, or the issuance of the refund, with 
or without a fee. The Department further views that allowing airlines 
to charge a refund processing fee harms competition and consumers 
because it reduces the incentives for airlines to minimize 
cancellations and significant changes, based on which refunds are due 
to consumers.
    As for ticket agents, the Department is concerned that permitting a 
ticket agent to charge a fee for processing refunds may be unfair to 
consumers. While the Department recognizes that ticket agents do not 
initiate the cancellation or significant changes that result in a 
refund being due, neither does a consumer. The Department plans to 
explore this issue further at a later time, including through its 
rulemaking \57\ pursuant to a requirement by 49 U.S.C. 42301 note prec. 
to issue a rule requiring ticket agents with an annual revenue of at 
least $100 million to adopt minimum customer service standards. In the 
meantime, the Department's Office of Aviation Consumer Protection will 
focus on whether the nature and amount of the refund processing fee was 
clearly and prominently disclosed to a consumer in determining whether, 
when a refund is due, a ticket agent engaged in an unfair or deceptive 
practice by charging a refund processing fee that was not properly 
disclosed at the time of ticket purchase. Also, if the Department 
determines that ticket agents' processing fees appear to circumvent the 
intent behind the requirement for consumers to receive a meaningful 
refund, the Department will consider whether further action is 
appropriate.
---------------------------------------------------------------------------

    \57\ Information on the rulemaking titled ``Air Transportation 
Consumer Protection Requirements for Ticket Agents'' (RIN 2015-AE57) 
is available in the Fall 2023 Unified Agenda of Regulatory and 
Deregulatory Action at https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AE57.
---------------------------------------------------------------------------

    The Table below summarizes whether airlines or ticket agents can 
retain certain fees when processing refunds.

   Table 2--Fees Charged by Airlines and Ticket Agents When Processing
                                 Refunds
------------------------------------------------------------------------
                                                      Are ticket agents
                              Are airlines allowed    allowed to retain
    Types of service fees      to retain fee when    fee when processing
                               processing refunds?        refunds?
------------------------------------------------------------------------
Booking Fee (for processing   No..................  N/A (DOT is not
 payment for flight that the                         aware of ticket
 consumer found).                                    agents that charge
                                                     this type of
                                                     booking fees).
Service Fee Related to        N/A (DOT is not       Yes, subject to
 Issuing Original Ticket       aware of airlines     required
 (for services provided        that charge these     disclosures.
 beyond processing payment     types of service
 for flight that the           fees).
 consumer found).
Processing Fee for Required   No..................  No determination in
 Refunds.                                            this final rule--
                                                     DOT will continue
                                                     to examine issue.
------------------------------------------------------------------------

II. Refunding Fees for Significantly Delayed Bags

1. Covered Entities and Flights

    The NPRM: In the NPRM, the Department proposed to mandate U.S. and 
foreign air carriers provide refunds to consumers for the fees charged 
to transport checked bags on scheduled flights to, from, or within the 
United States using aircraft of any size if the bags are significantly 
delayed. The Department explained that the proposed requirement is 
based on a mandate in 49 U.S.C. 41704 note for the Department to 
promulgate a regulation requiring U.S. and foreign air carriers refund 
bag fees to consumers when carriers fail to deliver checked bags to 
them within a specified time of their arrival on a domestic or 
international flight. In the NPRM, the Department acknowledged that the 
proposed requirement would apply to some small carriers but explained 
that it does not expect it to have a significant economic impact on a 
substantial number of small entities because many small carriers 
operate flights under codeshare arrangements with larger carriers, with 
the larger carriers responsible for collecting and refunding baggage 
fees.
    With respect to ticket agents, the Department did not propose to 
apply the baggage refund requirements to ticket agents. The Department 
stated in the NPRM that the Department has independent authority under 
49 U.S.C. 41712, which prohibits ticket agents from engaging in unfair 
or deceptive practices in air transportation, to include ticket agents 
in the regulation if deemed appropriate. The Department stated, 
however, that it is required by 49 U.S.C. 42301 note prec. to issue a 
rule requiring ticket agents with an annual revenue of at least $100 
million to adopt minimum customer service standards, and the Department 
intends to address this requirement through that separate rulemaking. 
In addition, the Department noted that a ticket agent's failure or 
refusal to make proper refunds promptly when service cannot be 
performed as contracted or a ticket agent's representation that such 
refunds are obtainable only at some other point violates 14 CFR 
399.80(l) and constitutes an unfair or deceptive practice. This 
requirement does not, however, directly address whether ticket agents 
that collect baggage fees from passengers must provide refunds of the 
fees when checked bags are significantly delayed. DOT sought comments 
on whether the proposed refund requirement for delayed checked bags 
should apply to ticket agents who engage in the transaction of baggage 
fees.
    Comments Received: The Department received no comments regarding 
the proposed scope of carriers that would be required to refund fees to 
consumers for significantly delayed bags on their domestic or 
international flights. The Department did receive comments on whether, 
as a policy matter, the Department should require ticket agents to 
refund baggage fees that they collected when the bags were 
significantly delayed. A4A, IATA, RAA, and Qatar Airways all supported 
holding ticket agents responsible for

[[Page 32790]]

refunds if they collected the baggage fees. Spirit also commented that 
ticket agents should be required to refund baggage fees, arguing that 
the Department has existing regulation requiring ticket agents to make 
``proper'' ticket refunds when contracted services are not provided, 
and it is arbitrary, inconsistent, and unfair to not require ticket 
agents to refund baggage fees.
    Travelers United commented that whether the ticket was purchased 
from airlines or ticket agents, airlines should ultimately be 
responsible for refunds of baggage fees and other ancillary fees. 
Similarly, ASTA and Travel Tech both argued that ticket agents should 
not be required to refund baggage fees. They pointed out that the 
statute directs the Department to issue a rule specifically requiring 
airlines to refund baggage fees. They argued that where ticket agents 
collect the fees, they are authorized by airlines to do so as agents of 
airlines. They noted that depending on the payment settlement system 
used, ticket agents can facilitate the issuance of baggage fee refunds, 
but each airline determines whether it would allow ticket agents to 
issue refunds. They further commented that any fees collected by ticket 
agents under airlines' authorization are promptly remitted to airlines.
    DOT Response: In this final rule, the Department requires U.S. and 
foreign carriers that operate scheduled passenger service to, within, 
and from the U.S. to provide a refund to passengers of fees charged for 
transporting a significantly delayed checked bag. The Department is 
applying this requirement to carriers regardless of the aircraft size 
that the carriers operate. DOT continues to believe that it is 
important to not exclude aircraft designed to have a maximum passenger 
capacity of 60 seats or fewer, which are considered small aircraft,\58\ 
because a significant number of passengers travel on such aircraft.\59\
---------------------------------------------------------------------------

    \58\ An air carrier is a small business if it provides air 
transportation only with small aircraft (i.e., aircraft with up to 
60 seats/18,000-pound payload capacity). See 14 CFR 399.73.
    \59\ According to data from the Department's Bureau of 
Transportation Statistics (BTS), a total of 760,159,634 domestic 
passengers were transported in 2022. While most of these passengers 
(734,090,772 passengers or 96.6%) were on flights using aircraft of 
more than 60 seats, a significant number (26,068,862 passengers or 
3.4%) were on flights using aircraft with 60 seats or fewer. See 
Bureau of Transportation Statistics ``T-100 Domestic Segment Data 
(World Area Code)'', https://www.bts.gov/browse-statistical-products-and-data/bts-publications/data-bank-28ds-t-100-domestic-segment-data.
---------------------------------------------------------------------------

    With regard to applying the proposed baggage refund requirements to 
ticket agents, the Department does not adopt in this final rule a 
specific requirement for ticket agents to provide refunds of baggage 
fees for significantly delayed bags even if ticket agents collect the 
bag fees. The NPRM sought information on ticket agents' involvement in 
collecting baggage fees from passengers, either as a carrier's agent or 
as a principal. It is the Department's understanding, based on comments 
from both ASTA and Travel Tech, that ticket agents' involvement in 
collecting baggage fees is minimal and the collections are generally 
authorized by airlines as their agents. Also, the Department believes 
that tracing mishandled baggage and ensuring delivery as soon as 
possible is best handled by carriers through direct communication with 
passengers. The Department is concerned that placing the obligation to 
refund baggage fees for delayed bags on ticket agents may cause 
unnecessary delays by removing some of the incentives for airlines to 
recover the bags as quickly as possible. It would also necessarily 
require that ticket agents determine whether refunds for significantly 
delayed bags are due, which the ticket agents cannot determine on their 
own. Further, 49 U.S.C. 41704 note directs the Department to promulgate 
a regulation requiring airlines to provide refunds for baggage fees. 
For all these reasons, the Department is not requiring ticket agents to 
provide refunds of baggage fees for significantly delayed bags in this 
final rule. The Department will continue to monitor the transactions of 
baggage fees and other ancillary service fees conducted by ticket 
agents and intends to revisit the issue in its rulemaking requiring 
ticket agents with an annual revenue of at least $100 million to adopt 
minimum customer service standards, as required by 49 U.S.C. 42301 note 
prec.\60\
---------------------------------------------------------------------------

    \60\ See fn. 55, supra.
---------------------------------------------------------------------------

2. Length of Delay Triggering Baggage Fee Refund Requirement

    The NPRM: The Department proposed to require an airline refund the 
fee paid by a passenger for a checked bag if the airline fails to 
deliver the bag to the passenger within 12 hours of arrival for 
domestic flights and within 25 hours of arrival for international 
flights. 49 U.S.C. 41704 note prescribes the minimum lengths of baggage 
delivery delay that would trigger the refund requirement as not later 
than 12 hours after arrival for domestic flights and not later than 15 
hours after arrival for international flights. It also provides the 
Department the flexibility to modify these timeframes to up to 18 hours 
for domestic flights and up to 30 hours for international flights if 
the Department determines that the 12-hour or 15-hour standards are 
infeasible and would ``adversely affect consumers in certain cases.'' 
The Department explained that it proposed 12 hours for domestic flights 
because airlines have tracking systems in place to identify the 
location of bags and airlines should be able to place delayed bags on 
the next available flight, often resulting in bags being delivered 
within 12 hours for domestic flights. With respect to international 
flights, the Department proposed to allow carriers up to 25 hours (an 
extension of the statutory default standard of 15 hours) to deliver 
checked bags without having to issue a refund, reasoning that many 
international long-haul flights are scheduled once a day which makes 
recovery and delivery of a delayed checked bag within the minimum 
length delay of 15 hours prescribed in the statute extremely 
challenging for carriers. The Department stated that consumers may be 
negatively impacted if the Department were to impose a 15-hour deadline 
because carriers may have less incentive to deliver the delayed bag on 
the next flight when flights are scheduled once a day. The NPRM 
solicited comment on whether it has adequately considered the impact on 
consumers and airlines of the proposed 25-hour deadline for 
international flights and whether the proposed 12-hour deadline for 
domestic flights is reasonable, particularly for ULCCs that may operate 
scheduled flights in a lower frequency and lack interline agreements 
with other carriers.
    Additionally, the NPRM discussed a tiered standard where the 
maximum number of delay hours that would trigger a refund would vary 
based on domestic versus international flights, the length or frequency 
of the flights, or other variables. The Department tentatively 
determined to not propose a tiered standard based on flights' frequency 
or length because carriers would have to implement a costly system of 
sorting and prioritizing delivery of delayed bags based on the length 
or frequency of each individual flight. It proposed instead a tiered 
standard based on domestic and international flights because it would 
be easier for carriers to implement and for consumers to understand. 
For international itineraries that include domestic segments, the NPRM 
proposed that the international standard for bag delay would apply.
    Comments Received: Most airline commenters generally supported 
adopting the maximum length of timeframes permitted by the statute, 
i.e., 18-hour delay for domestic itineraries

[[Page 32791]]

and 30-hour delay for international itineraries, while AAPA opposed a 
blanket timeframe by regulation and Kuwait Airways suggested a 72-hour 
timeframe. A4A stated that carriers cannot meet the proposed 12 hours 
for domestic and 25 hours for international standards under certain 
circumstances, including itineraries involving routes for which 
airlines do not operate daily flights, passengers traveling on the last 
flight of the day out of a remotely located airport, and passengers 
continuing travel on cruise or ground transportation preventing timely 
delivery of bags. A4A, IATA, and multiple international carriers also 
commented that special considerations should be given to international 
operation complexities such as airport congestion preventing offloading 
bags, weather impact on ground operations, the impact of a positive bag 
match requirement, and customs and security inspections. RAA urged the 
Department to consider that many carriers serving remote markets under 
the Essential Air Service program or serving international markets may 
only operate one flight a day and not every day. NACA, Allegiant, and 
Spirit commented that from the ULCC perspective, operating low 
frequency and the lack of interline partners makes it difficult to meet 
the proposed timeframes. Some of these commenters believed that 
adopting the 18/30-hour maximum standards would at least incentivize 
ULCCs to seek other means (e.g., overnight couriers) when transporting 
the bag on the next available flight would not meet the deadlines. Air 
New Zealand, Emirates, Kuwait Airways, and Qatar Airways indicated that 
the Department should give special consideration to ultra-long-haul 
international operations, arguing that the length of flight operations 
and the low frequency would prohibit their ability to meet the 25-hour 
deadline. Airline commenters supported the proposal to apply the 
international delay standard to domestic segments of international 
itineraries.
    Among consumer rights advocacy groups, Travelers United, Business 
Travel Coalition et al.,\61\ and FlyersRights commented that checked 
bags should be deemed late when they are not on the same flight as 
passengers. Business Travel Coalition et al. argued that the Department 
has its own authority under 49 U.S.C. 41712 to impose such a 
requirement without contradicting 49 U.S.C. 41704, note. Travelers 
United argued that refunds of bag fees should be issued automatically 
if the bags do not arrive within 60 minutes of the passengers' arrival. 
Business Travel Coalition et al. argued that the Department should 
require airlines to enter into interline agreements for baggage 
delivery. FlyersRights commented that by proposing a 25-hour standard 
for international flights, the Department has considered that 
international long-haul operations that operate one daily flight can 
still meet the deadline by placing the bag on the next flight. In that 
regard, FlyersRights questioned why the Department does not simply 
require that the bag be transported on the next flight. FlyersRights 
also stated that the 25-hour deadline would harm consumers on 
international flights that are operated more than once a day because 
bags that could have been transported within a shorter time now can be 
delayed for up to 25 hours.
---------------------------------------------------------------------------

    \61\ The joint comments by Business Travel Coalition et al. were 
signed by Business Travel Coalition, Consumer Action, the Consumer 
Federation of America, Consumer Reports, Ed Perkins of 
EdOnTravel.com, FlyersRights.org, National Consumers League, Travel 
Fairness Now, and U.S. PIRG.
---------------------------------------------------------------------------

    ASTA, representing ticket agents, commented that the Department 
should adopt the 12/15-hour minimum standards set by the statute. It 
argued that while the proposed 25-hour standard acknowledges long-haul 
flights operated once a day, it does not recognize many international 
flights that are short in duration and operated multiple times a day. 
ASTA further stated that it disagrees with the Department's belief that 
imposing the 15-hour deadline for international flights would result in 
carriers having less incentive to recover the bags because the deadline 
has already passed. It argued that keeping the bag fees is not the 
airlines' sole or primary purpose when considering recovering delayed 
bags.
    The Colorado Attorney General (Colorado AG) also provided comments 
in support of the Department's tentative decision to not adopt a tiered 
standard for the length of a delay triggering a refund based on 
flights' frequency, length, or other variables. The Colorado AG stated 
that a simplified system is certainly more accessible to all parties 
and is an example of the type of regulatory clarity that, in effect, 
protects consumers by enabling them to understand their own rights and 
advocate for themselves when regulations are defied or disregarded.
    DOT Responses: After fully considering the comments, the Department 
is requiring carriers to refund the bag fee if a checked bag is delayed 
the minimum statutory standard of 12-hours for domestic flights as 
proposed, the minimum statutory standard of 15-hours for an 
international flight that is 12 hours or less, and the maximum 
statutory standard of 30-hours for an international flight that is more 
than 12 hours. The Department appreciates consumer rights advocacy 
groups' comments that urge the Department to adopt a ``zero hour'' 
standard for delayed bags. While we agree that the Department has broad 
authority under 49 U.S.C. 41712 to define unfair or deceptive 
practices, 49 U.S.C. 41704 note imposes a specific requirement on the 
Department with regard to airlines' refund of delayed baggage fees. 
Specifically, the Department is directed to require U.S. and foreign 
carriers to provide a refund for any fees paid by a passenger for 
checked baggage if the carriers fail to deliver the bag to passengers 
within 12 to 18 hours of their arrival from domestic flights and within 
15 to 30 hours of their arrival from international flights. Although 
adopting a ``zero hour'' standard as suggested by a consumer 
organization would result in consumers receiving a refund of baggage 
fees in all instances where the bags did not arrive with the consumers, 
the Department is of the view that imposing a strict liability on 
airlines would not result in the maximum consumer benefit because this 
approach reduces the incentive for carriers to recover and return the 
delayed bags to consumers as soon as possible. As such, we are not 
setting a ``zero hour'' standard for delayed bags that would 
necessitate a refund of the bag fee.
    The Department has carefully considered the comments received and 
is adopting the proposed 12-hour standard for domestic itineraries. 
Airline commenters did not provide convincing evidence demonstrating 
that the 12-hour standard for domestic itineraries is not feasible and 
would ``adversely affect consumers in certain cases,'' as set forth by 
the statute. Further, although the Department acknowledges the 
differences between the legacy carriers and ULCCs in terms of flight 
frequencies and the scope of networks, we continue to believe that 
these differences do not warrant adopting a standard for ULCCs 
different from that of the other carriers. Specifically, the Department 
notes that all carriers have the option to transport the delayed bags 
through overnight couriers and still meet the delay deadline, instead 
of waiting for the next available flight. Also, although compared to 
the legacy carriers, it is likely that ULCCs may have to use courier 
services more frequently to recover the delayed bags, this

[[Page 32792]]

disadvantage for the ULCCs is countered by the reduced likelihood of 
ULCCs having delayed bags compared to legacy carriers because of their 
point-to-point operations. Legacy carriers' hub-and-spoke networks 
means that many of the bags they transport will be traveling through 
connecting itineraries that statistically have a higher possibility of 
being delayed, in comparison to the ULCCs' point-to-point operations. 
According to a Soci[eacute]t[eacute] Internationale de 
T[eacute]l[eacute]communications A[eacute]ronautiques (SITA) Baggage IT 
Insights report,\62\ transfer mishandling historically remains by far 
the leading cause of bag delays, which accounted for 42% of total bag 
delays in 2022.\63\
---------------------------------------------------------------------------

    \62\ https://www.sita.aero/resources/surveys-reports/baggage-it-insights-2023/.
    \63\ As noted in the NPRM, the SITA Baggage IT Insights report 
for 2019 states that transfer mishandling account for 46% of total 
bag delays in 2018. https://www.sita.aero/resources/surveys-reports/baggage-it-insights-2019/.
---------------------------------------------------------------------------

    With respect to international itineraries, the Department has 
decided that a ``one-size-fit-all'' standard may not be in the best 
interest of consumers. We agree with comments suggesting that the 
proposed 25-hour standard to return a bag before the carrier has to 
refund the bag fee may be too long when consumers are traveling on 
international routes with shorter durations and/or more frequencies. At 
the same time, we agree with comments asserting that, in many cases, it 
may not be feasible for carriers to return bags within the proposed 25-
hour standard for consumers traveling on ultra long-haul flights 
operated under low frequencies. This is not only because the carrier's 
next available flight could be 24 hours or more later, but also because 
there could be very limited choices to transport the bags on rerouted 
itineraries, on another carrier's flight, or through courier services. 
The flight segment duration data on major U.S. carriers collected by 
the Bureau of Transportation Statistics (BTS) shows that in 2022, the 
majority of non-stop flight segments operated by U.S. carriers to and 
from the U.S. have a flight duration of 12 hours or less, including all 
flights between the United States and Canada, Central/South America, 
and Europe, 65% of flights between the United States and Africa, 46% of 
the flights between the United States and Far East, 73% of flights 
between the United States and Middle East, and 14% of the flights 
between United States and Australia/Oceania.\64\ The Department assumes 
the duration of flights operated by foreign carriers is similar, but 
BTS does not collect this data from foreign air carriers. For these 
reasons, the Department is adopting two standards for international 
itineraries. For international itineraries with a non-stop flight 
segment to or from the United States that is 12 hours or less, we are 
adopting the minimum statutory standard of 15 hours. For international 
itineraries with a non-stop flight segment to or from the United States 
that is more than 12 hours, we are allowing carriers to recover the 
delayed bags within 30 hours to avoid refunding the bag fees.
---------------------------------------------------------------------------

    \64\ Data is derived from the T-100 Segment report as filed 
monthly by major U.S. carriers with BTS. Flight duration is 
calculated by dividing minutes airborne with performed departures.
---------------------------------------------------------------------------

    The Department notes that to qualify for the 30-hour standard, the 
itinerary must include an international segment (i.e. a flight segment 
between the United States and a foreign point) that is more than 12 
hours in duration. If the itinerary includes a segment between two 
foreign points that is more than 12 hours and the segment between the 
United States and a foreign point is 12-hour or less in duration, the 
15-hour delay standard would apply.
    The Department disagrees with some commenters' suggestion that the 
rule should explicitly require that the delayed bags be transported on 
the next available flight. We intend to provide carriers the maximum 
flexibility to recover the delayed bags to the benefit of passengers, 
including transporting the bags on partner airlines' flights, on cargo 
flights, or through commercial couriers. In addition, the Department 
agrees with ASTA's comment that it is inappropriate to assume that 
retaining the baggage fees is carriers' sole or primary goal and that 
once the deadline has passed for delivering delayed bags, carriers will 
not have the incentive to recover the bag as quickly as possible. As 
ASTA pointed out in its comment, delivering a delayed bag as soon as 
possible is a way to gain custom satisfaction and goodwill, regardless 
of whether carriers must refund the bag fee. Further, carriers are 
under the obligation to compensate consumers for incidental expenses 
related to delayed bags, subject to maximum liability limits under 14 
CFR 257 for domestic travel and under international treaties for 
international travel. The longer the bag is delayed, the more potential 
liability for incidental expenses carriers will face. The Department 
believes that all these factors provide incentives to carriers to 
recover the bags regardless of whether the refund deadline has passed.
    Regarding international itineraries that include a domestic 
segment, we are adopting the proposal to apply the international 
deadline to such itineraries. The Department holds the view expressed 
in the NPRM that mishandled bag incidents occur more frequently on the 
international segments. This is also confirmed by the aforementioned 
SITA Baggage IT Insight report, which states that globally, mishandling 
rates on international routes is 19.3 per thousand passengers, compared 
to 2.4 for domestic routes.\65\ The Department also received no 
objection to this proposal and believes that applying the international 
deadlines to such itineraries avoids consumer confusion and 
appropriately takes into account that many delayed bags traveling on an 
international itinerary were likely delayed on the international 
portion of the trip.
---------------------------------------------------------------------------

    \65\ The Report also noted that in 2022, there was a 
considerable surge in the international mishandling rate, which was 
at 8.7 during the previous year.
---------------------------------------------------------------------------

    Also, the Department notes that it is making an editorial change to 
the rule text in 14 CFR 259.5(b)(3). The existing rule requires 
carriers to make every reasonable effort to return mishandled baggage 
within twenty-four hours. The Department is removing the reference to 
``twenty-four hours'' and, instead, requiring carriers to make every 
reasonable effort to return mishandled baggage within the timeframes 
set forth in this final rule for purpose of avoiding refunding baggage 
fees.

3. Measuring the Length of Delay in Delivering a Checked Bag

    The NPRM: To calculate the length of the delay for a carrier to 
deliver a checked bag, it is necessary to specify the start and end of 
the delay. The provision at 49 U.S.C. 41704 note states that the 
baggage delay clock starts at ``the arrival'' of a flight and ends when 
the carrier ``[delivers] the checked baggage to the passenger.'' 
However, that provision does not specify what it meant by the arrival 
of a flight or delivery of the checked baggage.
    The Department proposed the start of the delay to be when the 
passenger arrives at his or her destination and is given the 
opportunity to deplane from the last flight segment. The Department 
reasoned that airlines already track this information for the purpose 
of ensuring compliance with the Department's tarmac delay rule in 14 
CFR part 259. Another measure considered in the NPRM for the start of 
the delay is the published scheduled arrival time of a flight or the 
``block-in time,'' i.e., the time when a flight has parked at the 
arrival gate or another disembarkation location and blocks were placed 
in front of its wheels.
    As to when a bag is considered to be delivered to the passenger for 
the

[[Page 32793]]

purpose of ending the delay in receiving a checked bag, the Department 
proposed that, at the carrier's discretion, the end of the delay is: 
(1) when the bag is transported to a location agreed to by the 
passenger and the carrier, regardless of whether the passenger is 
present to take possession of the bag; (2) when the bag has arrived at 
the destination airport, is available for pickup, and the carrier has 
provided notice to the passenger of the location and availability of 
the bag for pick-up; or (3) if the carrier offers delivery service and 
the passenger accepts such service, when the bag has arrived at the 
destination airport, and the carrier has provided notice to the 
passenger that the bag has arrived and will be delivered to the 
passenger. The Department shared in the NPRM that the three options to 
determine the end of the delay are intended to allow airlines, with 
less financial risk, to work with the passengers to transport the bags 
to the most convenient location in the most efficient manner to the 
passenger. The NPRM sought comment on whether this analysis accurately 
captures carriers' incentives to work with passengers and provide 
baggage delivery or if there are other factors that could cause 
carriers to engage in different behaviors in response to the proposed 
options. In addition, the NPRM sought comment on whether allowing 
carriers to choose among these three options is reasonable and 
effective to achieve the goal of providing carriers and passengers the 
maximum level of flexibility, promoting efficiency in delayed baggage 
recovery, and ensuring passengers are treated fairly when their bags 
are delayed in air transportation.
    The Department also solicited specific comment on the second 
option, which stops the delay clock when the bag has arrived at the 
destination airport, is available for pickup, and the carrier has 
provided notice to the passenger of the location and availability of 
the bag for pick-up. The NPRM noted that carriers have the burden of 
proving that notices have been provided to passengers prior to the 
applicable deadline, invited comment on sufficient forms of 
notifications, and asked what evidence should a carrier be required to 
provide if notification is through a voice call or message and there is 
a dispute between a carrier and a passenger about whether such a 
notification was provided.
    Comments Received: Regarding the start of baggage delivery delay, 
all airline commenters who commented on this issue suggested that the 
delay clock should start at the time a passenger files a Mishandled 
Baggage Report (MBR). They argue that airlines do not always know that 
a bag is delayed until a passenger notifies the carrier by filing an 
MBR. They further commented that this notification would allow carriers 
to collect necessary information for searching and delivering the bag, 
such as the passenger's contact information, the bag's tag number, and 
the bag's description. Qatar Airway asked if the Department would 
consider passengers using carriers' online reporting system to have 
started the clock.
    An individual consumer objected to the airlines' approach and 
argued that airlines determine how and when an MBR may be filed and 
there is obvious conflict of interest on airlines' part. This commenter 
suggested that a passenger arriving at 10 p.m. may not file an MBR 
until 9 a.m. the next day. This commenter further indicated that 
airlines' rejections of MBRs would increase DOT complaint volume.
    Regarding the end of the delay, airline commenters supported the 
Department's proposal to allow airlines to choose one of the three 
options, arguing that this approach would allow carriers the 
flexibility to recover bags and work with passengers for tailored 
solutions. A4A commented that for option 2 (bag has arrived at the 
destination airport, is available for pickup, and the carrier has 
provided notice to the passenger of the location and availability of 
the bag for pick-up), it is unreasonable to require carriers' baggage 
office to open 24/7 so the clock should stop at the time of 
notification even if the carrier's baggage office is closed. A4A, IATA, 
Spirit, and Virgin Atlantic further indicated that the Department 
should adopt a performance-based standard for notifications, taking 
into account any future innovations, and the notification requirement 
should focus on timeliness and not the form. A4A and IATA also stated 
that the Department should not prescribe how carriers keep records of 
the notifications as carriers use different systems to record 
communications with passengers. A4A further commented that recording 
the time of a voice call should be sufficient as evidence that a 
notification by phone call has been provided.
    Travelers United and Business Travel Coalition et al. opposed the 
proposal. Business Travel Coalition et al. argue that allowing the 
three options would result in airlines selecting the option that is 
most likely to relieve them from the obligation of refund baggage fee 
(i.e., option 2) and doing no more than the minimum necessary to avoid 
having to refund. One individual consumer expressed support for the 
proposal of three options and commented that the flexibility allows 
carriers to provide the service in reasonable time and cost 
effectively. Another consumer commented that the regulation should not 
indicate that carriers may use app push notices to provide notification 
because many passengers do not want to or have mobile apps for various 
reasons, including the lack of memory to download the app, the lack of 
cellular data, unwillingness to share location, or concerns about 
viruses. The commenter suggested that consumers should have the right 
to receive notifications through privacy-friendly means such as email 
or text message.
    ASTA commented that the clock should stop when the bag is 
physically in the passenger's possession because passengers 
continuously experience inconveniences until reunited with the bags. 
ASTA further stated, however, that it recognizes that it is inequitable 
to keep the clock running when a passenger delays the reclaim of a bag, 
and as such, it suggests that the clock should stop when the bag is 
delivered to a location designated by the passenger and the passenger 
is notified.
    DOT Responses: After carefully considering the comments provided, 
the Department is requiring that the length of the delay for a carrier 
to deliver a checked bag be calculated based on when the passenger 
arrives at his or her destination and is given the opportunity to 
deplane from the last flight segment (start of the delay) and when the 
carrier delivers the bag to a mutually agreed upon location such as a 
hotel or the passenger's home or when the passenger (or someone 
authorized to act on behalf of the passenger) picks up the bag at the 
airport (end of the delay). In determining the start of the delay, the 
Department focused on the fact that the delay started when the bag did 
not arrive with the passenger. In determining the end of the delay, the 
Department focused on when the carrier relinquishes its custody of the 
bag to the passenger, which is consistent with the Department's 
position on U.S. airlines reporting of mishandled baggage.\66\
---------------------------------------------------------------------------

    \66\ The Technical Directive issued by the Department's Bureau 
of Transportation Statistics requires that reporting carriers must 
report the number of mishandled bags, as reported by or on behalf of 
passengers, that were mishandled while in its custody. https://www.bts.gov/topics/airlines-and-airports/number-30a-technical-directive-mishandled-baggage-amended-effective-jan.
---------------------------------------------------------------------------

    Based on carriers' comments that in many circumstances carriers may 
not know when a bag is delayed until the passenger files an MBR, and 
consistent with the requirement of section 41704 note that passengers 
must notify carriers of the baggage delay, the Department is specifying 
that filing an MBR is

[[Page 32794]]

necessary to obtain a refund of the fee for a significantly delayed 
checked bag. Typically, airlines obtain, through the filing of an MBR, 
information such as the passenger's contact information, the bag's tag 
number, and the bag's description which helps them search for and 
deliver a bag. The provision in this final rule that a refund of the 
bag fee for a significantly delayed checked bag is not due until the 
passenger files an MBR with the last operating carrier is consistent 
with the statute in 49 U.S.C. 41704 note that provides a refund shall 
be provided if a carrier fails to meet the baggage delivery deadline 
``and . . . the passenger has notified the [carrier] of the lost or 
delayed checked baggage.'' The Department considers that a consumer 
filing an MBR to be notification to the carrier of the lost or delayed 
checked bag.
    Regarding the end of the delay for a carrier to deliver a checked 
bag, the Department had proposed in the NPRM to allow carriers to 
consider as end of the delay, among other things, instances where the 
carrier offers delivery service of the bag and the passenger accepts 
such service and the carrier has provided notice to the passenger that 
the bag has arrived and will be delivered to the passenger. The 
Department has determined that this is not an appropriate end of the 
delay because the bag remains under the carrier's custody and the 
passenger is not reunited with the bag when the carrier provides notice 
to the passenger that the bag has arrived and ``will be'' delivered. 49 
U.S.C. 41704 note states that the baggage delay clock ends when the 
carrier ``[delivers] the checked baggage to the passenger.'' Notifying 
passengers that the bag will be delivered is not a form of 
``delivery.'' \67\
---------------------------------------------------------------------------

    \67\ The Merriam-Webster Dictionary defines ``deliver'' to mean 
``to take and hand over to or leave for another.''
---------------------------------------------------------------------------

    Similarly, the Department has determined that its proposal that the 
end of the delay includes instances when the bag arrives at the 
destination airport, is available for pickup, and the carrier has 
provided notice to the passenger is inconsistent with 49 U.S.C. 41704 
note. Again, notifying the passenger that the bag is available for 
pickup is not a form of delivery. Further, the Department agrees with 
consumer representatives that this option provides the easiest option 
for airlines to stop the clock and may incentivize carriers to do the 
bare minimum to assist passengers in reuniting with their bags. The 
Department is also of the view that requiring passengers to return to 
the airport to pick up their delayed bags, after they have already 
experienced the inconvenience of leaving the airport without their 
checked bags upon arrival, adds a potentially significant burden to 
passengers in terms of their time, effort, and cost. As such, the 
Department is revising this option in the final rule so the delay clock 
stops at the time the passenger or someone authorized to act on behalf 
of the passenger are timely notified of the arrival of the bag and 
actually picks up the bag at the airport instead of when the carrier 
has provided notice to the passenger of the location and availability 
of the bag for pick-up.
    The Department is adopting its proposal that the end of the delay 
include instances when the bag is transported to a location (e.g., 
passenger's home, hotel) agreed to by the passenger and the carrier, 
regardless of whether the passenger is present to take possession of 
the bag. The Department agrees with comments that the clock should stop 
when the carrier delivers the bag to a location designated by the 
passenger and the passenger is notified. At this point, the bag is 
effectively no longer under the custody of the airline because the 
passenger agreed to delivery of the bag to the specified location. In 
this final rule, airlines have the option to choose as the end of the 
delay either (1) when the carrier delivers the bag to a mutually agreed 
upon location; or (2) when the passenger picks up the bag at the 
airport. The Department believes that these two options provide 
flexibility for airlines to work with passengers in finding the best 
solution to reunite them with their bags. If airlines determine that 
passengers could or are purposefully delaying arriving picking up their 
bags to receive a refund, carriers are free to choose option (1).

4. Entities Responsive for Refunds in Multiple Carrier Itineraries

    The NPRM: The Department proposed that, in a multiple carrier 
itinerary where a carrier collected the bag fee, the carrier that 
collected the baggage fee be the entity responsible for refunding the 
fee to a passenger should the checked bag be significantly delayed. The 
Department tentatively rejected an ``at fault'' approach that assigns 
the refund obligation to the carrier that causes the baggage delay, 
reasoning that expecting consumers to track down which airline caused 
the bag to be delayed would be an unreasonable burden on consumers. The 
Department also noted that it would be costly for carriers to determine 
which carrier is at fault for causing each bag delay.
    With respect to multiple-carrier itineraries for which a ticket 
agent collected the bag fee, the NPRM proposed to hold the carrier that 
operated the last flight segment, rather than the ticket agent, 
responsible for issuing the refund when a checked bag is significantly 
delayed. There was discussion in the NPRM of ticket agents being 
authorized by carriers to collect bag fees on the carriers' behalf. 
Also, while the Department acknowledged that the carrier that operates 
the last flight segment may be a fee-for-service carrier that normally 
does not handle baggage fee refunds since these carriers generally do 
not sell tickets or ancillary services, the Department added that 
carriers can prorate the cost of refunds among themselves. The 
Department solicited comment on whether, rather than requiring the 
carrier that operated the last flight segment to provide the refund, 
the Department should require the carrier that marketed the last flight 
segment to issue the refund when a ticket agent collects the bag fee.
    Comments Received: Most airline commenters supported requiring the 
carrier that collected the baggage fees to provide refunds for delayed 
bags in multiple carrier itineraries. Emirates agreed that the 
collecting carrier should refund but notes that the collecting carrier 
may not be the marketing/ticketing carrier. Virgin Atlantic commented 
that the marketing carrier has the payment information but may not have 
the information on the status of the bag, and the last operating 
carrier has the status of the bag but may not have the payment 
information. It suggested that carriers need to investigate together, 
and that additional time is needed. RAA commented that fee-for-service 
carriers that operate the last segments do not conduct transactions 
with passengers and are unable to process refunds. NACA stated that 
ULCCs that operate non-scheduled services often operate on behalf of 
other ULCCs for scheduled services. It contended that these non-
scheduled operating carriers do not collect baggage fees or take 
control of bags when passengers check in, and they should not be 
responsible for refunds. A4A suggested that the ticket agents 
collecting baggage fees for multiple carrier itineraries should refund 
and the passenger should be required to notify the last operating 
carrier about the bag delay. ASTA supported not requiring the carrier 
at fault of mishandling baggage to refund when multiple carriers are 
involved. It argued that this approach would result in passengers being 
sent back and forth among

[[Page 32795]]

carriers. ASTA also supported requiring the carrier collecting the fee 
be responsible for refunds.
    DOT Responses: The Department is requiring that, in a multiple 
carrier itinerary, the carrier that collected the baggage fee is the 
entity responsible for refunding the fee to a passenger should the 
checked bag be significantly delayed. Based on the comments received, 
it appears that the carrier that markets the itinerary may not always 
be the carrier that collects the baggage fee. Regardless of which 
carrier is marketing the flight or which carrier is at fault for the 
mishandling, the Department concludes that the most simplified and 
straightforward approach, from the passengers' perspective, is to hold 
the carrier that collected the baggage fee responsible for the refund 
because the collecting carrier already has the passenger's payment 
information for the baggage fee. The Department considers the carrier 
whose name is shown in the consumer's financial statements for the 
baggage fee transaction such as the debit or credit card charge 
statements (commonly known as the merchant of record) to be the carrier 
that collected the bag fee. As pointed out by commenters, the 
Department recognizes that the carrier that collected payment may not 
have information on the status of the bag. The Department agrees with 
Virgin Atlantic's suggestion that those carriers need to work together. 
In situations where the carrier that collected the bag fee and the 
carrier operating the last flight segment are different entities, the 
Department is requiring that the last operating carrier, which is the 
carrier that accepts MBRs, to determine whether a bag was significantly 
delayed and if so, provide the baggage delay information to the 
collecting carrier without delay. The Department's Office of Aviation 
Consumer Protection will determine the timeliness of the information 
provided by the last operating carrier to the collecting carrier based 
on the totality of the circumstances, including the operating carrier's 
process and procedures for determining whether the checked bag is 
significantly delayed and whether the last operating carrier informed 
the collecting carrier of the refund eligibility soon after it 
determined the bag was significantly delayed. The collecting carrier 
remains responsible for providing the refund. Under this final rule, 
the 7/20-day refund timelines start at the time the collecting carrier 
receives information from the last operating carrier that the 
passenger's bag has been significantly delayed and the passenger has 
filed an MBR.
    This final rule makes it an unfair practice for the last operating 
carrier to fail to timely determine if a bag has been significantly 
delayed and communicate that information to the collecting carrier. 
Airlines not providing such information in a timely manner pause the 
refund process and cause substantial harm to consumers by extending the 
timeline for consumers to receive the money to which they are entitled. 
This harm is not reasonably avoidable by consumers as they have no 
control over the airlines' actions. The Department also sees no 
benefits to consumers and competition from this conduct. Without this 
requirement, the money that is due to consumers could take however long 
an airline chooses, which in turn harms consumers and competition by 
penalizing good customer service and rewarding dilatory behavior. 
Regarding multiple-carrier itineraries for which a ticket agent 
collected the bag fee (i.e., the ticket agent's name is in the 
consumer's financial statement), the Department is adopting the NPRM 
proposal to require the operating carrier for the last flight segment 
to refund the baggage fee to the passenger when a checked bag is 
significantly delayed. In these situations, neither the marketing nor 
the operating carrier may have the payment information because the 
ticket agent collected the fees, but the operating carrier for the last 
flight segment will have information about the status of the bag. By 
taking this approach in the final rule, the Department is recognizing 
that when no carrier has collected the baggage fee, requiring the last 
operating carrier to refund makes sense because the operating carrier 
is the one that accepts and handles the MBRs and has information about 
the status of the bag. In these situations, the operating carrier may 
decide to request that the consumer completing the MBR form identify 
the ticket agent that collected the bag fee and the consumer's payment 
information in case a refund of the baggage fee should be necessary. 
Also, based on comments from both ASTA and Travel Tech, it is the 
Department's understanding that these types of situations will be 
infrequent because ticket agents' involvement in collecting baggage 
fees is minimal.
    With regard to RAA's comment that fee-for-service carriers do not 
transact with consumers and are unable to issue refunds, the 
Department's understanding of the industry practice is that the 
marketing carriers that contract and codeshare with fee-for-service 
carriers are usually the entities that handle most aspects of customer 
services for these flights, including accepting MBRs and compensating 
passengers for expenses that they may incur while their bags are 
delayed. Under this final rule, although a fee-for-service carrier 
operating the last flight segment is ultimately responsible for issuing 
refunds of baggage fees for ticket agent-transacted multi-carrier 
itineraries, it is permissible for the carrier to rely on other 
entities, such as their marketing codeshare partner, to process MBRs 
and issue refunds to consumers on its behalf.

5. Refund Mechanism and Passengers' Responsibility To Notify Carriers 
About Bag Delay

    The NPRM: The Department proposed to require that airlines provide 
refunds for delayed bags within seven business days of a refund being 
due for credit cards and within 20 days of a refund being due for 
payments using cash, check, vouchers, frequent flyer miles, or other 
form of payment. Under the NPRM, for the refund process to start, 
passengers would need to notify the airline that collected the bag fee 
about the delay in receiving the bag. The Department proposed that, in 
situations in which the carrier accepting and handling an MBR from the 
passenger is the same carrier that collected the baggage fee, the 
filing of an MBR would constitute notification from the passenger to 
the carrier that the baggage was delayed for the purpose of receiving a 
checked baggage fee refund.
    As proposed, if the carrier that received an MBR about a delayed 
bag and the carrier that charged the baggage fee are different 
entities, the Department proposed to require the passenger inform the 
carrier that collected the baggage fee of the lost or delayed bag. This 
would mean that the passenger would need to file an MBR with one 
carrier and then contact another carrier to state that his/her bag was 
lost or delayed. In situations in which a ticket agent collected the 
bag fee, the Department proposed that passengers would need to notify 
the carrier that operated the last flight segment about the delay in 
receiving the bag. The NPRM solicited comments on whether, instead of 
requiring passengers to notify the carrier that operated the last 
flight segment about the bag delays, the Department should require 
passengers to notify the carrier that marketed the last flight segment.
    The NPRM proposed that baggage fee refunds would be issued in the 
same form of payment as the original baggage fee payment. Under this 
proposal, in addition to credit card, cash, and check

[[Page 32796]]

payments being refunded in their respective original forms of payment, 
baggage fees paid by airline credit/voucher or frequent flyer miles 
would be refunded in their original forms of payment as well.
    Comments Received: Airlines were generally in support of requiring 
passengers to notify the last operating carrier and, if the last 
operating carrier is not the entity that collected the bag fee, also 
notify the entity (carrier or ticket agent) that collected the bag fee. 
They reasoned that notifying the last operating carrier is necessary to 
establish MBRs and provide the passenger's contact information, and 
that notifying the collecting entity is needed to more effectively 
determine liability among various entities. Contrary to this general 
position, COPA commented that notifying the last operating carrier 
alone is sufficient and the last operating carrier should be 
responsible for the refunds. Several airline commenters suggested that 
the Department should allow additional time (e.g., 30 days) to issue 
refunds, especially when multiple parties are involved. A4A stated that 
the Department should allow carriers the maximum flexibility to provide 
refunds, with passengers' consent, in alternative electronic forms.
    Although consumers and their advocacy groups did not specifically 
comment on this subject, ASTA disagreed with the Department's proposal 
that passengers should separately notify the collecting carrier if the 
last operating carrier is not the collecting carrier. ASTA commented 
that filing an MBR with the last operating carrier should be sufficient 
and requiring passengers to provide two notifications is unduly 
burdensome and may confuse passengers.
    ASTA agreed with the proposed timelines to require the collecting 
carrier to issue refunds.
    DOT Responses: After carefully considering the comments received, 
the Department has decided that in all situations, including when the 
carrier that received an MBR about a delayed bag and the carrier or 
ticket agent that collected the baggage fee are different entities, the 
filing of an MBR constitutes adequate notification from the passenger 
that the baggage was delayed for the purpose of receiving a checked 
baggage fee refund. The Department agrees with ASTA that requiring 
passengers to provide separate notifications to two entities to obtain 
a baggage fee refund is unduly burdensome and may confuse passengers. 
Further, 49 U.S.C. 41704 note requires carriers to provide ``prompt'' 
and ``automated'' baggage fee refund when the baggage delivery delay 
has exceeded the specified delivery deadline. In this final rule, the 
Department is defining an ``automated'' refund of the bag fee to mean a 
refund provided to a consumer for a checked bag that has been 
significantly delayed (i.e., delayed 12 hours or more for domestic 
flights, delayed 15 hours or more for international flight that is 12 
hours or less in duration, delayed 30 hours or more for an 
international flight that is more than 12 hours in duration) without 
action by the passenger beyond the filing of an MBR.
    In situations where the carrier accepting and handling an MBR from 
the passenger is the same carrier that collected the baggage fee, it 
should be simple for the carrier to provide passengers automated 
refunds if the checked bag is significantly delayed because that 
carrier has the passenger's payment information and knows whether the 
checked bag has been significantly delayed. In situations where a 
carrier collected the baggage fee and a different carrier accepted the 
MBR, both carriers are expected to work together to ensure that a 
refund is issued promptly when due, with the carrier accepting the MBR 
timely notifying the collecting carrier of the baggage delay status and 
any other information collected from the passenger necessary for 
processing the refund, and the collecting carrier promptly issuing the 
automatic refund when it is notified that the delay has exceeded the 
deadline. As stated earlier, both carriers will be held responsible 
when a refund is not issued promptly. In situations where a ticket 
agent collected the bag fee, under this final rule, the carrier that 
operated the last flight segment is both the carrier accepting and 
handling an MBR and the carrier required to provide an automated 
refund. As the carrier accepting and handling the MBR, the carrier 
knows whether the consumer's checked bag has been significantly delayed 
entitling the consumer to a refund of the bag fee. While that carrier 
may not know the identity of the ticket agent that collected the bag 
fee or have the consumer's payment information should a refund be 
necessary, the carrier can obtain such information from the consumer as 
part of the MBR form that the consumer completes. The carrier may also 
choose to use the information that the consumer provided about the 
ticket agent that collected the bag fee to seek reimbursement.
    In all the situations described above, the Department is requiring 
that the refund of the bag fee for a significantly delayed checked bag 
be prompt. The Department is defining a ``prompt'' refund of bag fees 
to mean a refund issued within 7 business days of the expiration of the 
baggage delivery deadline for tickets purchased with credit cards or 20 
calendar days of the expiration of the baggage delivery deadline for 
tickets purchased with other payments, unless the consumer did not file 
an MBR before the expiration of the baggage delivery deadline, in which 
case the refund is due within 7 or 20 days of the date when the MBR was 
filed. The Department notes that its requirement for carriers to refund 
baggage fees within 7 business days for credit card purchases and 20 
calendar days for purchases with other payments is consistent with the 
Department's existing refund regulation in 14 CFR 259.5 and 14 CFR part 
374. The requirement in part 374, which implements Regulation Z's 7-day 
refund timeline for credit card payments applies to all airline 
transactions for which refunds are due, not just ticket refunds. The 
Department disagrees with airline commenters that investigations of 
refund eligibility involving multiple carriers warrant additional time 
beyond the 7- or 20-day timeframes. As stated in the NPRM, our 
understanding is that the vast majority of travel itineraries marketed 
to consumers in the United States are either itineraries involving only 
one carrier or itineraries involving fee-for-service codeshare 
operations for which the operating fee-for-service carrier works 
closely with the marketing carrier on baggage handling and resolving 
MBRs. For delayed baggage claims in those itineraries, investigations 
should be a straightforward process. In other cases, the Department 
expects that carriers engaging in marketing codeshare or interline 
arrangements will continue to improve inter-airline communication 
channels to increase the efficiency of information exchange relating to 
customer service, including delivering delayed bags to passengers as 
soon as possible and providing refunds for baggage fees when 
appropriate.

6. Other Issues

    The NPRM: The NPRM raised a number of miscellaneous issues relating 
to refunding fees for significantly delayed bags and asked for public 
comments. These issues concern: (1) what types of bags are subject to 
the refund requirement, including whether fees for oversized/overweight 
bags should be exempt from refund requirement; (2) how to determine the 
amount of refund if a fee was charged for multiple bags under an 
escalated fee scale and one or some of multiple

[[Page 32797]]

checked bags are delayed, or if a passenger paid a fixed fee for a 
baggage fee subscription program that covers the passenger's checked 
bag fees for a specified period; (3) whether there are particular 
circumstances in which airlines should not be required to issue a 
refund for a significantly delayed bag; (4) whether a carrier can 
require waiver of fees and liability if a passenger voluntarily agrees 
to travel without the checked bag on the same flight; and (5) how the 
baggage fee refund requirement should apply when airlines arrange 
alternative transportation or when passengers choose not to travel on 
the scheduled or substituted flight.
    With regard to the types of checked bags subject to the refund 
requirement, the Department noted that the statute requires the rule to 
cover ``checked baggage'' and the Department interpreted this to 
include not only bags checked with carriers at the ticket counters but 
also gate-checked bags and valet bags. The Department added that the 
statute makes no distinction or exception for special items that are 
transported as checked bags and interpreted the statute to also cover 
oversized and overweight bags.
    As for the amount of baggage fee refund to be provided if a 
passenger paid a lump sum fee for multiple bags under an escalated fee 
scale and one or some of multiple checked bags are delayed, the 
Department indicated its intention to require a carrier to refund the 
highest baggage fee per bag if there is not a unique identifier for 
each checked bag that correlates to the fee. The Department stated that 
it would permit the specific fee paid for the significantly delayed bag 
to be refunded if a carrier can identify the specific fee paid for that 
delayed bag. For passengers who paid for a baggage fee subscription 
program, the Department stated that it would require airlines to 
provide refunds and solicited comment on how to determine the amount of 
refund to which these passengers should be entitled. The Department 
reasoned that a refund is appropriate because the subscribers are 
paying a fee to transport their bags even if it is not on a per bag 
basis.
    Another issue that the Department examined in the NPRM is whether 
the mandate for baggage fee refunds should exempt certain situations. 
The Department provided examples of two instances in which a delay of a 
bag may be a result of passenger inaction. The first example was of a 
passenger who fails to comply with the requirement of U.S. Customs and 
Border Protection to pick up a checked bag at the first point of entry 
into the United States and recheck the bag, causing baggage delay. The 
second example was of a passenger who is traveling with two separate 
tickets and the passenger fails to collect the checked bag at the end 
of the first itinerary and check it with the carrier on the second 
itinerary. The Department also asked whether, instead of specifying 
particular circumstances in which airlines are not required to issue a 
refund for a lengthy delay in delivering the bag, a general exception 
for checked baggage delays that were a result of a passenger's 
negligence is preferable. The Department sought comment on what level 
of proof, if any, carriers should be required to provide to show that a 
bag delay was caused by the passenger's negligent action or inaction.
    In addition, the Department analyzed and solicited comment on 
whether a carrier should be allowed to require a waiver of fee refunds 
for significantly delayed checked bags and a waiver of incidental 
expenses associated with the delay from a passenger who voluntarily 
agrees to be separated from his or her checked bags, usually due to 
late check-in or traveling as a standby passenger. The Department also 
asked whether it should require airlines to retain records of waivers 
for a specified time period if it were to allow such waivers. A related 
issue addressed in the NPRM was whether a baggage fee refund 
requirement should apply when passengers choose not to travel on the 
scheduled or substituted flight. In the NPRM, the Department noted that 
it has tentatively determined that when passengers voluntarily choose 
not to travel on the scheduled flight or a substitute flight offered by 
the carrier, either by taking ground transportation that the passengers 
arrange on their own, or by purchasing tickets on flights of another 
carrier, the baggage fee refund requirement should not apply. The 
Department stated, however, if it is the carrier that arranges the 
alternative transportation, the bag fee refund requirement would apply, 
and the baggage delay clock would start when the passenger arrives at 
his or her destination in the alternative transportation provided.
    Lastly, the Department stated that baggage fees included in 
airfares, or baggage services provided as a complementary service due 
to frequent flyer status or credit card benefits should not be included 
in the refund requirement.
    Comments Received: A4A and AAPA stated that the refund requirement 
should not cover oversized/overweight bags and other specialty checked 
bags such as pets. A4A asserted that transporting these bags involves 
additional special care and costs, higher injury risks to employees, 
and increased chance of delay due to weight and balance limits. Both 
commenters argued that requiring carriers to refund fees for these bags 
would disincentivize carriers from accepting them for transportation or 
cause carriers to increase the price for transporting these bags. IATA 
commented that it supports the proposal that airlines should assign a 
specific fee to each bag if using an escalated fee scale and the 
proposal that when no such assignment was made airlines should refund 
the highest fee per bag.
    A4A commented that passenger negligence or failure to meet the 
conditions set forth by the carrier's contract of carriage that causes 
bags to be delayed should exempt carriers from the refund obligation. 
It specifically listed situations that it believes should qualify for 
exemptions, including when: passengers fail to pick up and recheck bags 
at the international entry points, passengers travel to ``hidden 
cities'' (i.e., passengers book a through fare with intention to 
disembark mid-travel but the bags are checked all the way through to 
the final destination), passengers purchase two separate tickets and 
then fail to collect the bag and recheck with the second carrier, 
passengers do not meet the check-in and other contract of carriage 
requirements, or passengers pack prohibited items in bags. A4A also 
stated that the exemption should apply when passengers take an earlier 
flight as standby or arrange their own alternative transportation, in 
which case carriers should be allowed to request passengers sign a 
waiver. A4A further contended that third-party actions that cause the 
bag delay should also exempt carriers from refund liability and these 
situations include bags being mistakenly claimed by another passenger, 
bag delays due to government actions such as bags being held by customs 
or airport security, bag delays due to airport-operated system failure, 
negligence by third-party delivery services that is beyond carriers' 
control, or bag delays due to carriers' compliance with positive bag 
match requirements.
    IATA, AAPA, Qatar Airways, and Spirit supported the proposal that 
carriers may request a waiver from passengers when passengers arrange 
their own alternative transportation or when passengers choose to 
voluntarily separate from their bags. IATA further supported the 
proposal that the refund requirement would apply when carriers arrange 
the alternative transportation but suggests that the clock should start 
at the time of MBR filing, as opposed to the arrival of the alternative 
transportation as proposed in the

[[Page 32798]]

NPRM. Spirit and Qatar Airways supported the proposal that carriers are 
not responsible for refunds when consumers arrange for alternative 
ground transportation or travel on anther carrier's flight.
    On baggage subscription programs, A4A, IATA, and AAPA argued that 
baggage transportation services that are purchased as part of a baggage 
fee subscription service should not be subject to the refund 
requirement proposed in the NPRM. A4A argued that carriers should be 
exempted from the refund requirement because carriers cannot accurately 
calculate the cost of the bag transportation and the amount of refund 
due. It further argued that passengers purchasing the subscription 
program are receiving a bargain on baggage transportation and they 
understand the risk of not receiving a refund when a bag is delayed. 
A4A commented that not providing an exemption to the program will 
stifle innovation on dynamic pricing and comparison marketplaces.
    A4A, IATA, and AAPA argued that baggage transportation services 
included as part of the fare or provided free of charge due to the 
passenger's frequent flyer status or because the passenger holds a 
branded credit card from the airline should not be subject to the 
refund requirement. Spirit, on the other hand, stated that carriers 
that do not separately charge a bag fee should be required to provide 
partial ticket refunds when bags are delayed because these carriers 
have incorporated the baggage fee into ticket prices.
    Travelers United supported the proposal to treat oversized/
overweight bags the same as regular checked bags for the purpose of 
baggage fee refunds. It also supported the rule covering gate-checked 
and valet bags to the extent that baggage fees are charged. Travelers 
United commented that if fees for all bags are paid in the same 
transaction, when one of the bags are delayed, carriers should refund 
the highest per bag fee. On carrier-arranged alternative 
transportation, Traveler United expressed its belief that passengers 
should be protected by the same rule regarding baggage fee refunds. It 
further emphasizes that when passengers waive their rights to baggage 
fee refunds, they are not waiving their rights to compensation related 
to lost or damaged baggage. One individual consumer expressed 
disagreement with airlines' suggestion that the rule should exempt 
oversized or overweight bags. The consumer commented that the 
suggestion introduces incentives for airlines to give these bags the 
lowest priority.
    The Colorado AG suggested that instead of adopting a general 
category of ``passenger negligence'' that exempts carriers from the 
refund obligation, the Department should specify the particular 
circumstances in which carriers are exempted. The comment further 
contended that a vague concept of ``passenger negligence'' would likely 
post challenges to consumers, carriers, and the enforcement process, 
and it would also invite carriers to deny refunds more readily and 
place consumers in a challenging position. The comment recommended that 
the structure of the rule place the burden on the airline to establish 
any exception.
    DOT Responses: After careful consideration of the comments, the 
Department is: (1) defining checked bags subject to the refund 
requirement to include gate-checked bags, valet bags, checked bags that 
exceed carriers' normal allowance, oversized/overweight checked bags, 
and specialty checked bags such as sporting equipment and pets; (2) 
requiring the highest amount per bag fee on an escalated fee scale be 
refunded if one or some of multiple checked bags are significantly 
delayed without a unique identifier for each checked bag that 
correlates to the fee; and (3) requiring the lowest amount of baggage 
fee the carrier charges another passenger of similar status without the 
subscription be refunded to a passenger who paid a fixed price for a 
baggage fee subscription program and a checked bag is significantly 
delayed. The Department is also exempting from the requirement to 
refund a fee for significantly delayed checked bag instances where the 
delay is a result of: (1) passengers failing to comply with the 
requirement of U.S. Customs and Border Protection to pick up a checked 
bag at the first point of entry into the United States and recheck the 
bag; (2) passengers agreeing to travel without their checked bag on the 
same flight because they checked in late for the flight or are flying 
as stand-by passengers; (3) a third-party delivery service that is not 
a contactor or an agent of the carrier and, instead, is contracting 
directly with the passenger failing to deliver the bag promptly; and 
(4) passengers not being present to pick up a bag that arrived on time 
at the passenger's ticketed final destination.
(i) Types of Bags Covered by the Refund Requirement
    The requirement adopted in this final rule for airlines to refund 
baggage fees when airlines significantly delay delivery of checked bags 
does not distinguish between different types of checked bags. The 
Department is defining checked bags to include gate-checked bags, valet 
bags, checked bags that exceed carriers' normal allowances, oversized/
overweight checked bags, and specialty checked bags such as sporting 
equipment and pets. This interpretation is consistent with the language 
of section 41704 note, which refers only to ``checked baggage'' and 
does not distinguish between different types of checked bags.
    The Department acknowledges the need for special handling for 
oversized or overweight bags but notes that carriers are not required 
to accept these bags for transportation and those carriers that do 
generally charge a higher fee. The Department is not persuaded by the 
airlines' argument that including oversized/overweight bags in the 
refund requirement will disincentivize carriers from accepting these 
bags. We view competition the main incentive for carriers to continue 
to accept these bags for transportation, with the prices of baggage 
fees determined by the free market, based on consumer demands, 
carriers' costs and risk, and the likelihood of timely delivery.
(ii) Amount of Refund When Multiple Checked Bags Are Transported Under 
Escalated Fee Scale or Passenger Paid for Baggage Subscription Programs
    Having received no objections in the comments, we are adopting the 
proposal that when one of the multiple bags checked by a passenger was 
significantly delayed by a carrier that adopts an escalated baggage fee 
scale, and there is no specific fee assigned to the delayed bag, the 
highest per bag fee should be refunded.
    Regarding what the amount of the refund should be if a passenger 
paid for a checked bag through a baggage subscription program and the 
checked bag is significantly delayed, the Department is requiring that 
airlines refund the passenger the amount that is equal to the lowest 
amount the carrier charges another passenger of similar frequent flyer 
status without the subscription. The Department is not convinced by 
airlines' argument that delayed bags paid through a baggage 
subscription program should be exempted from the refund requirement. In 
support of this argument, airlines comment that passengers purchasing 
the subscription are receiving a bargain on baggage transportation and 
they understand the risk of not receiving a refund when a bag is 
delayed. We disagree. Although passengers choosing to purchase the 
subscription program receive a discount on the total cost of baggage 
transportation over the subscription period based on their

[[Page 32799]]

anticipated travel frequencies, they still paid a fee to airlines to 
transport their checked bags. The Department believes that these 
passengers should receive a refund if the bag delay exceeds the 
applicable timeline. Because it is difficult and impractical to 
determine the amount of refund due based on the actual per bag fee 
charged for the delayed bag, the Department is requiring a refund in 
the amount that is equal to the lowest amount the carrier charges 
another passenger of similar frequent flyer status without the 
subscription.
(iii) Exemptions From the Refund Requirement
    The Department generally agrees with commenters that when 
passengers' own negligence is the cause of baggage delivery delay, 
carriers should be exempted from the refund requirement. The Department 
also shares the Colorado Attorney General's concerns that adopting a 
general category of ``passenger negligence'' that exempts carriers from 
the refund obligation may pose challenges to both consumers and 
carriers. As a result, the Department specifies in this final rule the 
particular circumstances in which carriers are exempted.
    In the NPRM, the Department described situations where the baggage 
delivery delay was due to a passenger's failure to comply with the 
requirement of U.S. Customs and Border Protection to pick up a checked 
bag at the first point of entry into the United States and recheck the 
bag and a passenger failure to pick up the bag at the transition point 
and recheck the bag with the second carrier when traveling with two 
separate tickets.\68\ Many other situations were also cited by the 
airline commenters as potentially qualifying for exemptions because the 
passengers' own action of negligence caused the baggage delivery delay. 
Of the various examples suggested by commenters as potentially 
qualifying for an exemption, the Department agrees that situations 
where passengers fail to pick up and recheck bags at international 
entry points into the United States qualify for an exemption from the 
refund bag fee requirement. The Department is also persuaded that an 
exemption is appropriate when passengers are not present to pick up a 
bag that arrived on time at the passenger's ticketed final destination 
whether that is because the passenger traveled to a ``hidden city,'' 
the passenger failed to pick up the bag before taking a flight on a 
separate ticket, or any other reason that is due to the fault of the 
passenger if documented by the carrier.
---------------------------------------------------------------------------

    \68\ 86 FR 38423 (July 21, 2021).
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    For different reasons, the Department has concluded that the other 
situations described do not qualify for an exemption. For example, 
carriers suggest that the Department should exempt carriers from the 
refund obligation when the baggage delay was because passengers packed 
prohibited items in their checked bags. However, based on the 
Department's understanding of the procedures of the Transportation 
Security Administration (TSA), in the vast majority of these cases, the 
prohibited items would be removed from the bags during the screening 
process, and the bags would be allowed to continue their travel. Based 
on this understanding, the Department does not believe it is 
appropriate to categorically exempt bags that are temporarily held by 
TSA due to prohibited items being found in the bags. In addition, a bag 
is not late when passengers purchase two separate tickets and fail to 
collect the bag and recheck the bag with the second carrier. The second 
carrier could not transport the bag on the same flight as the passenger 
when the bag was never checked by the passenger, and the first carrier 
is exempted for the delay because the passenger failed to pick up the 
bag that arrived on time at the passenger's ticketed final destination. 
Similarly, a bag is not late when a third-party that contracted 
directly with the passenger picks it up from the carrier before 12 
hours for domestic flights, 15 hours for international flights of 12 
hours or less in duration, and 30 hours for international flights of 
over 12 hours in duration. If the third-party then caused a delay in 
the bag reaching the passenger, the carrier does not owe a refund of 
the bag fee to the passenger.
    As for the comment that the Department should exempt carriers from 
refund liability when the baggage delay was a result of third-party 
actions, the Department is of the view that an exemption is not 
appropriate when the third-party actions took place while the bag was 
in the custody of the airline before it has been delivered to the 
passenger. Airlines in their comments suggest that the Department 
should exempt a list of situations in which actions by a third-party 
cause the baggage deliver delay. The Department's view is that a third-
party's action that directly causes significant bag delivery delays 
while the bag is under a carrier's custody should not be exempted from 
the requirement to refund the bag fee. Consistent with the Department's 
policy for reporting mishandled baggage by U.S. carriers, a bag is in 
the custody of a carrier beginning at the point in time which the 
passenger hands the bag to the carrier's representative or agent, or 
leaves the bag at a location as instructed by the carrier; a carrier's 
custody ends when the passenger, a party acting on the passenger's 
behalf, or another carrier takes possession of the bag.\69\ Bag delays 
due to third-party actions (e.g., security authority or Customs holding 
bags, airport baggage processing system failure, or recovery bag delays 
due to carriers' compliance with the positive passenger-bag match 
requirement) are not permissible grounds for exempting the carriers 
from the baggage fee refund obligation because the affected bags are 
under carriers' custody. Also, bag delays caused by another passenger 
picking up the bag by mistake before the passenger or a party acting on 
the passenger's behalf takes physical possession of the bag is not 
exempted because the passenger provided his or her bag to the carrier 
and the bag was not available to be picked up by that passenger at the 
passenger's final destination.\70\
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    \69\ See, Technical Reporting Directive #30A--Mishandled Baggage 
and Wheelchairs and Scooters (Amended), Dec. 21, 2018.
    \70\ Id.
---------------------------------------------------------------------------

    Consistent with this approach, the Department considers baggage 
delays caused by a third-party delivery service to be a ground to 
exempt the carrier from refunding baggage fees only if the third-party 
is not a contactor or an agent of the carrier and, instead, is 
contracting directly with the passenger. For example, if a passenger 
arranges a third-party delivery service to pick up the bag at the 
passenger's final destination airport and transport it to a location 
designated by the passenger, the airline is exempted from refunding 
baggage fees if the baggage delivery is delayed by that third-party, 
who took possession of the bag from the carrier on behalf of the 
passenger.
(iv) Waiver of Fee Refunds and Incidental Expenses for Voluntary 
Separation
    The Department is exempting airlines from the refund obligation 
when passengers voluntarily agree to travel without their checked bags 
on the same flight as a way to make the flight when they checked in 
late for the flight or are flying as stand-by passengers. We agree with 
commenters that carriers offering passengers different travel options 
that meet their needs, including the option of traveling without their 
bags on the same flight, benefits consumers. In those situations where 
carriers are willing to accommodate passengers but may not have 
adequate time to load the

[[Page 32800]]

passengers' bags onto the same flights, we believe it is fair to exempt 
carriers from the baggage fee refund obligation provided that carriers 
clearly disclose to the passenger that the checked bag may not arrive 
promptly. In those circumstances, carriers are permitted to require 
passengers sign a document waiving their right to a refund of the 
baggage fees if the bag delivery is delayed beyond the regulatory 
timelines. The waiver that carriers seek from passengers in these 
situations must be limited to passengers relinquishing their right to 
refund of bag fees if delayed beyond the regulatory timelines. The 
waiver should also include an estimated delivery time and a delivery 
location that the carrier and the passenger agreed upon. The waiver 
must not include language suggesting that the passengers are 
relinquishing their right to refund of bag fees if the bag is lost, 
their right to compensation for damaged, lost, or pilfered bags, or 
their right to incidental expenses arising from delayed bags beyond the 
agreed upon delivery date/time consistent with the Department's 
regulation in 14 CFR part 254 and applicable international treaties.
(v) Alternative Transportation
    The Department has considered the comments regarding whether the 
baggage fee refund requirements should apply to significantly delayed 
bags when passengers arrange for alternative transportation. Passengers 
choosing to arrange their own alternative transportation even after 
already having handed over their checked bags to carriers' custody 
often do so because their flight has been canceled or significantly 
delayed. As explained later in this document, if a flight is canceled 
or significantly changed and the passenger chooses not to fly with the 
carrier, the passenger is entitled to receive a refund of the ancillary 
service fee, including baggage fee, for a service that they paid for 
and did not receive. Unless the carrier delivers the checked bag to the 
passenger at an agreed-upon location, the checked bag fee must be 
refunded.
    The Department is also not persuaded that it should exempt from the 
requirement to refund fees for significantly delayed bags when the 
carrier arranges alternative air travel for its passengers because of a 
flight cancellation or significant change by the carrier. The 
requirement to refund fees for significantly delayed bags still applies 
when the alternative transportation that the carrier arranges is a 
later flight operated by that carrier or a flight by another carrier. 
In those situations, the start of the delay when measuring the length 
of the delay for a carrier to deliver a checked bag is when the 
passenger arrives at his or her destination on the alternative air 
transportation, consistent with the Department's position on start of 
the baggage delay when passengers fly on their original scheduled 
flight. Because the statute applies to delays in transporting bags on 
flights and not on ground transportation, however, this rule requiring 
carriers to refund fees for significantly delayed bags does not apply 
to the alternative ground transportation.
    As a final matter, the Department is providing clarification that 
the refund requirement of 49 U.S.C. 41704 note covers ``any ancillary 
fees paid by the passenger for checked baggage'' (emphasis added). It 
is irrelevant whether the consumer uses a credit card, frequent flyer 
miles/points, travel vouchers, or something else to pay the fee for the 
checked bag. An ancillary fee is a fee for an optional service that is 
not included as part of the fare and includes baggage fees charged 
separately from the ticket price. To the extent that there was no 
separate bag fee paid by any form of payment (e.g., credit card, 
airline miles) because the transport of baggage was included as part of 
the fare or the baggage fee was waived due to the passenger's airline 
loyalty program status or as a benefit of using an airline-associated 
credit card, carriers are not required to provide a refund as the 
passenger did not pay an ``ancillary fee'' for the checked bag.

III. Refunding Ancillary Service Fees for Services Not Provided

1. Covered Entities and Flights

    The NPRM: The Department proposed to mandate U.S. and foreign air 
carriers provide refunds to consumers of the fees a passenger pays for 
an ancillary service related to air travel on a flight to, from, or 
within the United States that the passenger does not receive, including 
retaining the existing regulatory requirement for such refunds due to 
oversales and flight cancellations \71\ and other situations when the 
ancillary service is not available to the passenger. The Department is 
required by 49 U.S.C. 42301 note prec. to cover U.S. and foreign air 
carriers that offer ancillary services for a fee on their domestic and 
international flights.\72\ With respect to ticket agents, similar to 
the requirement on refunding baggage fees for significantly delayed 
bags, although the Department is not required by statute to cover them, 
the NPRM stated that the Department has independent authority under 49 
U.S.C. 41712, which prohibits ticket agents from engaging in unfair or 
deceptive practices in air transportation, to include them in the 
regulation if deemed appropriate. As such, in the NPRM, the Department 
sought a general overview of ticket agents' role in the transaction and 
collection ancillary service fees and the process of how fees collected 
by ticket agents are transferred to carriers. The NPRM stated that this 
information would assist the Department in determining whether its 
regulation on ancillary fee refund should address ticket agents' role 
and the role of other non-carrier entities involved in the sale of 
ancillary fees.
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    \71\ 14 CFR 259.5(b)(5) requires carriers to provide prompt 
refunds where due, including refunding fees charged to a passenger 
for optional services that the passenger was unable to use due to an 
oversale situation or flight cancellation.
    \72\ Section 421 of the FAA Reauthorization Act of 2018 (2018 
FAA Act), which was codified under 49 U.S.C. 42301 note prec., 
directs the Department to promulgate regulations requiring ``each 
covered air carrier'' to provide refunds of ancillary service fees 
that a passenger paid for but did not receive. Section 401 of the 
2018 FAA Act defines ``covered air carrier,'' as used in Section 
421, to mean means an air carrier or a foreign air carrier as those 
terms are defined in section 40102 of title 49, United States Code. 
https://www.congress.gov/bill/115th-congress/house-bill/302/text?q=%7B%22search%22%3A%5B%22FAA+Reauthorization%22%5D%7D.
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    Comments Received: The Department received no comments regarding 
the scope of covered flights and covered carriers. With respect to 
ticket agents, IATA indicated that the entity that collected the 
ancillary fee should be responsible for the refund. Spirit also 
supported a requirement for ticket agents to issue refunds if they 
collected the fees. Ticket agent representatives' position on whether 
they should be required to refund ancillary service fees when the 
services are not provided is similar to their view on refunding baggage 
fees for significantly delayed bags, which was summarized in that 
section. In short, ticket agent representatives believe that based on 
the statutory language of 49 U.S.C. 42301 note prec., which referred 
only to air carriers, the infrequency of ticket agent-transacted 
ancillary fees, and the role of ticket agents in those transactions 
(i.e., acting as the agents of airlines), ticket agents should not be 
required to refund ancillary service fees.
    DOT Responses: The Department is requiring U.S. and foreign 
carriers that operate scheduled passenger service to, within, and from 
the U.S. to provide a refund to passengers of fees charged for an 
ancillary service that is paid for but

[[Page 32801]]

not provided. The Department is applying this requirement to carriers 
regardless of the aircraft size that the carriers operate. With regard 
to ticket agents, the Department is not adopting in this final rule a 
specific requirement for ticket agents to provide refunds of ancillary 
service fees even if ticket agents collect the fees. The Department 
believes that whether an ancillary service paid by a consumer was 
provided by an airline is a factual matter better handled directly by 
the airline through direct communication with passengers. The 
Department views that placing responsibility to provide such refunds on 
ticket agents may further complicate the matter and cause unnecessary 
delays for consumers to receive a refund. Further, 49 U.S.C. 42301 note 
prec. directs the Department to promulgate regulations requiring 
``covered air carriers'' to provide refunds for ancillary service fees. 
For these reasons, in this final rule, the Department is placing the 
responsibility to provide refunds of ancillary service fees for 
services not provided on carriers rather than ticket agents. The 
Department will continue to monitor the transactions of ancillary 
service fees conducted by ticket agents and may revisit the issue in 
the future should it become necessary.

2. Need for Rulemaking

    The NPRM: The Department proposed to require refunds of ancillary 
service fees for services paid for but not provided to implement a 
statutory provision of the FAA Reauthorization Act of 2018 (49 U.S.C. 
42301 note prec.), and to codify the Department's longstanding 
enforcement practice of viewing any airline practice of not refunding 
fees for ancillary services that passengers paid for but are not 
provided as an unfair or deceptive practice in violation of 49 U.S.C. 
41712. The statutory provision in 49 U.S.C. 42301 note prec., requires 
the Department to promulgate a rule that mandates that airlines 
promptly provide a refund to a passenger of any ancillary fees paid for 
services related to air travel that the passenger does not receive, 
including on the passenger's scheduled flight, on a subsequent 
replacement itinerary if there has been a rescheduling, or for a flight 
not taken by the passenger. Currently, the Department's regulation in 
14 CFR part 259.5(b)(5) explicitly requires that airlines refund fees 
charged to a passenger for optional services that the passenger was 
unable to use due to an oversale situation or flight cancellation. 
Under the statutory authority of 49 U.S.C. 41712, which authorizes the 
Department to investigate and, if necessary, take action to address 
unfair or deceptive practices or unfair methods of competition by air 
carriers, foreign air carriers, or ticket agents, the Department has a 
longstanding enforcement policy that considers any airline practice of 
not refunding fees for ancillary services that passengers paid for but 
are not provided to be an unfair or deceptive practice in violation of 
49 U.S.C. 41712, which goes beyond the situations related to oversales 
or flight cancellations. In the NPRM, DOT proposed to retain the 
existing regulatory requirement regarding ancillary fee refunds arising 
from flight oversales or cancellations, and to further clarify that the 
refund requirement would apply to any other situation in which an 
airline fails to provide passengers the ancillary services that 
passengers have paid for (e.g., passengers paid for using the in-flight 
entertainment (IFE) system on a scheduled flight but the IFE system was 
broken and could not be used by the passengers). DOT stated that the 
inclusion of regulatory text requiring that airlines must refund 
ancillary fees for services related to air travel that passengers did 
not receive, as provided in 49 U.S.C. 42301 note prec., would not 
impose additional requirements on airlines as airlines are already 
providing refunds of ancillary fees when they fail to provide services 
that passengers paid for, consistent with the Department's 
interpretation of section 41712.
    Comments Received: Virtually all consumers and consumer rights 
advocacy groups who submitted comments expressed their general support 
for this rulemaking. The majority of airlines and airline trade 
associations that commented on the NPRM also supported the Department's 
rulemaking to implement the Congressional mandate. Among airline 
commenters, however, AAPA argued that it is not necessary to promulgate 
a new rule because airlines generally are already providing refunds for 
services not rendered on their initiative. AAPA also noted that 
mandating prescriptive rules such as compulsory refunds for ancillary 
services would stifle innovation and restrict consumers' freedom of 
choice as it limits airlines' ability to offer other methods of 
compensation, such as vouchers or airline miles, which could be more 
attractive to the customer. Qatar Airways commented that it already 
offers refunds of ancillary service fees when there is a flight 
cancellation. Qatar also states that the majority of ancillary products 
are transferred to the new itinerary when a schedule change has 
occurred.
    DOT Responses: The Department has concluded that the promulgation 
of this regulation not only fulfills a statutory mandate, but also is 
necessary to provide consistency and clarity to the regulated industry. 
Although many airlines are already providing refunds of fees for 
various ancillary services that they did not provide, this final rule 
defines the scope of ancillary services that are subject to this refund 
requirement and ensures that all carriers comply with the mandatory 
requirements following a unified standard with respect to the method 
and timeliness of refunds. The Department rejects AAPA's argument that 
having a compulsory refunds requirement would stifle innovation as 
under the mandatory refund requirement, airlines continue to have the 
option to offer other compensation such as vouchers or airline miles to 
consumers who did not receive the ancillary services they paid for, as 
long as carriers clearly inform consumers that they are entitled to a 
refund for the fees at the same time or before offering vouchers or 
other non-cash compensation.

3. Definition of Ancillary Services

    The NPRM: The provision in 49 U.S.C. 42301 note prec. requires that 
airlines refund ancillary fees paid for services ``related to air 
travel.'' As stated in the NPRM, the Department has not defined 
``ancillary services'' in its aviation economic regulations and 
proposes to adopt a definition that is substantially identical to the 
definition for ``optional services'' in 14 CFR 399.85(d) \73\ which 
requires U.S. and foreign air carriers to prominently disclose on their 
websites marketing air transportation to U.S. consumers information on 
fees for all optional services available to a passenger purchasing air 
transportation. Specifically, DOT proposed to define ``ancillary 
service'' to mean any service related to air travel provided by a 
covered carrier, for a fee, beyond passenger air transportation. DOT 
specified that such service includes, but is not limited to, checked or 
carry-on baggage, advance seat selection, access to in-flight 
entertainment system, in-flight beverages, snacks and meals, pillows 
and blankets and seat upgrades. DOT noted that the definition in 
section

[[Page 32802]]

399.85(d) does not include fees charged for services to be provided by 
entities other than airlines, such as hotel accommodations or rental 
cars, which are commonly offered by some airlines as a package during 
the airfare reservation process. DOT sought comments on whether 
adopting a definition for ``ancillary service'' that is similar to the 
definition of ``optional service'' in section 399.85(d) is appropriate 
in the context of ancillary service fee refunds.
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    \73\ ``Optional services'' is defined as any service the airline 
provides, for a fee, beyond passenger air transportation. Such fees 
include, but are not limited to, charges for checked or carry-on 
baggage, advance seat selection, inflight beverages, snacks and 
meals, pillows and blankets and seat upgrades. 14 CFR 399.85(d).
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    Comments Received: Airline and consumer commenters supported the 
proposed definition for ``ancillary service.'' Spirit stated that it 
supports the Department's efforts to harmonize the definition of 
``ancillary services'' with that of ``optional services.'' AAPA 
commented that an alignment of definitions is crucial to avoid 
confusion for all stakeholders concerned, including passengers, 
airlines, and service providers. A4A noted that Department should 
clarify, in the definition, that ancillary service fees are not costs 
included in a fare or as a prerequisite; and that ``ancillary 
services'' do not include services provided pursuant to an agreement 
directly between the passenger and a third-party service provider. 
Among consumer commenters, Travelers United expressed its support for 
the Department's proposed definition of ``ancillary services.''
    Panasonic Avionics, a manufacturer of in-flight entertainment 
(``IFE'') and in-flight connectivity (``IFC'') systems and a service 
provider, commented that the proposed refund requirement should apply 
only to covered carriers when they enter into a contract directly with 
a passenger for the provision of an ancillary service and process that 
passengers' payment for that ancillary service. It further stated that 
the rule should not be construed to obligate covered carriers to issue 
refunds when a passenger has contracted with a third-party service 
provider for an ancillary service and made payment to that third-party 
provider because in that case, the passengers' right to a refund will 
be governed by the terms and conditions of sale between the third-party 
provider and the passenger, with the third-party provider being 
governed by the consumer protection regulations of its applicable 
industry. Panasonic suggested that the Department's final rule should 
clarify in the applicability section that the regulation ``is not 
intended to address services provided by third-party service providers 
that entered into a service contract and/or terms and conditions 
directly with the passenger.'' Panasonic also suggested that the 
definition of ``ancillary service'' should clarify that it does not 
include services provided by third-party service providers that entered 
into a service contract directly with the passenger.
    The Department also received a comment from the Colorado Attorney 
General, who, among other things, recommended that the Department's 
final rule ensure that consumers paying additional fees for add-on 
services truly receive items of tangible value.
    DOT Response: With minor modifications, the Department is adopting 
the NPRM's proposed scope and definition for ``ancillary services'' in 
this final rule. The Department has considered A4A's comment that 
ancillary services subject to the refund requirement should not include 
services the costs of which are included in the airfare. We agree and 
have modified the definition of ancillary service by adding the word 
``optional'' to reflect that the ancillary services covered under this 
rule are services that consumers can purchase at their discretion, and 
they do not include services mandatorily included in airfares or 
complimentary services provided to passengers without a separate 
fee.\74\
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    \74\ For passengers who did not receive an ancillary service 
because of an airline cancellation or a significant change of flight 
itinerary and the cost of the ancillary service is included in the 
airfare as a mandatory charge, carriers are required to refund the 
entire amount of airfare (all government taxes and fees and all 
mandatory carrier-imposed fees). See 14 CFR 260.6(a). To the extent 
that the cost of the ancillary service is not included in the 
airfare, carriers are required to refund the fee when the ancillary 
service was not provided because of a flight cancellation or 
significant change. See 14 CFR 260.4(a).
---------------------------------------------------------------------------

    The Department has also considered Panasonic's and A4A's comments 
regarding the need to expressly clarify that ``ancillary services'' in 
this rule do not include services provided pursuant to an agreement 
directly between the passenger and a third-party service provider. The 
Department's authority to prohibit unfair or deceptive practices under 
49 U.S.C. 41712 is limited to practices by U.S. carriers, foreign air 
carriers, and ticket agents in air transportation or the sale of air 
transportation. Also, the Department's authority to mandate prompt 
refund to a passenger of any ancillary fees paid for services related 
to air travel that the passenger did not receive pursuant to 49 U.S.C. 
42301 note prec. is limited to carriers. The Department does not have 
the authority to regulate the practices of other entities under these 
statutory provisions. Accordingly, while not adopting the suggested 
rule text amendments by Panasonic, we are clarifying that services 
provided to passengers in relation to air travel pursuant to a contract 
between passengers and an independent third-party provider that does 
not act as an agent or contractor of an airline are not covered by this 
refund requirement. The Department understands that some independent 
third-party service providers may rely on airlines to refer interested 
customers to them for service purchases. In circumstances where an 
airline facilitates the purchase of an ancillary service but is not a 
direct party in the service contract, the Department expects the 
airline to provide clear disclaimer regarding the nature of the service 
contract and inform consumers that they should communicate directly 
with the service providers for any issues related to the service.

4. Refund Eligibility and Promptness of the Refund

    The NPRM: The provision at 49 U.S.C. 42301 note prec. requires 
covered carriers to refund ancillary service fees for services that ``a 
passenger does not receive, including on the passenger's scheduled 
flight, on a subsequent replacement itinerary if there has been a 
rescheduling, or for a flight not taken by the passenger.'' The 
Department interpreted the statute to mean that a passenger would be 
eligible for a refund if he or she did not receive the ancillary 
service paid for because (1) the service was not made available to the 
passenger on the flight he or she took (either the original flights or 
an alternative flight due to cancellation or schedule changes made by 
the airlines or due to an oversales situation); or (2) if the passenger 
did not take any flight due to the airline canceling the flight or 
making a significant change to the flight. The proposal was focused on 
whether a carrier failed to fulfill its obligation to provide the 
service, as opposed to whether the service was utilized by the 
passenger. If the service was available but a passenger did not use the 
service, the passenger would not be entitled to a refund. Also under 
this proposal, if the ancillary service is not available because a 
flight schedule change affirmatively made by the passenger or due to 
passenger action, carriers are not required to refund the service fee.
    Regarding ``prompt'' refunds, the Department proposed to apply the 
same standards to ancillary service fees when refunds are due that is 
currently applicable to airline ticket refunds. In both situations, 
prompt refund would mean refunds within seven days for credit card 
transactions and 20 days for transactions involving cash, checks, 
vouchers, or frequent flyer miles after the entity responsible for 
issuing a

[[Page 32803]]

refund receives a request for a refund and the documentation necessary 
for processing the refund.
    Comments Received: Virtually all airlines and airline trade 
organizations that provided comments supported the Department's 
proposal that a passenger would be entitled to a refund of the 
ancillary service fee if the passenger did not receive the ancillary 
service. Several airlines commented that the Department's rule should 
expressly state that a refund would not be required when the service 
was available but was not used by the passenger, when the passenger 
voluntarily changes or cancels their flight, or when the passenger 
violates the check-in requirements, the contract of carriage, or 
related policies. Spirit requested clarification on how to determine 
whether a service ``was not provided'' and whether a partial provision 
of the service would entitle a passenger to a refund. A4A stated that a 
refund should not be required for issues relating to partial provision 
of a service or the quality of the purchased ancillary service, as it 
would be impossible for a carrier to determine when refunds would be 
due or the proper amount of the refund. IATA and AAPA expressed their 
support for applying the same ``promptness'' standards to refunding 
ancillary service fees when refunds are due that is currently 
applicable to refunds for tickets, fees for optional services that 
could not be used due to an oversale or flight cancellation, and fees 
for lost bags.
    A joint comment by Business Travel Coalition and multiple other 
consumer rights advocacy groups \75\ stated that the Department should 
require carriers to automatically provide refunds for ancillary 
services not provided without consumers needing to complain. The 
consumer advocacy groups further stated that carriers should be 
required to proactively track when ancillary services paid for by 
passengers are not provided and to issue refunds automatically. They 
also expressed concerns that any regulation requiring passengers to 
seek out refunds will result in fewer refunds than consumers are 
entitled to receive. Travelers United stated its support of the 
Department's proposal and opines that passengers must request any 
refund of ancillary fees. Travelers United further suggested that the 
Department establish a form that can be used to notify both the airline 
and DOT at the same time regarding any refund request for ancillary 
service not provided.
---------------------------------------------------------------------------

    \75\ Consumer Action, Consumer Federation of America, Consumer 
Reports, Edontravel.Com, Flyersrights.Org, National Consumers 
League, Travel Fairness Now, and U.S. PIRG.
---------------------------------------------------------------------------

    In relation to its comments regarding the exclusion of third-party 
provided services from the definition of ``ancillary services,'' 
Panasonic stated that in the context of satellite services it provides, 
the discussion around refund eligibility must be left to the terms and 
conditions established between the customer and the service provider, 
not the covered carrier. However, Panasonic suggested that covered 
carriers be required to post information related to contacting the 
third-party service providers' support centers on carriers' websites or 
other locations.
    DOT Response: After carefully considering the comments received, 
the Department has determined that, under certain circumstances where 
consumers' rights to refunds of ancillary services is undisputed, it is 
not necessary for carriers to wait to receive consumers' refund 
requests to provide refunds. More specifically, carriers are required 
to automatically refund fees for ancillary services in instances where 
the service was not available for any passenger who paid for the 
service, such as unavailable Wi-Fi for the entire flight. It should not 
be necessary for the consumer to separately request a refund under 
these circumstances because the carrier knows that no one on that 
flight received the service.
    The Department does not believe an ``automatic'' refund approach in 
the same way is workable if the ancillary service is only unavailable 
to an individual passenger or passengers (e.g., seatback entertainment 
equipment malfunction). In these situations, the operating carrier of 
the flight on which the paid ancillary service was not provided will 
need to be informed of the issue so they can conduct an investigation 
and verify refund eligibility. In our view, the affected consumer 
notifying the operating carrier when a paid-for service is not received 
is the most direct and efficient way to initiate the refund process. 
Notifying the operating carrier about the service not being provided is 
implicitly a request for refund by a consumer. The Department believes 
that notifying the operating carriers about the service issue should 
not be a significant burden to consumers. Carriers should make 
information available on their website on the different avenues 
available to customers to report such problems. Further, to the extent 
the operating carrier and the carrier that collected the ancillary 
service fee (merchant of record) are different carriers, the Department 
is requiring the operating carrier to, without delay, verify the 
passenger's claim about the ancillary service not being provided and 
notify the collecting carrier if this is the case as described more 
fully in the next section, so that the collecting carrier can provide 
an automatic refund. The collecting carrier is responsible for 
providing the refund. However, if a ticket agent collected the 
ancillary service fee, then the operating carrier that failed to 
provide the ancillary service is responsible for providing the 
automatic refund.
    Regarding comments on how to determine whether a service ``was not 
provided'' and whether a partial provision of the service would entitle 
a passenger to a refund, the Department interprets the provision of 
section 42301 note prec. requiring refunds of fees for services that 
``the passenger does not receive'' to mean a carrier has failed to 
fulfill its obligation to provide the service as opposed to the quality 
of the purchased ancillary service not being up to the expectation of 
the passengers. The Department does consider partial service such as 
providing Wi-Fi service for only a portion of the flight when a 
consumer paid for Wi-Fi service to entitle a consumer to a refund.
    The Department generally agrees with airlines' comments that a 
refund should not be required when the service was available but was 
not used by the passenger. The Department further recognizes that 
actions by consumers may directly result in the pre-paid ancillary 
services not being available to passengers and in these situations, 
carriers are not required to provide refunds for the ancillary service 
fees. The actions by passengers that exempt carriers from the 
obligation to refund fees for ancillary services that a passenger does 
not receive include the passenger taking another flight due to non-
compliance with minimum check-in time requirement or passengers being 
denied boarding on a flight due to non-compliance with carriers' 
contracts of carriage or governmental requirements. The Department 
notes that passenger-initiated cancellations or changes permitted by 
the terms of the tickets should not be a ground for carriers to refuse 
refunds of ancillary service fees that the passengers do not receive. 
For example, if a passenger holds a flexible ticket that allows the 
passenger to change flights without charge and the passenger changes to 
a new flight where the ancillary service that the passenger has paid 
for is not available, the passenger is entitled to a refund of the fee 
for that ancillary service.
    With respect to Panasonic's comments on how to determine whether a 
refund

[[Page 32804]]

is due for services provided by an independent third-party provider, as 
stated in the previous section, passengers not receiving a service they 
purchased directly from a third-party provider are not eligible to 
receive a refund under this rule as this rule applies to carriers and 
ticket agents. The passengers' refund eligibility will be governed by 
the terms and conditions of the service contract with the third-party 
provider and subject to applicable consumer protection laws. As 
suggested by Panasonic, the Department encourages carriers to provide 
consumers information on how to contact these third-party entities. The 
Department also reminds carriers that when promoting or facilitating 
the purchase of ancillary services or products provided by third-party 
entities, carriers may not provide information that is misleading to 
consumers as to which entity is responsible for providing the service 
or issuing refunds to dissatisfied consumers.
    On the timeliness of refunds, the Department is adopting the same 
``promptness'' standards for refunding ancillary service fees as 
proposed. A ``prompt'' refund of ancillary service fees means a refund 
issued within 7 business days for credit card payments or within 20 
calendar days for non-credit card payments. For automatic refunds, the 
7/20-day clock starts when a consumer's right to a refund of an 
ancillary service fee is clear. For circumstances where an 
``automatic'' refund approach is not applicable, the 7/20-day clock 
starts when the passenger has notified the operating carrier about the 
unavailability of the service. The Department notes that adopting the 
7- and 20-day refund timelines across the board on various refund 
issues provides consistency to consumers, carriers, and other 
stakeholder and streamlines carriers' customer service procedures, 
complaint resolutions, and training.

5. Entity Responsible for Refund

    The NPRM: The Department recognized that for codeshare or interline 
itineraries or ticket agent-involved ancillary service fee 
transactions, the entity that collected the ancillary fee may not 
necessarily be the entity that is responsible for providing the 
ancillary service. Similar to the multiple-carrier scenario for 
refunding baggage fees for significantly delayed bags, the Department 
proposed to hold the carrier that collected the ancillary service fee 
responsible for issuing a refund when the ancillary service was not 
provided. When a ticket agent collected the ancillary service fee, the 
Department noted its understanding that the fee collected by a ticket 
agent is passed on to the carrier whose ticket stock is used for 
issuing the ticket and proposed to hold that carrier responsible for 
issuing the refund. The Department further noted that 49 U.S.C. 42301 
note prec. requires airlines to refund ancillary fees paid for services 
related to air travel. For multiple-carrier itineraries for which a 
ticket agent collected the fee, the Department proposed that the last 
operating carrier issue the refunds, similar to the proposal for 
refunding baggage fees for delayed bags. The Department sought general 
information on ticket agents' role in the transaction and collection of 
ancillary service fees.
    Comments Received: Comments on ticket agents' responsibility to 
refund were largely focused on refunding baggage fees for delayed bags. 
However, most comments also mentioned that their positions on ticket 
agents' responsibility to refund baggage fees should also apply to 
refunding ancillary fees for services not provided. In summary, airline 
commenters believed that ticket agents should be responsible for 
refunding ancillary service fees if they collected the fees, especially 
for multiple-carrier itineraries. One consumer rights advocacy group 
argued that airlines should ultimately be responsible for refunds, 
while two ticket agent representatives argued that airlines should be 
responsible. Details of these comments are provided in the comment 
summary section for refunding baggage fees for significantly delayed 
bags.
    DOT Response: For multiple-carrier itineraries where one of the 
carriers collected the ancillary service fees, the Department is 
adopting the same approach as for refunding fees for delayed bags to 
require the carrier that collected the ancillary service fees (i.e., 
merchant of record) to provide refunds when the services were not 
provided, regardless of whether the ancillary service at issue was not 
provided on a flight operated by the collecting carrier. In the 
Department's view, this approach is the most straightforward way to 
initiate and process a refund request from consumers' perspectives. The 
Department believes that the collecting carriers are in the best 
position to process and issue refunds as they have direct visibility of 
the passengers' selected ancillary services, the total amounts 
consumers were charged, and consumers' payment information. As noted in 
the prior section, automatic refunds are not required when the 
ancillary service is only unavailable to an individual passenger or 
passengers and under these circumstances passengers would need to 
notify the operating carrier that an ancillary service that they paid 
for was not available to them (e.g., seat upgrade was not provided or 
seatback entertainment equipment malfunction), so carriers can conduct 
an investigation to verify refund eligibility.
    In situations where the carrier that collected the ancillary 
service fee and the carrier(s) operating the flights are different 
entities, the Department is requiring the carrier(s) that failed to 
provide the passenger the ancillary service that the passenger paid for 
to provide that information to the collecting carrier without delay. 
Should the carrier that failed to provide the ancillary service not 
know which entity collected the ancillary service fee from the 
passenger, it can obtain that information from the passenger. The 
Department's Office of Aviation Consumer Protection will determine the 
timeliness of the information provided to the collecting carrier based 
on the totality of the circumstances, including how soon after becoming 
aware of the lack of service to the passenger did the carrier that 
failed to provide the ancillary service notify the collecting carrier.
    The collecting carrier remains responsible for providing the 
refund. For example, a passenger purchased an itinerary that has two 
flight segments, with the first segment operated by Carrier A, and the 
second segment operated by Carrier B. Carrier A collected the ancillary 
service fee (merchant of record) for a seat upgrade on the second 
flight segment but the service was not provided. As this ancillary 
service was unavailable only to this passenger, automatic refund is not 
required. To obtain a refund, the passenger must inform Carrier B that 
the paid for seat upgrade was not provided on the second segment. 
Carrier A will be responsible for issuing the refund because it is the 
collecting carrier, and Carrier B is responsible for informing Carrier 
A that the paid for seat upgrade was not provided. The 7/20-day refund 
timeline starts for Carrier A at the time that it receives information 
from Carrier B that the paid for ancillary service was not provided.
    For the same reasons articulated in the section on refunding 
baggage fees for significantly delayed bags, in cases where ancillary 
service fees are collected by a ticket agent for a single-carrier 
itinerary, the Department will hold that carrier responsible for 
issuing the refund. The Department notes that ticket agent 
representatives stated in

[[Page 32805]]

their comments that when ticket agents collect ancillary service fees 
including baggage fees, they do so primarily with the authorizations of 
airlines and act as airlines' agents. Airline commenters did not 
dispute this assertion. This approach is also consistent with 49 U.S.C. 
42301 note prec., which requires ``each covered carrier'' to refund 
ancillary fees paid for services that are not provided. Ticket agents 
are encouraged to establish effective communication channels with 
airlines that authorize them to transact ancillary service fees and 
facilitate the refunds by providing necessary information to airlines.
    Furthermore, when a ticket agent collects ancillary service fees 
for multiple-carrier itineraries, the Department is requiring the 
operating carrier of the flight on which the paid ancillary service was 
not provided to issue the refund. To the extent that the carrier that 
failed to provide the ancillary service does not know whether the 
entity that collected the ancillary service fee from the passenger is a 
ticket agent or a carrier, that information can be obtained from the 
consumer. The Department believes that when no carrier is the merchant 
of record, the operating carrier that failed to provide the service is 
in the best position to issue refunds to the affected consumers. That 
carrier would know if a service was not provided on the entire flight 
that it operated or if specific passengers on that flight did not 
receive the service. Because the operating carrier that failed to 
provide the service is the entity that knows or can verify whether the 
passenger received the ancillary service that the passenger paid for 
when the service was to be provided on its own flight, that carrier is 
the responsible party for providing a prompt refund when due. The 
Department notes that, to the extent that the carrier that failed to 
provide the ancillary service does not know whether the entity that 
collected the ancillary service fee from the passenger is a ticket 
agent or a carrier, that information can be obtained from the consumer. 
Although the operating carrier that failed to provide the passenger 
that ancillary service remains responsible for providing the refund 
when a ticket agent collected the fee, a fee-for-service carrier that 
fails to provide the ancillary service may choose to rely on other 
entities, such as their marketing codeshare partner, to issue refunds 
to consumers on its behalf. The Department expects the parties to work 
together and develop effective communication to ensure that information 
necessary to process passengers' refunds is transmitted in an accurate 
and efficient manner.
    This final rule makes it an unfair practice for carriers that did 
not provide the paid for ancillary service to fail to timely inform the 
collecting carrier or, if a ticket agent collected the fee, the last 
operating carrier, that the service was not provided. The failure to 
provide in a timely manner information about ancillary services that 
have been paid for but not provided pauses the refund process and 
causes substantial harm to consumers by extending the timeline under 
which they are expected to receive the money they are entitled to. This 
harm is not reasonably avoidable by consumers as they have no control 
over how quickly this information is relayed which is what starts the 
refund process. The Department also sees no benefits to consumers and 
competition from this conduct. Without this requirement, money that is 
owed to consumers may be kept by others indefinitely, which in turn 
harms consumers and competition by penalizing good customer service and 
rewarding dilatory behavior.

IV. Providing Travel Vouchers or Credits to Passengers Due to Concerns 
Related to a Serious Communicable Disease

1. Statutory Authorities

    The NPRM: The Department proposed this rulemaking pursuant to the 
authority set forth in 49 U.S.C. 41712 to take action to address unfair 
or deceptive practices or unfair methods of competition by air 
carriers, foreign air carriers, or ticket agents. The Department also 
relied on its authority in 49 U.S.C. 41702 to require air carriers to 
provide safe and adequate service in interstate air transportation. The 
Department noted that 49 U.S.C. 40101(a) directs the Department in 
carrying out aviation economic programs, including issuing regulations 
under 49 U.S.C. 41702 and 41712, to consider certain enumerated factors 
as being in the public interest and consistent with public convenience 
and necessity. These factors include ``the availability of a variety of 
adequate, economic, efficient, and low-priced services without 
unreasonable discrimination or unfair or deceptive practices'' and 
``preventing unfair, deceptive, predatory, or anticompetitive practices 
in air transportation,'' as well as ``assigning and maintaining safety 
as the highest priority in air commerce.'' In issuing the NPRM, the 
Department also discussed the Airline Deregulation Act of 1978 (ADA) 
and noted that the ADA liberalized airlines' ability to freely price 
air travel products based on, among other things, consumer demand, and 
how airlines today offer a ``non-refundable'' ticket booking class that 
restricts passengers' ability to change or cancel the reserved flights 
in exchange for a lower price than tickets with more flexibilities for 
consumers.
    Regarding the authority under 49 U.S.C. 41712, the Department 
stated its tentative position that it is an ``unfair practice'' \76\ by 
an airline or a ticket agent to not provide non-expiring travel credits 
or vouchers to consumers who are restricted or prohibited from 
traveling by a governmental entity due to a serious communicable 
disease (e.g., as a result of a stay at home order, entry restriction, 
or border closure) or are advised by a medical professional or 
determine consistent with public health guidance (e.g., CDC guidance) 
not to travel to protect themselves or others from a serious 
communicable disease. The Department articulated that consumers are 
substantially harmed when they pay money for a service that they are 
unable to use because they were directed or advised by governmental 
entities or medical professionals or determine consistent with public 
health guidance not to travel to protect themselves or others from a 
serious communicable disease, and the airline or ticket agent does not 
provide a non-expiring credit or voucher or a refund. The Department 
pointed out that this substantial harm is not reasonably avoidable 
because the only way to avoid it is to disregard public health guidance 
or direction from governmental entities or medical professionals not to 
travel and risk inflicting serious health consequences on themselves or 
others. The Department added that the tangible and significant harm to 
consumers of losing the entire value of their ticket is not outweighed 
by potential benefits to consumers or competition. The Department 
expressed concern that, to avoid financial loss, consumers who have or 
may have contracted a serious communicable disease may choose to travel 
even when they have been advised not to travel, which is not in the 
public interest.
---------------------------------------------------------------------------

    \76\ A practice is ``unfair'' to consumers if it causes or is 
likely to cause substantial injury, which is not reasonably 
avoidable, and the harm is not outweighed by benefits to consumers 
or competition. Proof of intent is not necessary to establish 
unfairness. 14 CFR 399.79.
---------------------------------------------------------------------------

    The Department further stated that aside from enhanced protection 
of consumers' financial interests, it believes that a regulation 
providing protection to non-refundable ticket holders who are unable to 
travel by air

[[Page 32806]]

due to reasonable concerns related to a serious communicable disease is 
needed to promote and maintain a safe and adequate aviation 
transportation system. Citing 49 U.S.C. 41702, which requires U.S. 
carriers to provide safe and adequate interstate air transportation, 
and 49 U.S.C. 40101(a), which directs the Department to consider 
certain enumerated factors including ``assigning and maintaining safety 
as the highest priority in air commerce'' in carrying out aviation 
economic programs, the Department asserted that the proposals would 
encourage certain consumers to postpone travel and avoid potential harm 
to themselves and others in the aviation system. The Department sought 
comments on whether requiring airlines and ticket agents to issue 
travel credits or vouchers to non-refundable ticket holders in these 
situations and refunds when entities receive government assistance is 
an appropriate way for the Department to promote safe and adequate air 
transportation.
    Comments Received: Airline commenters stated that the NPRM failed 
to establish legal justification for the proposals relating to 
communicable diseases. A4A, RAA, IATA, AAPA, and Air Canada argued that 
the proposals interfere with airlines' tiered fare structure and 
threaten ``the availability of a variety of adequate, economic, 
efficient, and low-priced service'' and therefore, are inconsistent 
with the ADA and section 40101. They added that the proposals will 
result in a smaller pricing gap between refundable fares and non-
refundable fares, with tickets priced closer to the higher fare group, 
decreasing load factors, and impacting the commercial viability of 
marginal routes and remote markets. A4A and IATA commented that it is 
important to maintain non-refundable fares because they increase access 
to air travel by providing the least expensive form of travel with a 
trade-off that consumers who choose this option may not be able to 
change or cancel the tickets. Air Canada commented that the proposals 
violate the pricing freedom principle set forth in the U.S.--Canada 
bilateral agreement.
    A4A argued that any consumer harm stated in the Department's 
analysis for ``unfair'' practice can be mitigated by readily available 
market solutions such as travel insurance, refundable tickets, or 
airlines waiving change fees during a public health emergency. 
Similarly, two ticket agent representatives, ABTA and ASTA, commented 
that they oppose the proposal because the harm that the proposal is 
intending to address can be prevented by purchasing insurance or 
refundable tickets and is therefore reasonably avoidable by consumers. 
Furthermore, on the analysis for ``unfair'' practice, A4A contended 
that any harm to consumers during a public health emergency is not 
caused by a ``practice'' by a carrier or a ticket agent. A4A also 
commented that the asserted authorities under sections 41712 and 41702 
contradict the conclusion included in the Regulatory Impact Analysis 
(RIA) for the NPRM that states the proposals would not decrease the 
spread of a serious communicable disease by a measurable amount. 
Lastly, A4A commented that the proposal on travel credits or vouchers 
is inconsistent with the Federal Trade Commission (FTC) and agency 
practices of other modes of transportation and other industries.
    FlyersRights commented that the Department has the clear authority 
and responsibility to promulgate the pandemic related provisions to 
ensure airlines ``provide safe and adequate interstate air 
transportation.'' It stated that the proposals would ensure any 
passenger who has a serious communicable disease, who is complying with 
government orders pertaining to pandemics, or who is following the 
advice of governmental health and safety agencies, is able to cancel or 
change their flight reservations through non-expiring travel credits, 
releasing airlines from their obligation to transport the passengers 
during a pandemic or when the passengers are contagious. FlyersRights 
further argued that the Department also has the clear authority to 
determine it is an unfair or deceptive practice for airlines to deny 
refunds or non-expiring credits to passengers who have COVID-19 or 
COVID-19 symptoms, who have had immediate exposure to someone with 
COVID-19, or who have health conditions or fears that made it unsafe to 
fly on planes or congregate at airports.
    Regarding airlines' argument that the proposal will circumvent the 
``non-refundable'' feature of the ticket booking class and result in 
price increases, FlyersRights argued that in their view non-refundable 
tickets do not provide a cheaper alternative for passengers. Regarding 
airlines' rationale that enforcing the ``non-refundable'' feature 
provides needed certainty that confirmed passengers will actually take 
the flights and reduces the risk of airlines being unable to sell empty 
seats closer to flight departure, which in turn allows airlines to keep 
price low, FlyersRights commented that the same rationale can be 
applied to passengers when their flights are cancelled or changed by 
airlines closer to departure date, at which point passengers are likely 
to pay a premium for alternative transportation. According to 
FlyersRights, the airlines' rationale will result in the conclusion 
that passengers having their flights cancelled or significantly changed 
by airlines should receive a premium of the ticket price in addition to 
refunds.
    U.S. Travel Association commented that the proposals relating to 
serious communicable disease are problematic because they are overly 
broad, ambiguous, subjective, and outside of DOT authority. USTOA also 
opposed the proposals and argued that the circumstances triggering the 
proposed requirements are beyond airlines' control and the Department 
fails to explain why not complying with the proposed requirements is an 
unfair or deceptive practice. It also supported the airlines' argument 
that there are other solutions for consumers such as travel insurance 
or higher-priced fares with more flexibility. It stated that the RIA 
acknowledges that the proposals would not be likely to reduce the 
spread of disease, therefore weakening the argument for authority under 
section 41702. U.S. Chamber of Commerce stated that the proposals are 
overly broad and subject to abuse and the Department should require 
vouchers or credits to be issued only when there is a public health 
emergency that inhibits travel.
    DOT Responses: The Department has carefully considered the comments 
by stakeholders regarding the Department's stated authorities for 
imposing requirements to protect consumers whose air travel plans are 
affected by a serious communicable disease. We have reached the 
conclusion that such protections are consistent with the Department's 
authority to prohibit unfair or deceptive practices in air 
transportation and are necessary to ensure consumers are treated fairly 
when unexpected interruptions arising from a serious communicable 
disease result in them being unable to travel by air or hesitant to 
travel by air because traveling would pose potential harm to themselves 
or others. The Department has further concluded that such protections 
will contribute to the Department's mission in ensuring safe and 
adequate interstate air transportation through economic regulations and 
will not interfere with airlines' freedom of pricing as provided by the 
ADA and bilateral agreements between the United States and other 
jurisdictions.

[[Page 32807]]

A. Unfair Practice
    Airline commenters do not dispute that consumers suffer a harm if 
they do not receive travel credits or vouchers when they are unable to 
travel due to a serious communicable disease. Instead, airline 
commenters contended that the Department failed to demonstrate that not 
providing travel credits or vouchers to consumers is an ``unfair 
practice'' pursuant to 49 U.S.C. 41712 because: (1) the consumer harm 
articulated in the NPRM is the result of a communicable disease 
outbreak and is not caused by the ``practices'' of carriers; (2) the 
harm is avoidable by consumers through the purchase of travel insurance 
or refundable tickets; and (3) the harm is outweighed by countervailing 
benefits to consumers or competition. For the reasons described below, 
the Department disagrees with these assertions.
    In the 2020 final rule \77\ that codifies the definition of 
``unfair'' in 14 CFR 399.79, the Department also discussed the meaning 
of the term ``practice.'' While that rule did not adopt a definition 
for ``practice,'' it discussed how the Department would determine if an 
act or omission was a practice. To be a ``practice'' in the aviation 
consumer protection context, the conduct must generally be more than a 
single incident, however, ``even a single incident may be indicative of 
a practice if it reflects company policy, practice, training, or lack 
of training.'' \78\ A carrier policy of not providing travel credits or 
vouchers when consumers are unable to travel due to a serious 
communicable disease is a practice. The fact that the outbreak of a 
serious communicable disease is not the fault of a carrier does not 
make carriers' policies of not providing travel credits or vouchers any 
less of a practice.
---------------------------------------------------------------------------

    \77\ Final Rule, Defining Unfair Or Deceptive Practices, 85 FR 
78707, December 7, 2020.
    \78\ See 85 FR 78707, 78710-78711 (Dec. 7, 2020).
---------------------------------------------------------------------------

    The Department is not persuaded by the argument by airlines and 
ticket agents that the proposed requirements ignore readily available 
market solutions that could prevent the consumer harm. While refundable 
tickets and travel insurance are intended to address uncertainty in 
travel, the Department believes that it is unreasonable to expect 
consumers to purchase travel insurance or refundable tickets to protect 
their money just in case a pandemic occurs, or just in case a 
government imposes a restriction or prohibition in relation to a 
serious communicable disease when a pandemic has not been declared. 
Also, some travel insurance policies do not provide protection against 
cancellations related to a pandemic. The Department agrees that persons 
who purchase airline tickets after a pandemic has been declared should 
know the potential risks of purchasing a non-refundable ticket without 
travel insurance. These consumers have the option to purchase 
refundable tickets or appropriate travel insurance to avoid financial 
loss should they not be able to travel due to a pandemic-related 
reason. For consumers who are advised not to travel to protect 
themselves during a public health emergency or consumers who are 
prohibited or required to be quarantined for a substantial portion of 
their trip by a governmental entity, the Department in this final rule 
requires airlines to provide travel credits and vouchers to individuals 
who purchased tickets prior to a public health emergency being declared 
or, if there is no declaration of a public health emergency, before the 
government prohibition or restriction for travel to that region. In 
addition, the reason that the individuals are not traveling must be 
because they want to protect themselves from a serious communicable 
disease that led to the declaration of the public health emergency or 
their travel is affected by the government prohibition/restriction 
related to a serious communicable disease.
    With respect to consumers who have or are likely to have contracted 
a serious communicable disease, the Department requires that airlines 
provide travel credits or vouchers to them regardless of whether their 
travel is during a public health emergency and regardless of when they 
purchased their tickets. It would not be reasonable to expect a 
consumer to purchase a refundable ticket or travel insurance to ensure 
that his or her financial interests are protected in case the consumer 
contracts a serious communicable disease when a public health emergency 
has not been declared. A consumer could not reasonably avoid the harm 
of financial loss under those circumstances because the consumer likely 
would not even think of conducting a risk assessment of contracting a 
serious communicable disease when a public health emergency has not 
been declared. For a consumer who purchased the ticket while a public 
health emergency is ongoing, the Department believes that this 
individual could have done a risk assessment and decided to purchase 
travel insurance or a refundable ticket if the individual wished to not 
risk financial harm. This individual traveling on a flight to avoid 
financial harm, however, will cause or is likely to cause substantial 
harm to the health of the other passengers on the flight. These other 
passengers are not reasonably able to avoid this harm as they have no 
control over this individual's actions and whether the airline seats 
them in close proximity to this individual. The Department believes 
that airlines not providing an incentive for the infected consumer to 
postpone travel is likely to cause significant harm to other passengers 
on the same flight by substantially increasing the likelihood of these 
passengers being exposed to the disease and infected during the flight 
and such harm cannot be reasonably avoided by these passengers as they 
are likely to have no knowledge about them being seated in a close 
proximity to an infected passenger. This harm is not outweighed by 
benefits to consumers or competition as suggested by airlines. The 
Department is of the view that the requirement to provide travel 
credits or vouchers would not result in the elimination of 
nonrefundable fares or in distorting the difference between a 
refundable and non-refundable fare as some commenters have suggested 
given that a public health emergency affecting travel to, within, and 
from the United States on a large scale is infrequent and this 
requirement only applies to consumers who purchased tickets prior to a 
public health emergency and are unable or advised not to travel during 
a public health emergency. Further, not providing vouchers and credits 
to consumers who are advised not to travel during a pandemic could 
result in some consumers risking their health or the health of others 
to avoid financial loss, which is not in the public interest. The 
Department doesn't believe there would be any benefit to consumers or 
competition among airlines in infected or potentially infected 
travelers possibly choosing to travel by air and infecting other 
passengers.
B. Assertion of Inconsistency With FTC Policies
    Regarding A4A's comment that the proposals relating to serious 
communicable diseases are inconsistent with the policies of the FTC, 
the practices of other modes of transportation, other segments of the 
travel industry, or other industries, the Department notes that its 
unfair or deceptive practices regulations are modeled on FTC's 
regulations and policies. To the extent that there are differences 
between DOT and FTC regulations, the Department notes that when 
determining its own regulations and policies, it routinely considers, 
among other things, the unique characteristics of the aviation

[[Page 32808]]

environment and context as well as any problematic areas, as reflected 
by consumer complaints, for which a regulatory remedy should be 
considered. In this instance, the Department has considered the large 
number of consumer complaints it received during the COVID-19 pandemic 
regarding the hardships consumers experienced when requesting credits 
from airlines so they could postpone travel. These hardships include 
airlines' refusal to issue credits or imposing limitations on the 
credits that consumers view as unreasonable. In the Department's view, 
these complaints are clear evidence that a regulation pursuant to the 
Department's authority is needed. While the Department views 
consistency among Federal consumer protection regulations as likely to 
benefit consumers by reducing confusion, the Department also 
appreciates the importance of regulations tailored to each regulated 
industry.
C. Airline Deregulation Act
    The Department disagrees with the comments that a requirement for 
airlines to provide travel credits or vouchers for passengers unable to 
travel due to a serious communicable disease is inconsistent with the 
Airline Deregulation Act of 1978 and 49 U.S.C. 40101(a). These 
commenters argue that the proposals interfere with airlines' freedom of 
pricing, including the freedom of offering tiered fare structure that 
incorporates different pricing reflecting the levels of flexibilities 
for consumers to cancel or change tickets. In essence, the commenters 
argue that the proposals will largely require more flexibility for non-
refundable tickets, blurring the lines between refundable fares and 
non-refundable fares, resulting in higher prices for all consumers and 
reduced load factors that also, in some cases, impact the commercial 
viability of small and remote markets. IATA and A4A also note, in their 
substantive comments on the Regulatory Impact Analysis for the proposed 
rule, that the proposal to require travel credits and vouchers may 
result in airlines eliminating basic economy fares if airlines can't 
enforce basic economy change restrictions.
    First and foremost, the proposals that we are finalizing here do 
not affect the restrictions applicable to non-refundable tickets in 
most cases outside of the context of a serious communicable disease 
outbreak, such as the COVID-19 pandemic. The requirements protecting 
consumers who are prohibited or restricted from travel by a government 
order or consumers who are advised not to travel during a public health 
emergency to protect themselves apply only to very specific cases in 
which non-refundable ticket holders are impacted by an unforeseeable 
event relating to a serious communicable disease and, as the result of 
the impact of the event, consumers are either unable or advised not to 
travel. Further, the Department is revising the proposal to enhance 
measures airlines and ticket agents may adopt to prevent fraud and 
abuse. For similar reasons, the Department disagrees with Air Canada's 
comment that the proposals violate the pricing freedom principle set 
forth in the bilateral aviation agreement between the United States and 
Canada. Airlines can fully comply with the consumer protection 
requirements finalized in this rule and continue to exercise freedom of 
pricing and offer a variety of air travel products, including non-
refundable fares with lower prices and more restrictions, to meet the 
market demands for adequate, economic, and efficient air transportation 
services.
D. Safe and Adequate Interstate Air Transportation
    With regard to the application of the legal authority under 49 
U.S.C. 41702, which requires air carriers to provide safe and adequate 
interstate air transportation, airline and ticket agent commenters 
argue that the RIA prepared by the Department concludes that the 
proposals would not decrease the spread of a serious communicable 
disease by a measurable amount. The commenters state that the RIA 
conclusion contradicts the NPRM's stated purpose of ensuring safe and 
adequate interstate air transportation. We disagree. The Department 
acknowledges that the RIA accompanying the NPRM stated that the 
proposals would not have decreased the spread of serious communicable 
disease by a measurable amount. In the RIA accompanying this final 
rule, the Department estimates that 0.7% of COVID-19 infections were 
transmitted on aircraft.\79\ The Department continues to believe that 
the requirement to provide travel credits or vouchers to consumers who 
have or are likely to have contracted a serious communicable disease 
and would pose a direct threat to the health of others will reduce the 
likelihood of passengers contracting communicable diseases in air 
travel. As stated in the NPRM, it is the Department's understanding 
that airlines in general would allow and prefer that a passenger with a 
serious communicable disease in the contagious stage not travel, and 
airlines would likely grant an exception from the tickets' non-
refundability to allow the passenger to reschedule travel. The 
Department believes the low COVID-19 transmission rate was influenced 
by airlines' actions of allowing passengers to reschedule travel. By 
making the airlines' voluntary action mandatory, this rule would 
further ensure safe and adequate interstate air transportation as 
passengers would be assured that they can reschedule travel for when 
they are well without facing financial loss.
---------------------------------------------------------------------------

    \79\ See, Barnett, A., Fleming, K. Covid-19 Infection Risk on US 
Domestic Airlines. July 2, 2022, https://link.springer.com/article/10.1007/s10729-022-09603-6#Sec3.
---------------------------------------------------------------------------

2. Need for Rulemaking

    The NPRM: In the NPRM, the Department stated its view that a 
regulation is needed to ensure consumers are consistently treated 
fairly when they are unable or advised not to travel due to reasonable 
concerns related to a serious communicable disease. The Department 
further explained that the Department's existing regulation does not 
require airlines to issue refunds or travel credits to passengers 
holding non-refundable tickets when the airline operated the flight and 
the passengers do not travel, regardless of the reason that the 
passenger does not travel. The Department described its goal as 
protecting consumers' financial interests when the disruptions to their 
travel plans were caused by public health concerns beyond their 
control. The Department also shared that it expects that the financial 
protection would further incentivize individuals to postpone travel 
when they are advised by a medical professional or determine consistent 
with public health guidance not to travel because they have or may have 
a serious communicable disease that would pose a threat to others. The 
Department described how the COVID-19 pandemic imposed unprecedented 
challenges on air travelers when numerous consumers were caught off 
guard by the sudden events of government travel restrictions or the 
widespread incidence of a serious communicable disease that impacted 
their travel plans. The Department expressed its view that the need for 
regulatory intervention arises when, despite airlines voluntarily 
offering travel credits or vouchers in situations where a passenger 
states that he or she was unable to travel or advised not to travel due 
to COVID-19 related reasons, consumers were frustrated by the short 
validity periods of the credits and vouchers, the strict conditions 
imposed

[[Page 32809]]

on them, and the difficulties to obtain and redeem them.
    The Department stated its view that consumers are acting reasonably 
when they decide to not travel because they have or may have contracted 
a serious communicable disease that may pose risks to others during air 
travel, or because their own health conditions are such that traveling 
during a public health emergency may put them at higher risk of harm to 
their health. Further, the Department pointed out that consumers may be 
unable to travel due to government travel restrictions related to the 
pandemic. In the NPRM, the Department stated its tentative position 
that a regulation is needed to ensure consumers are consistently 
treated fairly when they are unable or advised not to travel due to 
reasonable concerns related to a serious communicable disease. It 
further stated that a regulation defining the baseline of 
accommodations to non-refundable ticket holders and identifying the 
specific circumstances that would give rise to the need to accommodate 
passengers when they cancel or postpone their travel would greatly 
enhance consumer protection. The Department pointed out that without 
such requirements, airlines and ticket agents may have different 
interpretations of what types of events would be sufficient to justify 
a deviation from the non-refundable terms of a ticket, and such 
different application of interpretations may result in increased 
consumer confusion and frustration, as well as increased administrative 
cost to airlines and ticket agents for handling customer service 
requests and complaints from consumers with different perspectives.
    Comments Received: Most ticket agent representatives argued that 
the proposals may create tremendous financial burden and disincentivize 
airlines from offering non-refundable fares. Global Business Travel 
Association argued that airlines should have the flexibility to deal 
with public health emergency related issues. It further added that the 
Department, airlines, and ticket agents lack public health expertise to 
navigate the proposals.
    FlyersRights asserted that without the proposed protections, 
consumers would be forced to forfeit the money they paid for the 
tickets or to take a flight against the orders, recommendations, or 
medical advice of government health agencies or medical professionals, 
resulting in some passengers making the financial decisions to fly 
while sick, contagious, or immunocompromised, or with the strong 
suspicion of being sick.
    National Consumers League expressed its view that the Department 
should require airlines and ticket agents to provide travel credits or 
vouchers to consumers who cannot fly due to health-related reasons, 
regardless of public health emergency declarations, public health 
agency guidance, or serious risk of communicable disease. It commented 
that developing a health condition that would make air travel dangerous 
to the passenger or others after purchasing the airline ticket is 
something beyond the passenger's control. It suggested that it is in 
the public interest for the passenger to be protected from losing the 
ticket investment. Travelers United also supported a broader ``airline 
sick passenger rule'' that would require airlines to allow passengers 
with legitimate illnesses to postpone flights without additional costs. 
Travelers United provided examples of inflight disease outbreaks and 
argues that airlines charging change fees for sick passengers to 
postpone travel could result in additional cost to airlines.
    U.S. Travel Association asserted that the proposals affect 
passengers who have bought travel insurance policies because they would 
have to wait until the credits or vouchers expire before they can be 
reimbursed by the insurance carrier, and many passengers would not 
prefer vouchers. It further stated that the proposals introduce fraud 
risk because some consumers may attempt to file insurance claims and 
also receive credits or vouchers. Travel Tech supported a rulemaking to 
address consumer protection in the context of communicable disease but 
argued that the requirements should exempt ticket agents.
    DOT Responses: The Department continues to be of the view that a 
regulation is needed to ensure consumers are consistently treated 
fairly when they are unable or advised not to travel due to reasonable 
concerns related to a serious communicable disease. Approximately 20% 
of the refund complaints that the Department received from January 1, 
2020 to June 30, 2021, involved instances in which passengers with non-
refundable tickets chose not to travel because of considerations 
related to the COVID-19 pandemic.\80\ As for U.S. Travel Association's 
comment that insurance companies require consumers to wait until 
credits or vouchers expire before consumers can be reimbursed, the 
Department anticipates that insurance companies will offer a variety of 
products that meet consumers' different needs to stay competitive after 
the final rule takes effect. The Department also acknowledges the 
concerns by several consumer rights advocacy groups regarding the need 
for a broader regulation requiring airlines to allow passengers with 
any legitimate illness to postpone travel without additional cost. 
Because the NPRM's focus is on the three categories of consumers 
affected by a serious communicable disease, however, and the public did 
not have the opportunity to fully consider and comment on this broader 
issue, we decline to address it here.
---------------------------------------------------------------------------

    \80\ See Report to the White House Competition Council, p. 11.
---------------------------------------------------------------------------

3. Covered Entities

    The NPRM: The Department proposed to require the entity that 
``sold'' an airline ticket (i.e., the entity identified in the 
consumer's financial statement, such as credit card statement), whether 
a carrier or a ticket agent, provide travel credits or vouchers to 
eligible consumers affected by a serious communicable disease. The 
Department noted, however, that it is open to suggestions on whether 
the entity obligated to issue credits or vouchers should be determined 
based on other criteria and solicited comment on whether airlines 
should solely be responsible for issuing credits or vouchers because 
they are the direct providers of the air transportation paid for by 
consumers and the ultimate recipients of the consumer funds. The 
Department asked how it can best ensure that credits and vouchers 
issued by an airline is prompt if a ticket agent is the entity that 
``sold'' the ticket. The Department inquired about what role and 
responsibility it should place on ticket agents that sold airline 
tickets to facilitate the issuance of credits or vouchers by airlines 
when the ticket agents are the principals of the transactions.
    Comments Received: A4A supported the proposal to require ticket 
agents to provide travel credits valid for use within the ticket 
agent's system, arguing that ticket agents cannot issue credits valid 
for use on a carrier. National Consumers League supported the 
Department's proposal as applicable to airlines and ticket agents. 
Ticket agent representatives expressed concerns about applying the 
proposals to ticket agents. USTOA stated that the Department did not 
consider the training and administrative costs for ticket agents to 
screen passenger documentation. It further stated that such a 
requirement has never been placed on ticket agents, only on airlines. 
Travel Management Coalition commented that airlines should issue

[[Page 32810]]

credits to eligible travelers, but that for business travelers, the 
corporate clients would not want the travelers to get credits that can 
be used for their personal travel. It suggested that ticket agents 
should be involved in those situations for the issuance and management 
of credits. Travel Tech provided the following reasons for which it 
believes that the proposals should not apply to ticket agents: (1) 
airlines should be the origination of the credits that are airline 
instruments designed for future travel on the airline on which the 
consumer originally scheduled to travel, even when the ticket agents 
are the merchants of record; (2) airline fare rules dictate the 
conditions of the credits; (3) ticket agents may have assisted the 
issuance of credits during the COVID-19 pandemic according to the 
instructions provided by airlines; requiring ticket agents to issue 
their own credits is administratively wasteful because ticket agents 
will have to work with each airline and create their own credits; and 
(4) requiring ticket agents to issue credits can be confusing to 
consumers because there could be situations in which the rule empowers 
both airlines and ticket agents to evaluate consumer documentation, 
which may create inconsistency.
    DOT Responses: The Department is requiring that airlines are the 
sole entities responsible for issuing travel credits or vouchers to 
eligible consumers whose travel is affected by a serious communicable 
disease, even if the original tickets were purchased from a ticket 
agent who acted as the merchant of record. The comments from airlines 
and ticket agents noted that ticket agents cannot issue credits valid 
for future travel with a carrier. The Department also agrees with the 
comment that it is a significant burden to create and manage their own 
credits or voucher systems including coordinating with various airlines 
to ensure that the credits or vouchers are usable. The Department 
considers this burden to be particularly substantial for small ticket 
agents. In addition, like Travel Tech, the Department believes having 
both airlines and ticket agents issue travel credits and vouchers could 
further increase the likelihood of consumer confusion. Airlines that 
are the merchants of record for the ticket transactions will be 
responsible for issuing the travel credits or vouchers to eligible 
consumers. When a ticket agent is the merchant of record, each 
operating carrier is responsible for issuing a travel credit or voucher 
to the consumer. Under this final rule, although a fee-for-service 
carrier operating the flight is ultimately responsible for issuing 
travel credits or vouchers for ticket agent-transacted itineraries, it 
is permissible for the carrier to rely on other entities, such as their 
marketing codeshare partner, to process and issue travel credits or 
vouchers to consumers on its behalf.
    This does not mean that ticket agents don't have a role to play in 
the issuance of travel credits or vouchers. The Department encourages 
ticket agents to assist airlines by providing information that airlines 
may need to complete the issuance of the travel credit or voucher, such 
as consumers' contact information or the price paid by consumers for 
the original tickets.

4. Definition of Serious Communicable Disease

    The NPRM: The Department proposed to define a serious communicable 
disease to mean a communicable disease as defined in 42 CFR 70.1 \81\ 
that has serious consequences and can be easily transmitted by casual 
contact in an aircraft cabin environment. The Department did not 
propose to include a list of communicable diseases under the 
definition. Instead, it stated that the analysis of whether a 
communicable disease is ``serious'' under the NPRM is similar to the 
analysis of ``direct threat'' under the Department's Air Carrier Access 
Act regulation,\82\ which considers the significance of the 
consequences of a communicable disease and the degree to which it can 
be readily transmitted by casual contact in an aircraft cabin 
environment. The Department further provided examples of diseases that 
do and do not meet the two-prong analysis under the proposed 
definition--readily transmissible in the aircraft cabin and likely to 
result in significant health consequences. For example, the Department 
explained that the common cold is readily transmissible in an aircraft 
cabin environment but does not have severe health consequences. AIDS 
has serious health consequences but is not readily transmissible in an 
aircraft cabin environment. Both the common cold and AIDS would not be 
considered serious communicable diseases. SARS is readily transmissible 
in an aircraft cabin environment and has severe health consequences. 
SARS would be considered a serious communicable disease. The Department 
asked whether it is sufficiently clear to the regulated entities and 
the public as to which types of communicable diseases would and would 
not be considered serious.
---------------------------------------------------------------------------

    \81\ 42 CFR 70.1 states ``Communicable diseases means illnesses 
due to infectious agents or their toxic products, which may be 
transmitted from a reservoir to a susceptible host either directly 
as from an infected person or animal or indirectly through the 
agency of an intermediate plant or animal host, vector, or the 
inanimate environment.''
    \82\ See 14 CFR 382.21(b)(2).
---------------------------------------------------------------------------

    Comments Received: Airline commenters were concerned about the 
proposed definition for ``serious communicable disease,'' stating it 
uses terms that are too vague. A4A asked for more clarity on the terms 
``easily transmissible in the aircraft cabin'' and ``casual contact.'' 
IATA further commented that the term ``serious consequence'' in the 
analysis for serious communicable disease does not consider that the 
consequence of a disease could differ from person to person.
    Airline commenters also disputed statements in the NPRM that COVID-
19 is easily transmissible in aircraft cabins. In written comments, 
IATA and A4A separately asserted that the NPRM's claim that COVID-19 is 
easily transmissible in aircraft cabin is inconsistent with the 
research that shows it is not highly transmissible in aircraft cabin 
due to the filtration and air circulation system. During the March 21, 
2023 public hearing, however, an IATA Medical Advisor suggested that 
the final rule should highlight only those diseases that medical 
consensus suggests is likely to be spread by aerosols or droplets in an 
aircraft environment as ``serious communicable diseases,'' which he 
stated is likely to include only respiratory infections that are highly 
contagious such as measles or COVID-19 and perhaps in unusual cases, 
gastrointestinal ones such as Norovirus. He opined that any medical 
assessment even by medical professionals needs to have the information 
on what is a ``serious communicable disease'' to adequately determine 
the risk onboard. The IATA Medical Advisor also pointed out that 
certain diseases that could be considered communicable in other 
locations may be less threatening in aircraft environment due to cabin 
conditioning flow rates, filtration systems, and other aircraft 
characteristics making transmission significantly less likely than in 
other public gathering locations.
    DOT Responses: The Department is adopting the proposed definition 
for ``serious communicable disease,'' which means a communicable 
disease as defined in 42 CFR 70.1 that has serious health consequences 
and can be easily transmitted by casual contact in an aircraft cabin 
environment. The Department declines to adopt a definition with an 
exclusive list of

[[Page 32811]]

communicable diseases or highlight only those communicable diseases 
that are spread by aerosols or droplets in an aircraft environment 
because the Department does not believe a list based on currently known 
diseases would serve its purpose in the long term. The definition of 
serious communicable disease continues to include the examples provided 
in the NPRM to demonstrate that a ``serious communicable disease'' must 
meet both prongs of the definition--``serious health consequence'' and 
``can be easily transmitted by casual contact in an aircraft cabin 
environment.''
    The Department acknowledges that the consequence of contracting a 
communicable disease on an individual may vary depending on the 
individual's health condition. ``Serious health consequence'' is 
referring to the health of an average person rather than health of each 
individual. For example, the average person would not have serious 
health consequences from a common cold, though it can be life 
threatening for people with weak immune systems, such as a cancer 
patient undergoing treatment.
    As for the meaning of ``can be easily transmitted by casual contact 
in an aircraft cabin environment,'' the Department has reviewed public 
health guidance issued by CDC and WHO, which find that although modern 
aircraft ventilation and air filtration systems do play an important 
role in reducing the likelihood of disease transmissions, transmissions 
of infection may occur \83\ between passengers who are seated in the 
same area of an aircraft, usually by contact with infectious droplets 
(as a result of the infected individual coughing or sneezing) or by 
touch (direct contact or touching communal surfaces that other 
passengers touch).\84\ Accordingly, the Department determines that a 
communicable disease that ``can be easily transmitted by casual contact 
in the aircraft cabin environment'' to mean a disease that is easily 
spread to others in an aircraft cabin through general activities of 
passengers such as sitting next to someone, shaking hands, talking to 
someone, or touching communal surfaces.
---------------------------------------------------------------------------

    \83\ A study led by MIT scholars estimated that between June 
2020 and February 2021, the probability of contracting COVID-19 
onboard an average domestic flight was about 1 in 2000. See fn. 75, 
supra.
    \84\ See, CDC Air Travel Yellow Book 2024, https://wwwnc.cdc.gov/travel/yellowbook/2024/air-land-sea/air-travel#inflight; World Health Organization Air Travel Advice, 
https://www.who.int/news-room/questions-and-answers/item/air-travel-advice.
---------------------------------------------------------------------------

5. Passengers Who Are Advised by a Medical Professional Not To Travel 
To Protect Themselves During a Public Health Emergency

    The NPRM: The Department proposed that, when there is a public 
health emergency, airlines and ticket agents must provide non-expiring 
travel credits or vouchers to non-refundable ticket holders who are 
advised by a medical professional or determine consistent with public 
health guidance issued by the CDC, comparable agencies, or WHO not to 
travel by air to protect themselves from a serious communicable 
disease. Under this NPRM, to be eligible for the travel credits or 
vouchers, the non-refundable ticket holder must have booked the ticket 
before the beginning of the public health emergency and the travel date 
must be during the public health emergency. The Department proposed to 
define ``public health emergency'' based on the U.S. Department of 
Health and Human Services (HHS) regulation addressing measures taken by 
CDC to quarantine or otherwise prevent the spread of communicable 
diseases, 42 CFR 70.1.\85\ The Department sought comments regarding 
whether the proposal is reasonable with respect to the passengers 
protected, asking whether the protection should be extended to 
passengers who purchased their tickets after the public health 
emergency is declared but did not develop the underlying health 
condition until after the tickets are purchased. The Department also 
sought comments regarding whether it is reasonable to extend the 
proposed requirements to passengers who sought to defer travel because 
they are the caregivers of persons with a health condition and at a 
higher risk, and passengers who would have difficulty traveling alone 
when their travel companion qualifies for a voucher or refund. The 
Department also asked whether there are obstacles airlines and ticket 
agents faced when some of them voluntarily provided travel vouchers to 
consumers who decided not to travel during the COVID-19 pandemic. The 
Department also solicited comment on whether consumers experienced 
difficulties in redeeming credits and vouchers issued to them and what 
the Department should consider in the proposed regulation to address or 
resolve these difficulties.
---------------------------------------------------------------------------

    \85\ The definition for public health emergency in 42 CFR 70.1 
is: (1) Any communicable disease event as determined by the Director 
with either documented or significant potential for regional, 
national, or international communicable disease spread or that is 
highly likely to cause death or serious illness if not properly 
controlled; or (2) Any communicable disease event described in a 
declaration by the Secretary pursuant to 319(a) of the Public Health 
Service Act (42 U.S.C. 247d (a)); or (3) Any communicable disease 
event the occurrence of which is notified to the World Health 
Organization, in accordance with Articles 6 and 7 of the 
International Health Regulations, as one that may constitute a 
Public Health Emergency of International Concern; or (4) Any 
communicable disease event the occurrence of which is determined by 
the Director-General of the World Health Organization, in accordance 
with Article 12 of the International Health Regulations, to 
constitute a Public Health Emergency of International Concern; or 
(5) Any communicable disease event for which the Director-General of 
the World Health Organization, in accordance with Articles 15 or 16 
of the International Health Regulations, has issued temporary or 
standing recommendations for purposes of preventing or promptly 
detecting the occurrence or reoccurrence of the communicable 
disease.
---------------------------------------------------------------------------

    Comments Received: Airline commenters stated that the proposal 
includes vague and unclear terms and subjective standards that will 
cause substantial consumer and carrier confusion. A4A commented that 
the proposed definition for ``public health emergency'' is too broad. 
It noted that there are over 100 events during the past five years that 
would qualify under the definition. It further argued that there needs 
to be a connection between a passenger's travel and the public health 
emergency, and that an event in another country should not be used to 
protect domestic passengers. IATA argued that governments around the 
world took different approaches towards COVID-19, from being very 
restrictive to extremely permissive, but the NPRM presupposes that all 
governments take a uniform approach. Both A4A and IATA also commented 
that more clarity is needed on what are ``comparable agencies in other 
countries'' that would be qualified to issue the public health 
guidance. AAPA opined that it is difficult for airlines to verify the 
authenticity of the documentation from various governments that 
passengers may provide airlines to prove their eligibility for travel 
credits or vouchers. Further, A4A and IATA commented that the term 
``medical professional'' is a vague term that is not defined. A4A and 
IATA both opposed the proposal to allow passengers to ``determine'' 
whether they should travel. A4A argued that this is a subjective 
standard and IATA added that allowing passengers to self-determine 
whether they should travel based on public health guidance is 
inconsistent with the rule text that allows airlines to request medical 
documentation.
    A4A suggested and IATA supported that: (1) the requirement cover 
only a public health emergency that occurs in the United States at a 
national level; (2) eligible passengers must have purchased their 
tickets before the public health

[[Page 32812]]

emergency declaration; (3) the travel must have been planned to occur 
during the public health emergency; and (4) the reason that an eligible 
passenger is not traveling must be because of the public health 
emergency. Similar to A4A, U.S. Chamber of Commerce also suggested that 
the Department should limit travel credits or vouchers to medical 
situations when there is a Public Health Emergency and to situations 
that inhibit travel (such as a prohibition by a government entity). 
U.S. Chamber of Commerce commented that the Department's proposal would 
be subject to abuse by bad actors. SATA opposed the proposal and stated 
that when passengers holding non-refundable tickets are not comfortable 
with traveling and the flight is operated, airlines offer higher fares 
with more flexibilities and airlines should not be obligated to issue 
refunds or credits.
    Regarding the Department's inquiry in the NPRM on whether the 
credits or vouchers protection should be extended to passengers who are 
the caregivers of persons with a health condition and at a higher risk, 
and passengers who would have difficulty traveling alone when their 
travel companion qualifies for a voucher, A4A opposed the expansion of 
the proposal and argued that including flight credits to caregivers 
will exacerbate the potential for mistakes, misunderstandings, and 
fraud by introducing another undefined and unclear mandate. IATA also 
opposed the expansion of the credits to caregivers. It further argued 
that children should not be eligible for credits based on the provision 
of a credit to their adult companion because parents concerned about 
such a possibility can purchase travel insurance. AAPA opposed the idea 
of providing travel credits or vouchers to passengers who are 
caregivers of individuals with underlying health conditions, arguing 
that this is too broad a scope that would be open to fraud. USTOA also 
opposed requiring credits or voucher to be issued to caregivers of 
persons with health conditions, either though family relationship or 
employment.
    Many individual consumers expressed their general support for the 
proposals relating to serious communicable diseases, including the 
proposal to provide travel credits and vouchers to passengers who do 
not travel during a public health emergency because of concerns about 
their health. Consumer rights groups commented that the proposals 
should be expanded to cover medical situations beyond public health 
emergency or communicable diseases. The ACPAC voted to support the 
Department's proposal to protect travelers affected by a serious 
communicable disease, including the proposal to require airlines and 
ticket agents to issue travel credits or vouchers to passengers who 
purchased the airline ticket before a public health emergency was 
declared, the consumer is scheduled to travel during the public health 
emergency, and the consumer is advised by a medical professional or 
determines consistent with public health guidance issued by CDC, 
comparable agencies in other countries, or the WHO not to travel by air 
to protect himself or herself from a serious communicable disease.\86\ 
At least one individual commenter supported providing regulatory 
protections for caregivers.
---------------------------------------------------------------------------

    \86\ Among the four members of ACPAC, three members voted in 
support of this recommendation and the member representing airlines 
abstained, stating that there are many terms in the proposal that 
are not clear and may cause more passenger confusion.
---------------------------------------------------------------------------

    DOT Responses: After reviewing and carefully considering the 
comments, the Department is requiring airlines to provide travel 
credits or vouchers to passengers who have been advised by licensed 
treating medical professionals not to travel during a public health 
emergency to protect themselves from a serious communicable disease. 
The Department is not expanding this requirement to provide travel 
credits and vouchers to cover situations beyond a public health 
emergency or serious communicable diseases as suggested by consumer 
groups. The Department agrees with A4A and U.S. Chamber of Commerce 
that the requirement for travel credits or vouchers should be limited 
to medical situations when there is a public health emergency. Under 
this rule, to be eligible for a travel credit or voucher, the passenger 
must have purchased the airline ticket before the public health 
emergency was declared, and the ticket must be for an itinerary to, 
from, or within the United States that involves traveling to or from a 
point affected by the public health emergency during the public health 
emergency.
    The Department does not agree with the suggestion from airlines to 
limit the requirement to provide travel credits or vouchers to only 
public health emergencies that occur in the United States because an 
outbreak of a serious communicable disease in another country can 
affect passengers traveling between the United States and that country. 
However, the Department agrees that there needs to be a connection 
between a passenger's travel and the public health emergency. For 
example, a public health emergency relating to an outbreak of Ebola in 
another country would be grounds for a passenger to request a travel 
credit or voucher only if the passenger's planned travel, as reflected 
in a single itinerary, is between the United States and that country. 
In that regard, if the passenger booked two separate tickets, one from 
the United States to a connecting third country not subject to the 
public health emergency, and the other from the third country to the 
outbreak country, the Department would not require airlines to issue 
credits or vouchers based on the passenger's health-related concerns 
about traveling to the outbreak country.
    The Department is persuaded by comments that its proposal to allow 
individuals to self-determine consistent with public health guidance 
whether to travel to protect themselves from a serious communicable 
disease is subjective. Unless otherwise directed by HHS, this rule 
allows airlines to require medical documentation from passengers who 
state that they do not wish to travel during a public health emergency 
for a medical reason to protect themselves. An airline may not require 
passengers to provide documentation from a medical professional if HHS 
issues public health guidance declaring that requiring such medical 
documentation is not in the public interest.
    The Department further acknowledges comments from industry seeking 
clarity about the meaning of the terms ``medical professional'' and 
``comparable agencies in other countries.'' In this final rule, the 
term ``medical professional,'' is defined in the regulation. The 
Department is adopting a definition for the term ``licensed treating 
medical professional'' to mean an individual, including a physician, a 
nurse practitioner, and a physician's assistant, who is licensed or 
authorized under the law of a State or territory in the United States 
or a comparable jurisdiction in another country to engage in the 
practice of medicine, to diagnose or treat a patient for a specific 
physical health condition that is the reason for the passenger to 
request a travel credit or voucher. The Department is providing further 
explanation of this definition in the section that discusses medical 
documentation. The Department no longer uses the term ``comparable 
agencies in other countries'' when referencing public health guidance 
that the consumers' licensed treating medical professionals may rely on 
or reference when providing professional opinions regarding whether the 
consumers should travel because that term is also subjective. In this 
final rule, the Department states ``consistent with

[[Page 32813]]

public health guidance issued by the Centers for Disease Control and 
Prevention (CDC) or the World Health Organization (WHO).''
    Regarding whether caregivers of high-risk passengers should be 
protected, the Department is persuaded that extending the requirement 
to provide travel credits or vouchers to caregivers of people who have 
health conditions that place them at a higher risk of contracting a 
serious communicable disease may increase the risk of fraud. The 
Department also agrees that the complexity of appropriately defining 
this expanded group and verifying their eligibility can be burdensome 
for airlines. While not expanding the scope of the rule to these 
consumers, the Department encourages carriers to provide good customer 
service by offering maximum flexibilities to consumers who request to 
postpone their travel due to a genuine concern about the health of 
their families and others who are dependent upon them for care.

6. Passengers Who Are Prohibited From Travel or Required To Quarantine 
for a Substantial Portion of Trip by Government Entity

    The NPRM: The Department proposed to require airlines and ticket 
agents to provide travel credits or vouchers to ticket holders who are 
unable to travel because of a U.S. (Federal, State, or local) or 
foreign government restriction or prohibition related to a serious 
communicable disease regardless of whether there is a public health 
emergency. Examples of such government restrictions or prohibitions 
include government issued ``stay at home'' orders, ``shelter in place'' 
orders, or government-instituted border closure or entry restrictions 
because of a serious communicable disease for certain types of 
passengers. The Department further explained that under the proposal, 
the requirement would cover passengers who can travel under the 
government order, but the restriction has rendered the passenger's 
travel ``meaningless.'' Passengers would not be entitled to a travel 
credit or voucher if they simply failed to exercise due diligence to 
ensure that all conditions for travel imposed by the governments of the 
departure, transit, or arrival locations are met (e.g., negative test 
result for a communicable disease). The Department solicited comments 
on whether the proposed requirement for a non-expiring voucher or 
credit strikes the right balance given that the travel restrictions are 
out of the airlines' and ticket agents' control and the differential 
economic impact of a refund mandate versus a travel credit or voucher 
on airlines and ticket agents in these circumstances.
    Comments Received: Airlines in general were concerned about the 
scope of the proposal which, in their view, is too broad and 
subjective, making it difficult to determine whether a passenger is 
eligible for a travel credit or voucher. Spirit opposed the proposal, 
stating that it shifts the risk of whether a consumer can fly entirely 
to airlines when the restriction is not the fault of airlines or 
consumers. It commented that there should be a reasonable balance of 
risks between airlines and passengers. A4A commented that the proposal 
does not explicitly require that a government order prevent the 
passenger from traveling, instead, by using the term ``restriction'' it 
implies that passengers could be eligible for credits even if they have 
partial discretion to travel. Several airline commenters argued that 
determining whether a passenger is ``unable to travel'' or the 
restriction renders travel ``meaningless'' requires a case-by-case 
analysis looking into the purpose of each passenger's travel, subject 
to different interpretations. They were also concerned about 
significant resources needed for airlines to determine whether a 
passenger has exercised ``due diligence'' to comply with each 
jurisdiction's travel requirements. Also, airlines were concerned about 
the proposal's language that does not limit the eligible travel to 
``air travel.'' In that regard, they argued that the Department is 
burdening carries with obligations to provide travel credits when the 
non-air portion of the travel, not under the carrier's control, may be 
prohibited by a government order.
    A4A provided several suggestions on how the proposal should be 
revised. First, A4A suggested that the term ``unable to travel'' should 
be replaced by the term ``prohibited from travel by air.'' Second, A4A 
recommended that the Department should remove the ``rendering travel 
meaningless'' standard from the regulation. Third, A4A asked the 
Department to include an explicit list of all scenarios that would 
disqualify a passenger for receiving travel credits. Fourth, A4A 
suggested that carriers should be required to issue travel credits only 
when the government order directly and substantially impacts the 
origination or destination of the passenger's itinerary. Over 1,500 
individual consumers expressed their general support for the proposed 
protections for consumers affected by a serious communicable disease. 
Consumer rights advocacy groups did not specifically comment on the 
proposal of requiring airlines and ticket agents to issue travel 
credits or vouchers to passengers who are unable to travel due to a 
government restriction or prohibition relating to a serious 
communicable disease.
    Among ticket agent's representatives, ASTA, DWHSA, Travel Tech, and 
ABTA supported this proposal. ASTA commented that consumers should be 
provided credits or a voucher because they are prevented from travel by 
government actions and failing to so do meets the standard for unfair 
practice. USTOA stated that modifications of the proposal are needed 
because ``unable to travel'' is too broad and vague and the term 
``prohibited from travel'' should be used instead. It also opposed the 
inclusion of situations in which travel is rendered ``meaningless'' 
because this term is too subjective. GBTA commented that the proposal 
is enormously burdensome to airlines and ticket agents because it would 
require them to consider foreign government orders and public health 
guidance when determining passenger's eligibility to travel credits or 
vouchers, and also consider the timing of these documents' issuance 
relative to the ticket purchase date and the travel date. The ACPAC 
voted to support the Department's proposal to, regardless of whether 
there is a public health emergency, require airlines and ticket agents 
to provide travel credits or vouchers to consumers who are unable to 
travel because of a U.S. (Federal, State or local) or foreign 
government restriction or prohibition (e.g., stay at home order, entry 
restriction, or border closure) in relation to a serious communicable 
disease that is issued after the ticket purchase.\87\
---------------------------------------------------------------------------

    \87\ Among the four members of ACPAC, three members voted in 
support of this recommendation and the member representing A4A voted 
against the recommendation, stating that there are many terms in the 
proposal that are not clear, and it will cause more passenger 
confusion.
---------------------------------------------------------------------------

    DOT Responses: Having fully considered the comments, the Department 
has decided to adopt a final rule largely along the lines set forth in 
the NPRM, with a few changes to address comments received from airlines 
about the difficulty and cost in determining which government 
restrictions would render travel ``meaningless'' and whether a 
passenger exercised ``due diligence'' to comply with each 
jurisdiction's travel requirements. These changes also further ensure 
the Department's actions are within its statutory authority. In this 
final rule, the Department is requiring airlines to provide travel 
credit or vouchers to non-refundable ticket holders who are prohibited 
from travel or required to quarantine for a

[[Page 32814]]

substantial portion of the planned trip by the U.S. or foreign 
government in relation to a serious communicable disease. The 
Department has decided to replace the term ``unable to travel'' by the 
term ``prohibited from travel'' and to remove the ``rendering travel 
meaningless'' standard as suggested by airline commenters. In place of 
``rendering travel meaningless,'' the Department is specifying that the 
travel restriction that would entitle a consumer to a travel credit or 
voucher is a mandatory quarantine for more than 50% of the length of 
the passenger's scheduled trip at the destination (excluding travel 
dates) as shown on the passenger's itinerary. In addition, the 
Department is limiting the requirement for airlines to provide travel 
credits and vouchers to consumers who purchased the airline ticket 
before a public health emergency affecting the passenger's origination 
or destination was declared or, if there is no declaration of a public 
health emergency, before the government prohibition or restriction for 
travel to or from the affected region is imposed. Passengers cannot 
reasonably avoid the harm of financial loss under these circumstances 
because they would have no reason to think there would be a government 
prohibition from travel or mandatory quarantine requirement at the 
passenger's origination or destination in relation to a serious 
communicable disease when a public health emergency has not been 
declared.
    Beginning in January 2020, governments all over the world began 
taking various measures to try to curb the spread of COVID-19, 
including government-issued stay-at-home orders, business closure 
orders, border entry limits or quotas, quarantine requirements for 
arrivals, and restrictions or bans for commercial flights from certain 
originations. Many of these government orders impacted air travelers 
directly by making travel impossible through prohibitions from travel 
or indirectly by severely limiting the activities that travelers 
intended to engage in at the destinations through mandatory 
quarantines. Based on the comments, it appears that all stakeholders 
agree that passengers who are banned or prohibited from travel by air 
should be protected by the proposed requirement. The Department does 
not agree, however, that the scope of the consumer protection 
requirement should be limited to these passengers. The proposal's goal 
is to mitigate the financial losses suffered by air travelers during a 
communicable disease outbreak so severe that it triggers drastic 
actions by governments to restrict the movements of people. It is the 
Department's view that consumers who bought their airline tickets 
before the issuance of a public health emergency or, if there is no 
declaration of a public health emergency, before a government order 
prohibiting travel or restricting movement through mandatory 
quarantines should have the ability to retain the value they paid into 
the airline tickets.
    The Department acknowledges the concerns about certain language 
used in the NPRM that could be construed as vague and subjective. As 
such, in finalizing this proposal, we are amending the rule text to 
provide more clarity. Specifically, the term ``unable to travel'' is 
replaced by ``prohibited from travel.'' The Department notes that the 
government order does not have to prohibit air travel. A passenger is 
entitled to a travel voucher or credit if the passenger is prohibited 
from travel by a government order (i.e., an order prohibiting the 
passenger from traveling to or from the airport at the origination or 
destination) from entering the destination country/city as show in the 
passenger's itinerary or from boarding the flight(s). As proof of 
eligibility, airlines may require these passengers to provide the 
relevant government order and any appropriate supporting documentation 
to show the nexus between the government order and their inability to 
travel. For example, if a passenger states that he or she is prohibited 
from entering the destination country by a government order because of 
the passenger's nationality, carriers may require proof of the 
passenger's nationality in addition to the relevant government order 
prohibiting passengers of certain nationalities from entering.
    With respect to government orders that do not prohibit travel but 
substantially restrict travel, the Department has considered airline 
comments that ``the restriction that renders travel meaningless'' 
standard is subjective and requires a case-by-case analysis into the 
purpose of each passenger's travel. As a result, the Department has 
removed the ``rendering travel meaningless'' standard. In the NPRM, the 
Department had explained what it meant by renders travel meaningless 
through an example of a passenger who plans to spend a week at the 
vacation destination and the local government imposes a seven-day 
quarantine requirement for all arriving passengers, which eliminates 
the purpose of the travel. Allegiant Air criticized the Department for 
picking the ``low-hanging fruit'' by providing this example and asked 
that the Department also opine on whether a passenger would be eligible 
for the proposed protection if only a part of the time at the 
destination is lost. The Department agrees that more clarity is needed 
in this respect so that airlines have more certainty on their 
obligation and consumes are treated consistently from airline to 
airline.
    In place of the ``rendering travel meaningless'' standard, the 
Department specifies in this final rule that the travel restriction 
that would entitle a consumer to a travel credit or voucher is a 
mandatory quarantine at the passenger's destination for more than 50% 
of the length of the passenger's planned trip. As proof of eligibility, 
airlines may require passengers to provide the relevant government 
order mandating a quarantine which includes information about the 
length of the quarantine and documentation to show the length of the 
passenger's planned time at the destination, excluding the travel 
dates. This amendment should address carriers' concern about fraud and 
abuse.

7. Passengers Who Are Advised by a Medical Professional Not To Travel 
To Protect the Health of Others

    The NPRM: Beyond widespread infections of a communicable disease 
that lead to a ``public health emergency'' declaration or government 
orders restricting or prohibiting travel, the Department also proposed 
to require airlines and ticket agents to issue travel credits or 
vouchers to passengers who are advised or determine not to travel to 
protect the health of others because they have or may have contracted a 
serious communicable disease, regardless of whether there is a public 
health emergency. The Department stated that it believes that airlines 
in general would allow and prefer that a passenger with a serious 
communicable disease in the contagious stage not travel, and airlines 
would likely grant an exception from the tickets' non-refundability to 
allow the passenger to reschedule travel. The Department described 
airlines' current practices in assessing whether a passenger with a 
communicable disease would pose a direct threat to the health of others 
such as requesting medical documentation and in minimizing risk to 
other passengers such as taking precautions to prevent the transmission 
of the disease in the cabin while transporting the passenger, or if 
appropriate, denying boarding and allowing the passenger to reschedule 
travel. The Department expressed its belief that it would be in the 
interest of carriers, passengers, and the public at

[[Page 32815]]

large for the travel to be postponed. The Department noted that this 
proposal would cover only passengers who have or may have contracted a 
serious communicable disease and the consumer's condition is such that 
traveling on a commercial flight would pose a direct threat to the 
health of others based on advice from a medical professional or the 
consumer's determination consistent with public health authorities 
issued by CDC, comparable agencies in other countries, or WHO.
    The Department noted that using economic tools as incentives to 
discourage passengers who would pose a risk to the health of others 
from traveling is consistent with its mission to ensure that the air 
transportation system is safe and adequate for the public. It also 
noted its expectation that requests for credits or vouchers under this 
circumstance should be infrequent and will likely place minimal burden 
on the airlines outside of the context of public health emergencies. 
The Department solicited comment on the potential for abuse and whether 
a documentation requirement is sufficient to prevent abuse. Further, 
the Department asked for suggestions on alternative methods to protect 
consumers who are advised by a medical professional or determine 
consistent with public health guidance not to travel because they have 
or may have a serious communicable disease.
    Comments Received: A4A expressed its concern about this proposal 
not being tied to either a public health emergency or a government-
issued order. It argued that the proposal allowing passengers to 
subjectively determine that they should not travel ``consistent with'' 
public health guidance will cause tremendous confusion and impose 
significant costs to carriers. Like A4A, several other airline 
commenters expressed their concerns about the broad scope of the 
proposal that protects not only passengers advised by a medical 
professional not to travel due to contracting a serious communicable 
disease, but also passengers who rely on public health guidance issued 
by governments around the world to determine that they should not 
travel. Airline commenters were generally concerned about allowing 
consumers who ``may have'' a serious communicable disease to receive 
travel credits or vouchers. Commenters asserted that this broad scope 
will would lead to bad faith actors engaging in fraud and abuse and 
good faith consumers cancelling travel based on misinformation, 
creating a huge workload for carriers and the Department to resolve 
complaints. A4A also asked the Department to clarify whether the 
``comparable agencies in other countries'' whose guidance may be relied 
on by consumers include third-party non-government entities if these 
entities' guidance is relied on by state or local level governments.
    IATA and AAPA stated that airlines already have policies in place 
to accommodate passengers who are not able to travel due to a 
communicable disease, including requiring medical documentation. They 
argued that the Department has offered no evidence to show that these 
policies do not work. NACA stated that it is too broad to impose the 
proposal irrespective of a public health emergency. A4A also commented 
that the proposal does not require that passengers must have purchased 
their tickets before contracting the disease, which could result in 
passengers who purchased tickets while knowing they have a serious 
communicable disease to be eligible for the protection.
    Travelers United stated that an airline ``sick-passenger rule'' 
would help stop disease spread and should be enforced all the time, not 
just during public health emergencies. It commented that airlines' 
current ``sick passenger rule,'' which allows postponing travel but 
with a fee, has resulted in sick passengers deciding to continue 
travel. On the other hand, according to Travelers United, airlines that 
allow sick passengers to postpone travel without charge have reported 
no problems of fraud.
    Similar to airlines, ticket agent representatives raised concerns 
about the scope and ambiguity of certain terms used in the proposal. 
USTOA commented that requiring credits or vouchers be issued to 
passengers who ``may have'' contracted a serious communicable disease 
will invite abuse and fraud. It stated that the protection should be 
tied to a public health emergency. GBTA asserted that the NPRM does not 
define ``serious communicable disease'' in an actionable way and the 
Department, airlines, and ticket agents lack the public health 
expertise to navigate the requirements of the proposed definition. It 
further commented that the proposal leaves it open on who would need to 
verify a passenger's health status and what mechanism would be used to 
settle disputes. ABTA suggested that if the Department moves forward 
with this proposal, airlines and ticket agents should be allowed to 
require clear evidential documentations issued by certificated and 
qualified medical professionals. Travel Tech opined that instead of the 
proposed requirement, airlines should be required to rebook without 
charge to accommodate passengers who have or may have contracted a 
serious communicable disease. The ACPAC discussed this proposal and 
recommended to the Department to adopt a rule that requires airlines 
and ticket agents to provide travel credits or vouchers when a consumer 
is advised by a medical professional or determines consistent with 
public health guidance issued by CDC, comparable agencies in other 
countries, or WHO not to travel by air because the consumer has or may 
have contracted a serious communicable disease, and the consumer's 
condition is such that traveling on a commercial flight would pose a 
direct threat to the health of others. The ACPAC recommended that the 
requirement apply regardless of whether there is a public health 
emergency.\88\
---------------------------------------------------------------------------

    \88\ Among the four members of ACPAC, three members voted in 
support of this recommendation and the member representing airlines 
abstained, stating that there are many terms in the proposal that 
are not clear and may cause more passenger confusion.
---------------------------------------------------------------------------

    Public Hearing: The March 21, 2023, public hearing held under the 
requirement of 14 CFR 399.75 discussed the subject of whether a 
consumer can make reasonable self-determination regarding contracting a 
serious communicable disease. In the Notice announcing the hearing, the 
Department requested interested parties to provide information on 
airlines' and ticket agents' current practice in handling consumers' 
requests to cancel or postpone travel due to contracting a serious 
communicable disease. The Department further asked for data on the 
volume of such requests, the volume of requests that were considered 
fraudulent, and the volume of requests that were not considered 
fraudulent but were rejected because they were deemed ``unreasonable 
self-determination.'' The Department also requested information on the 
costs to airlines and ticket agents to verify consumers' claims 
regarding contracting a serious communicable disease and the type of 
diseases being claimed as a reason to postpone or cancel travel.
    During the March 21 public hearing, a representative of 
FlyersRights commented that consumers can make reasonable self-
determinations regarding contracting a serious communicable disease. He 
specifically mentioned that during the COVID-19 pandemic, many 
passengers avoided flying when they self-determined that they were 
COVID-positive. A representative from National

[[Page 32816]]

Consumers League stated that the Department should not accept the 
assumption that consumers cannot make reasonable self-determinations 
and that consumers will abuse this proposed right. He further argued 
that the proposal is consistent with the CDC's longstanding approach 
that advises people to stay home while they are sick. On the subject of 
abuse, he stated that should an airline determine that a passenger is 
serially abusing this right, nothing would prevent the airline from 
refusing service to such a passenger in the future. On the cost of the 
proposal, he commented that the Department should not accept the 
assertion that consumers exercising this right will significantly 
increase cost to airlines. In that regard, he pointed out that airlines 
are required to issue credits, not refunds, which means they can 
continue to earn interest from the money consumers used to purchase the 
tickets, until the credits are used. He further commented that airlines 
can also sell the vacated seats, likely for a higher price because it 
would be closer to travel dates.
    Several airline representatives provided comments during the public 
hearing. One A4A representative commented that nearly all the data 
sought by the Department in the public hearing notice does not answer 
the question that is the subject of the hearing because there is no 
current standard applied for seeking credits or refunds for a ``serious 
communicable disease'' and that the information sought by the 
Department would have nothing to do with the reasonableness of 
consumers' self-determinations. Two representatives from MedAire spoke 
at the hearing at the request of A4A and IATA. One speaker commented 
that from his experiences as a medical doctor for MedAire, he strongly 
believes that self-determining a medical condition regarding 
communicable disease is not a simple matter. He opined that properly 
trained medical professionals are the only ones who can ultimately make 
these determinations. He concluded that if the practice of self-
determination is to be entertained, strict and specific criteria need 
to be applied, and such criteria should be subject to changes according 
to prevailing public health guidance issued by central health 
authorities. The other speaker from MedAire commented that the 
Department should analyze the topic from an operational perspective. He 
stated that MedAire trains crew members on how to handle medical 
conditions and how to comply with the Air Carrier Access Act 
regulation, 14 CFR part 382. He stated that there could be confusion 
among crew members and customer service agents regarding the 
requirement of this NPRM and the requirement of Part 382. He expressed 
his concern that the terminology associated with Part 382 and the 
terminology proposed in this NPRM, such as ``direct threat'' and 
``serious communicable disease,'' is not aligned and that the 
Department should look into achieving some alignment to avoid 
confusion. A doctor from Harvard medical school also spoke at the 
request of A4A and IATA. As an expert in airborne transmission of 
disease during transportation and a lung physician, he stated that his 
perspective is to try to assess the potential for individuals to judge 
whether they have a serious transmissible infection. He indicated that 
for diseases such as COVID that can be tested at home, there is 
consensus that an individual who tested positive should not travel. He 
commented that, however, there are a variety of viral respiratory 
infections for which there are no tests. He opined that even erring on 
the side of assuming there was a respiratory infection, particularly 
when accompanied by a fever, during a pandemic or endemic, it is still 
difficult for an individual to be sure that they have a disease that is 
communicable. He expressed his concerns about the accuracy of self-
determination as well as the potential for a reasonable public health 
precaution being used by individuals who change travel plan for reasons 
not related to health. He concluded that it is very difficult to self-
determine that one has a serious communicable disease in a way that is 
operationally honest and fair to both sides.
    Next, an IATA medical advisor specializing in occupational and air 
space medicine provided comments. He pointed out that airlines today 
already regularly accommodate passengers by offering travel credits or 
vouchers to passengers who have been diagnosed by a medical doctor as 
having a communicable disease that could threaten the health of other 
passengers on an aircraft, and airlines normally make the determination 
on the validity of the passenger's claim through reviews of the medical 
documentation provided by airline medical advisers, either in house or 
contracted by external organizations such as MedAire. He stated that he 
believes a final rule in this area must provide greater guidance as to 
what should or should not be considered a threat to other passengers in 
an aircraft environment. He stated that the medical system is based on 
the premise that trained medical professionals are best positioned to 
diagnosis diseases, weigh medical risks, and prescribe appropriate 
management. He concluded that any final rule in this area must require 
passengers seeking a refund or voucher to present documentation 
verifying that a medical professional has seen the passenger and 
assessed them for a particular serious communicable disease and that 
the presence of that passenger in the aircraft threatens the safety of 
other passengers. In that regard, he urged the Department to eliminate 
the self-diagnose option from any final rule, to provide a short list 
of likely conditions of concern, to require that any definition of 
communicable disease recognize the unique nature of aircraft 
environment, and to provide that the airline's medical service be given 
the final determination in any case of doubt.
    Following the March 21 public hearing, A4A and IATA filed 
supplemental comments to reiterate their positions that consumers 
cannot reasonably self-diagnose and medical professionals are best 
positioned to diagnose and proscribe appropriate treatments. This 
position is supported by Spirit. USTOA also supported the airlines' 
position and added that, if the Department moves forward with this 
proposal, it should be limited to consumers who present a medical 
attestation completed by a licensed physician who is actually treating 
the individual.
    DOT Responses: After considering all the comments, the Department 
is requiring airlines to provide travel credits or vouchers to 
consumers who are advised by a medical professional not to travel, 
irrespective of a public health emergency, because the consumers have 
or are likely to have contracted a serious communicable disease and 
would pose a direct threat to the health of others. An airline may 
require documentation from a passenger under these circumstances absent 
a public health directive or order issued by HHS stating that requiring 
medical documentation is not in the public interest.
    This final rule differs from the proposal in that it allows 
airlines to require documentation from a licensed medical professional 
that the passenger has or is likely to have a serious communicable 
disease and the consumer's condition is such that traveling on a 
commercial flight would pose a direct threat to the health of others. 
Under this final rule, unless directed otherwise by HHS, airlines are 
not required to accept consumers' self-diagnosis as evidence that they

[[Page 32817]]

contracted a serious communicable disease ``consistent with'' public 
health guidance as proposed. The Department has determined that a 
documentation requirement is in the public interest as it would prevent 
consumer confusion on whether they should or shouldn't take a flight 
and minimize likelihood of fraud or abuse.
    In addition to allowing airlines to require medical documentation, 
the Department has made other smaller changes in response to the 
comments received in the docket and at the public hearing. Regarding 
covered passengers, we agree with airline and ticket agent commenters 
that the phrase the consumer ``may have contracted a serious 
communicable disease'' could potentially be misunderstood should 
individuals self-diagnose whether they have a communicable disease. As 
stated in the prior paragraph, under this final rule, airlines are not 
required to accept the assertion by consumers, based on self-diagnosis, 
that they contracted or may have contracted a serious communicable 
disease as evidence of their eligibility for credits or vouchers. 
However, the Department disagrees with some airlines' suggestion that 
the Department eliminate the term ``may have'' entirely and only 
include passengers who have been clinically confirmed to have a serious 
communicable disease. As medical professionals indicated during the 
public hearing, some communicable disease cannot be diagnosed with a 
simple test that can be administered at home or at a clinic. Instead, 
diagnosing certain serious communicable diseases would require much 
more comprehensive medical procedures. Also, at the public hearing, a 
medical expert stated that during a pandemic or epidemic when a 
communicable disease is known to be widespread, public health experts 
may tend to be in favor of erring on the side of assuming infection 
when an individual displays typical symptoms of a communicable disease 
and there is no confirmation of infection available. Further, requiring 
a confirmed diagnosis for a disease, particularly when readily 
available testing is not an option, does not serve the public interest. 
Accordingly, instead of a passenger who ``may have'' contracted a 
serious communicable disease, the final rule uses the term ``is likely 
to have'' contracted a serious communicable disease and, in absence of 
HHS stating that requiring medical documentation is not in the public 
interest, an assertion that a passenger ``has or is likely to have'' a 
serious communicable disease must be supported by credible medical 
documentation. The Department believes that this amendment to the NPRM 
proposal enhances clarity and will reduce fraud and abuse, while 
ensuring that the rule appropriately includes passengers who don't have 
a confirmed diagnosis but were considered likely to have an infection 
by a treating medical professional so they are incentivized to postpone 
travel while medically considered to be potentially contagious.
    Also, on the scope of protected passengers, the final rule 
clarifies that when a passenger who has or is likely to have a serious 
communicable disease purchased a ticket is irrelevant to the 
passenger's eligibility for a travel credit or voucher. As stated in 
the legal authority section, the Department believes that it is 
unreasonable to expect a passenger to purchase a refundable ticket or 
travel insurance for the purpose of gaining more flexibility to 
postpone travel due to contracting a serious communicable disease when 
a public health emergency has not been declared. Passengers who 
purchased their tickets during a public health emergency, however, 
could reasonably have imagined contracting a serious communicable 
disease and could have purchased a refundable ticket or travel 
insurance to avoid risk of financial loss. Nevertheless, an airline's 
practice of not providing travel credits or vouchers to those 
passengers is an unfair practice because it is likely to cause harm to 
the health of other passengers, which they cannot reasonably avoid if 
the potentially infected passengers choose to continue travel to avoid 
financial loss as set forth in section IV.1(i).
    Regarding comments to align the definition of ``direct threat'' and 
``serious communicable disease'' in this proposed rule to the 
definition of those terms in the Department's disability regulation, 
the Department views that these terms as used in this final rule to be 
consistent with the terms as used in the disability regulation. The 
Department's regulation implementing the Air Carrier Access Act, 14 CFR 
part 382, provides that a ``direct threat'' is a significant risk to 
the health or safety of others that cannot be eliminated by a 
modification of policies, practices, or procedures, or by the provision 
of auxiliary aids or services.\89\ We note that the context for the 
``direct threat'' assessment under Part 382 is different from the 
context here. In Part 382, the regulatory goal of requiring carriers to 
conduct a ``direct threat'' assessment is to ensure that carriers apply 
reasonable standards to determine that the carriage of a passenger 
would pose a direct threat to others before imposing travel 
restrictions on or denying boarding of the passenger who wishes to 
travel despite having contracted a communicable disease. Here, however, 
the goal of the regulation is to ensure that carriers apply a 
reasonableness standard to determine whether the assertion by the 
passenger's treating medical professional of posing a direct threat is 
sufficiently valid to warrant the issuance of travel credits or 
vouchers to a passenger who wishes to postpone travel. Nonetheless, in 
both regulations, the determination of ``direct threat'' is based on 
the same set of objective, factual, and science-based standards that 
looks into the nature of the communicable disease, the consequence of 
the disease, the likelihood of disease transmission in the aircraft 
cabin by casual contact. With respect to the term ``serious 
communicable disease,'' as explained earlier in this document, the 
definition of this term as adopted in this final rule is consistent 
with that of Part 382.
---------------------------------------------------------------------------

    \89\ 14 CFR 382.3.
---------------------------------------------------------------------------

8. Supporting Documentation

    The NPRM: The Department proposed to allow carriers and ticket 
agents, as a condition for issuing travel credits or vouchers, to 
require certain documentation dated within 30 days of the initial 
departure date of the affected flight. For consumers stating an 
inability to travel due to a government restriction or prohibition in 
relation to a serious communicable disease, the Department proposed to 
allow carriers to require the government order or other document 
demonstrating how the consumer's ability to travel is restricted. The 
Department explained that a quarantine isolation order or a border 
closure notice or entry restriction issued by a government would all be 
acceptable documents. The Department added that even a local stay at 
home order that restricts local travel would be reasonable if it 
impacts the passenger's entry or exit of the local vicinity through air 
travel. For consumers stating that they are not traveling because they 
have been advised by a medical professional or have self-determined 
consistent with public health guidance not to travel by air to protect 
themselves from a serious communicable disease, the Department proposed 
to allow carriers to require the applicable guidance or a written 
statement from a licensed medical professional attesting that it is the 
medical professional's opinion that the consumers should not travel by 
commercial air transportation to protect themselves. The Department

[[Page 32818]]

made clear that a general fear about traveling when there is a public 
health emergency declared would not be sufficient to entitle that 
passenger to a travel credit or voucher. For consumers stating that 
they have been advised by a medical professional or self-determined 
consistent with public health guidance not to travel because they have 
or may have contracted a serious communicable disease that poses a 
direct threat to the health of others, the Department proposed to allow 
carriers to require the applicable guidance or a written statement from 
a licensed medical professional attesting that it is the medical 
professional's opinion that the consumer should not travel by 
commercial air transportation to protect the health of others. Under 
the proposal, the type of document that a carrier could require of 
consumers seeking not to travel to protect themselves or others would 
be dependent on whether the consumer was advised by a medical 
professional or making a self-determination based on public health 
guidance. To the extent that a passenger is providing a written 
statement from a medical professional, the Department proposed to 
permit airlines and ticket agents to request that the documentation be 
current.
    The Department asked whether the types of information that the 
Department would allow airlines and ticket agents to seek from 
passengers is adequate; whether there are ways to reduce or prevent 
passengers from falsely claiming that they have a serious communicable 
disease without airlines and ticket agents requesting documentation 
from passengers about their health; whether the Department should 
specify that the medical documentation explain the reason that the 
passenger is more susceptible than others to contracting a serious 
communicable disease during air travel and whether there are any 
implications on privacy concerns; and whether the proposal that medical 
documentation be dated within 30 days of the initial departure date is 
reasonable and appropriate.
    Comments Received: Several airline commenters were concerned about 
the term ``medical professional,'' asserting that the term is too broad 
and potentially invites fraud. Commenters stated that this issue is 
analogous to the emotional support animal (ESA) situation under the 
Department's Air Carrier Access Act rule prior to its revision in 2020, 
which required carriers to accept ESAs as service animals provided that 
passengers present medical documentation from a licensed mental health 
professional. They further asserted that like the ESA regulation, the 
proposed rule here allows unscrupulous passengers to take advantage of 
the undefined term by seeking documentations from a broad range of 
medical professionals who may have no knowledge about the relevant 
information sought, or even purchasing documentations from online 
sources without actual medical treatment or evaluation.
    A4A commented that a more robust documentation scheme will reduce 
the likelihood of travel credits being sought by ineligible passengers. 
A4A suggested that similar to the 2020 service animal final rule,\90\ 
the Department should prescribe a government form that includes a 
warning of the potential Federal criminal penalty under 18 U.S.C. 1001 
for any person to knowingly or willfully make materially false or 
fraudulent statements to obtain travel credits. A4A further suggested 
that the form should be dated within 15 days of the departure and 
should require certain information including the passenger's name, date 
of birth, diagnosis, method of diagnosis, test result, information 
regarding the medical professional (name, license information, 
location, signature), a clear statement that the passenger should not 
travel, a statement regarding when the passenger can travel again. IATA 
supported A4A's suggestion that the medical documentation should 
include a criminal penalty warning and that the documentation should be 
dated within 15 days of departure. IATA further commented that it does 
not see any privacy concerns on requiring medical attestation from 
passengers because passengers are choosing to waive their rights to 
privacy to avoid losing the money invested in the tickets. Allegiant 
commented that the proposed documentation requirement creates 
opportunities for abuse when passengers only need to present a doctor's 
note stating that they may have a serious communicable disease. 
Allegiant opined that this will become a refuge for passengers who want 
to avoid paying ticket change fees.
---------------------------------------------------------------------------

    \90\ Final Rule, Traveling by Air With Service Animals, 85 FR 
79742, Dec. 10, 2020.
---------------------------------------------------------------------------

    Air Canada expressed its concerns about the burden of carriers' 
manually reviewing and assessing documentations, arguing that different 
public health policies adopted by different countries and subjective 
interpretations will create a complex and ever-changing set of rules 
that would greatly interfere with carriers' ability to sell seats with 
predictability. It further suggested that the Department should remove 
all documentary evidence that requires a subjective assessment of a 
passenger's condition or reason not to travel to avoid the burden and 
costs to carriers associated with a manual review process.
    A number of individual commenters also provided their views on the 
proposed documentation requirement. One individual commenter 
recommended that medical documentation should be required only when the 
communicable disease is not demonstrable via a test result. Another 
commenter stated that the ``medical professionals'' issuing the 
documentation should include not only physicians, but also other 
primary care providers such as nurse practitioners or physician's 
assistants. In contrast, another individual opined that the proposal 
failed to provide guidance regarding the types of medical professionals 
who are qualified to issue the documentation, resulting in a broad 
scope of the type of medical professionals that is untenable to 
airlines. One individual commented that the scope of the types, 
formats, and language of the proposed documentation requirement is 
enormous, and verifying their authenticity will be burdensome, with a 
high possibility of fraud. This commenter suggested that the Department 
consider imposing stricter requirements to prevent abuse. Another 
individual commenter expressed concerns about fraud and abuse and 
argued that consumers should be required to provide a certification 
from a registered medical professional or positive test result from a 
professional third party (as opposed to a home test kit).
    The Department also received comments from ticket agent 
representatives on the issue of documentation. USTOA agreed with 
airline commenters and argued that the Department should define the 
scope of qualifying public health guidance and medical professionals to 
ensure clarity on the required documentation. It further echoed 
airlines' comments that the Department should prescribe the medical 
form that includes a warning of Federal crime for false statements. 
USTOA further commented that ticket agents should be able to require 
that documentation be in English or in any other language of their 
choice to avoid the cost of translation. Travel Management Coalition 
stated that it should be entirely airlines' responsibility to require 
health-related evidentiary documents and that ticket agents should not 
be involved in determining whether passengers are

[[Page 32819]]

entitled to travel credits. In that regard, it offered that, to limit 
the number of parties involved and to protect passenger privacy, 
passengers should provide documentation directly to airlines even if 
ticket agents are the merchants of record for the ticket sales.
    The ACPAC discussed the issue of defining ``medical professional'' 
and recommended to the Department to replace the term ``medical 
professional'' with the term ``treating physician,'' and adopt the 
definition for ``treating physician'' as the following:

    A ``treating physician'' means an individual who is licensed or 
authorized under state law to engage in the practice of medicine or 
the practice of osteopathic medicine and surgery, who furnishes a 
consultation or treats a patient for a specific physical or mental 
health condition, and who may use the results of a diagnostic test 
in the management of the patient's specific physical or mental 
health condition. For purposes of this rule alone, the term 
``treating physician'' includes physicians, osteopaths, nurse 
practitioners, social workers, licensed professional counselors, 
psychiatrists, physician's assistants, and other medical providers 
who are licensed in the state in which the treatment is or has been 
provided and who are allowed, pursuant to state and federal 
licensing regulations, to provide individualized care to the patient 
without medical supervision by another medical provider.\91\
---------------------------------------------------------------------------

    \91\ This definition, based on Michigan law and regulation of 
Centers for Medicare & Medicaid Services, is provided by the State 
Attorney General of Michigan, who is a member and chair of the 
ACPAC. Two additional members representing consumer rights advocacy 
groups and airports, respectively, support this recommendation. The 
member representing A4A is against the recommendation, stating that 
it includes practitioners such as social workers and psychiatrists 
who would not be treating an infectious or communicable disease. The 
member further reiterated that A4A's belief that ``treating 
physician'' should be treating the person for the infectious disease 
or serious communicable disease based on which the consumers are 
seeking flight credit.

    Public Hearing: DOT also addressed the topic of whether the 
proposed documentation requirements (medical attestation and/or public 
health guidance) are sufficient to prevent fraud in the notice 
announcing the March 21, 2023, public hearing. In the notice, DOT asked 
participants to provide information on whether medical attestations 
currently provided to airlines from consumers seeking to cancel or 
postpone travel are primarily based on consumers' self-assessments, 
medical professionals' assessments, or a combination of both; the types 
of medical professionals currently providing the attestations accepted 
by airlines and ticket agents; the types of public health authority-
issued guidance currently affecting air travel; and airlines' 
validation of medical attestations, including the procedures, the 
volume, and the costs associated with the validation.
    During the hearing, the representative from FlyersRights and the 
representative from National Consumers League both spoke against 
airlines' argument that the situation of passengers fraudulently 
claiming a communicable disease is analogous to the situation where a 
small percentage of passengers fraudulently obtain paperwork that 
allows them to bring a pet animal onboard as an ESA. They stated that 
in the matter regarding ESAs, airlines faced potential injury of losing 
revenue for transporting the animals as a pet as well as potential 
safety and health concerns. They pointed out that in contrast, there is 
little incentive for consumers to engage in fraud here because the 
appeal of fraud is to net a monetary gain and there is no monetary gain 
in this instance when a consumer simply avoids a loss of the money that 
they already paid by obtaining a travel credit or a voucher. They view 
DOT's proposed requirement as sufficient and well-conceived and urge 
the Department to disregard the industry petitioners' concerns, which 
they believe rest on a flawed assumption that consumers will have such 
an incentive to obtain travel credits under the proposal and that the 
cost will outweigh public health and consumer protection benefits. The 
consumer advocates argued that no rule will completely prevent fraud, 
and instances of fraud should be investigated and punished.
    A representative from A4A commented that the hearing request 
initiated by the airline industry on this issue is broader than the 
questions posed by the Department in the hearing notice. He commented 
that the data sought by the Department in the hearing notice will not 
answer the questions at hand. Specifically, he stated that both the 
basis of current medical attestations provided to airlines by 
consumers, and the types of medical professionals currently providing 
such attestations have no bearing on the actual adequacy of the 
documentation to prevent fraud under the proposed standards for credits 
or refunds, especially when airlines' current standards differ from 
those proposed. He further stated that U.S. airlines typically don't 
provide credits or refunds when the passenger only may have a 
communicable disease or when the consumer wants to protect him or 
herself from a communicable disease. He noted that Part 382 requires 
the medical professional to be, at least, the passenger's physician, 
and even with that, the airline can require the passenger to undergo 
specific review under certain circumstances. He also commented that the 
types of guidance ``affecting air travel'' issued by public health 
authorities currently has no bearing on whether providing such 
information is adequate to prevent fraudulent claims. He opined that 
what matters is the guidance related to communicable diseases and 
whether, with no other information presented to the airline, simply 
providing such guidance would allow the airline to determine whether 
the consumer is making a fraudulent claim. He concluded that the 
proposed documentation standard will only confuse consumers into 
believing that they can submit unsubstantiated attestations or public 
health guidance to support their claims.
    A representative from MedAire, which provides medical advisory 
services to airlines, stated that he was commenting strictly from a 
medical standpoint and without considering the economic aspects around 
the question. From that perspective, the MedAire medical expert stated 
that a public health authority-issued criteria and guidelines in 
concert with a properly trained medical professional to diagnosis and 
to attest the presence of a transmissible disease is the ideal and the 
best practice possible to minimize fraud and abuse to a manageable 
level.
    A representative from A4A commented that A4A's concerns regarding 
the proposals go beyond fraud and asserted A4A's belief that the 
proposal is impractical and unworkable and an example of regulatory 
overreach by a transportation regulatory agency lacking expertise in 
the area of public health. He offered that A4A members that currently 
accept medical documentation in connection with passenger-initiated 
itinerary changes typically require the documentation to be in the form 
of a medical professional document issued by a treating physician, and 
in cases where documentation from a non-treating physician is allowed, 
the airlines would require the documentation to be on official 
letterhead. He stated that the current level of fraud is low because 
most airlines' policies would not contemplate allowing passengers to 
self-certify their conditions or produce public health guidance without 
accompanying statement by a treating physician.
    On the Department's request for information regarding the types of 
public health authorities that issue guidance affecting air travel, the 
A4A representative stated that many airline

[[Page 32820]]

members do not routinely track this information because, in the current 
environment, change and cancellation fees for most fare types have been 
eliminated. He further identified various aspects of the NPRM that A4A 
believes depend on factual issues that are genuinely in dispute. First, 
he stated that DOT assumes in the NPRM that the medical professional 
completing the attestation possesses sufficient knowledge of not only 
the communicable disease but also the passenger's current condition. He 
asserted that if this medical professional is not the passenger's 
treating physician and has not examined the passenger, the reliability 
of the documentation becomes highly questionable and the possibility of 
fraud is heightened. Second, he stated that DOT's finding that the 
required production of relevant public health guidance will reduce 
fraud assumes such guidance will be given due to the person's 
condition. He asserted that, for example, guidance recommending an 
individual having been exposed to serious disease refrain from travel 
for a set number of days would not prevent unscrupulous individuals who 
have not had any exposure from misusing the guidance. Third, he stated 
that the NPRM assumes that the guidance produced by the passenger will 
be authentic, yet there's no provision in the draft rule text 
addressing validation by airlines. Fourth, he commented that DOT's 
implicit assumption is that airlines have the ability, if they so 
choose, to confirm the authenticity of the documentation through 
reasonable inquiry without external efforts. He offered that this is 
not the case, for example, with public health guidance not widely 
posted on a governmental website. Lastly, he disputed two claims made 
in the NPRM. Regarding DOT's claim that the proposal will promote 
public health by discouraging travel by persons who have contracted or 
been exposed to a communicable disease, he commented that this is 
highly questionable given that there's little to no correlation between 
the non-expiring travel credit proposal and slowing communicable 
disease spread, a point that A4A asserts the Department's own 
regulatory impact analysis concedes. Regarding DOT's claim that it will 
benefit consumers by protecting their financial interests and 
expenditures made on tickets, he commented that any such benefit may be 
eliminated by the proposal's longer-term impact on ticket pricing. He 
elaborated that airlines will not be able to resell seats suddenly 
returned to inventory because of passengers who have availed themselves 
of the non-expiring travel option. He stated that to recoup their 
losses and account for the longer-term liability of non-expiring travel 
credit, airlines may have to increase fares, and, in some cases, that 
means routes may be rendered uneconomical, potentially leading to 
service cuts.
    An economist from A4A spoke on data aggregated by A4A on 
significant fraud associated with customers who claim that their pets 
were ESAs, arguing that the topic of ESA is relevant to this hearing 
because it demonstrates why carriers are concerned about the potential 
fraud that will result from this rulemaking. He commented that the ESA 
issue also demonstrated that fraud occurs when a regulation fails to 
define or loosely defines terms and allows passengers to make 
suggestive interpretations that carriers are prevented from disputing, 
questioning, or validating. He stated that the ESA data clearly 
demonstrates that fraud was extensive and substantial. According to the 
speaker, from 2016 to 2019, the number of ESAs traveled had more than 
doubled, skyrocketing from 540,000 in 2016 to 1.13 million in 2019. He 
stated that DOT ultimately changed the definition of a service animal 
to exclude ESAs. He commented that this rulemaking similarly creates 
new, ambiguous, and inconsistent standards, including medical related 
standards unknown to Federal health agencies regarding ``serious 
communicable disease.'' Next, he commented that U.S. airlines have been 
and remain responsive to refund requests and frequently exceed DOT 
recommendations regarding consumer protections. He provided that the 
annual cash refunds in 2021 and 2022 exceeded pre-pandemic 2019 level 
and in 2022, the 11 largest U.S. carriers issued $11.2 billion in 
refunds. He noted that DOT received less than one complaint about 
refunds for every 100,000 passengers. He concluded his presentation by 
stating that there is no evidence of a market failure or unfair or 
deceptive practice in this area.
    DOT Responses: The Department is continuing to allow airlines, as a 
condition for issuing travel credits or vouchers, to require certain 
documentation. This final rule differs from the proposal in that it 
allows airlines to require current medical documentation from consumers 
as evidence that they are not traveling to protect themselves or others 
from a serious communicable disease. Airlines are not required to 
accept consumers' self-diagnoses that they contracted or may have 
contracted a serious communicable disease ``consistent with'' public 
health guidance and providing the applicable guidance as proposed. An 
airline's ability to require medical documentation from a passenger 
under these circumstances is conditioned on the absence of a public 
health directive or order issued by HHS stating that requiring medical 
documentation is not in the public interest. For consumers stating an 
inability to travel due to a government restriction or prohibition in 
relation to a serious communicable disease, the Department has not 
changed the documentation allowed from what was proposed at the NPRM 
stage but specifies that the documentation must be current. This final 
rule permits carriers to require passengers provide a current 
government order or other document demonstrating how the consumer's 
ability to travel is restricted. A government order is current if it is 
valid for the planned travel date.
    After carefully reviewing the comments provided, as well as the 
ACPAC recommendation, the Department has decided to specify that the 
medical documentation must be from a licensed treating medical 
professional and define that term. The Department is adopting a 
definition for ``licensed treating medical professional,'' to mean an 
individual, including a physician, a nurse practitioner, a physician's 
assistant, or other medical provider, who is licensed or authorized 
under the law of a State or territory in the United States or a 
comparable jurisdiction in another country to engage in the practice of 
medicine, to diagnose or treat a patient for a specific physical health 
condition that is the reason for the passenger to request a travel 
credit or voucher. The Department believes that limiting the medical 
professionals to those who provide or have recently provided diagnoses 
or treatment to passengers for the specific health condition that is 
the reason for requesting the travel credits or vouchers will better 
ensure passengers do not rely on persons who have no medical knowledge 
about their health conditions. The Department notes that the licensed 
treating medical professional may provide in-person medical diagnosis 
and treatment as well as virtual diagnosis and treatment, as deemed 
appropriate by common medical practice. The Department also notes that 
treating medical professionals may include a primary care provider or a 
specialist that treats the passenger on a regular basis, as well as 
medical professionals that the passenger sees on an ad hoc basis, such 
as care providers

[[Page 32821]]

from a walk-in clinic, an emergency care facility, or a medical 
facility that the passenger visits while away from home.
    Regarding the treating medical professional's license, the 
definition requires that the medical professional be licensed in a 
State or territory of the United States or a comparable jurisdiction in 
another country. In that regard, the rule allows carriers to require 
that the documentation be on the medical professional's letterhead and 
include information on the type and date of the medical professional's 
license, the license number, and the state or other jurisdiction in 
which it was issued. The Department interprets ``comparable 
jurisdiction in another country'' to mean the appropriate governing 
body in a foreign country that oversees the issuance of medical 
licenses, either at a national or state level.
    For medical documentation provided by passengers who seek travel 
credits or vouchers due to an underlying health condition, the rule 
allows carriers to require that the medical documentation be current, 
specify that the passenger has an underlying health condition that is 
being treated or has recently been treated by the medical professional, 
and that based on the licensed treating medical professional's opinion, 
including references to relevant public health guidance if available 
and applicable, the passenger should not travel on a commercial flight 
during a public health emergency to protect his or her own health. To 
protect passengers' privacy, carriers may not insist that the 
documentation specify what the underlying health condition is. Further, 
because this medical documentation specifically concerns the 
passenger's planned travel during a public health emergency, to ensure 
that the medical documentation is ``current'' with respect to the 
passenger's medical condition, carriers may require that it be dated 
after the declaration of the public health emergency but be within one 
year of the scheduled travel date.
    For medical documentation provided by passengers seeking travel 
credits or vouchers because the passenger has contracted or is likely 
to have contracted a serious communicable disease, the rule allows 
carriers to require that the documentation be current, specify that the 
medical professional has recently diagnosed and/or provided medical 
care to the passenger with regard to a serious communicable disease, 
and be based on the licensed treating medical professional's opinion, 
including reference to relevant public health guidance if available and 
applicable, that the passenger has contracted or is likely to have 
contracted a serious communicable disease and should not travel on 
commercial flights to protect the health of others on the flights. The 
carriers may further require the medical documentation provide a 
medically reasonable timeframe during which the passenger is advised 
against travel. The purpose of the medical documentation under this 
rule is to attest that it is the medical professional's opinion, based 
on current medical knowledge about the serious communicable disease at 
issue and the passenger's current health condition, that the passenger 
should not travel to protect others from that serious communicable 
disease. This rule allows carriers to apply a reasonable standard to 
determine whether medical documentation is current. For example, if 
according to public health guidance on a particular communicable 
disease, an individual would normally remain contagious for 15 days 
from the date of diagnose or onset symptom, it would be reasonable for 
carriers to interpret that ``current'' medical documentation means the 
documentation is dated within 15 days of the scheduled departure. The 
Department believes that this flexibility serves the public interest by 
allowing carriers to tailor the medical documentation's validity period 
based on objective and scientific information, i.e., the common 
contagious period of a particular communicable disease, therefore 
screening out passengers who would generally have passed the contagious 
period on the travel date while ensuring that passengers who are likely 
to pose a direct threat during travel will not be unduly burdened to 
seek medical documentation very close to the travel date.
    In addition to addressing the date of the supporting documentations 
that must be ``current,'' the Department has considered the timing of 
passengers providing the current documentation to airlines when 
requesting a travel credit or vouchers. Although it is conceivable that 
passengers requesting travel credits or vouchers based on a government 
travel restriction would have the ability to provide the documentation 
right away because the government orders are readily available to the 
public, passengers requesting travel credits or vouchers based on a 
health condition may need additional time to schedule a visit with a 
medical professional and obtain the documentation. The Department is 
concerned that the rule would not effectively protect consumers as 
intended if airlines are permitted to require that the medical 
documentation must be provided before the planned travel date. For 
example, if a public health emergency was declared right before a 
passenger's travel date, and the passenger has an underlying health 
condition that would put the passenger at risk during travel, the 
passenger would be deprived the required credit or voucher because 
there is no time to obtain a medical documentation before the travel 
date. Further, passengers could be infected with a serious communicable 
disease very close to the travel date but there is not enough time to 
seek an appointment with a treating medical professional and obtain a 
medical documentation before the scheduled travel date. In such 
situations, the final rule requires that carriers allow a reasonable 
time for the passenger to provide relevant medical documentation after 
the scheduled travel date as long as the passenger notifies the carrier 
before the flight's departure about the illness. The carrier may wait 
to issue the travel credit or voucher until receiving current medical 
documentation within that time period. The Department notes that, 
although the medical documentation may be dated after the scheduled 
travel date, carriers may require that the documentation specify that 
based on the licensed treating medical professional's opinion, 
including reference to relevant public health guidance if available and 
applicable, the passenger has contracted or is likely to have 
contracted a serious communicable disease and should not travel by air 
on the scheduled travel date to protect the health of others on the 
flight. The Department believes that requiring airlines to provide a 
reasonable time for passengers who suffer acute illness close to travel 
dates to submit medical documentation allows passengers to seek medical 
diagnoses and obtain written documentation to prove their eligibility 
for travel credits or vouchers and avoid the situation that passengers 
choose to travel while feeling ill for fear of losing the money paid 
for the tickets, potentially endangering others on the flight.
    The Department has also decided against creating a Federal medical 
form that includes a criminal penalty warning for false statements, as 
some carriers and ticket agents have suggested. We do not agree that a 
DOT form is the best format to incorporate all the information 
permitted by the rule. Each passenger's health condition (including the 
underlying heath condition increasing their risk level while traveling 
during a public health emergency or their personal medical history of a 
serious communicable

[[Page 32822]]

disease infection) may be different, which warrants more flexibilities 
for medical professionals to customize content in the medical 
documentations that they prepare. The Department has also taken into 
account consumer rights advocacy groups' view that consumers in 
situations discussed here may be less likely to commit fraud or abuse 
the regulatory protection in comparison to situations related to ESAs 
as suggested by carriers because consumers requesting travel credits or 
vouchers due to a serious communicable disease have already paid 
airlines for their travel and the potential net gain of abusing the 
consumer protection requirement is simply avoiding paying a ticket 
change fee. The Department also agrees with consumer rights advocacy 
groups that airlines have effective tools to investigate and pursue 
punitive actions against serial offenders who repeatedly engage in 
fraudulent actions to receive travel credits or vouchers, including 
banning the individual from traveling on their flights. In conclusion, 
the Department is confident that the criteria for the documentations 
listed in the rule that carriers may request and carriers' own 
deterrence tools would place adequate safeguards against fraud and 
abuse.

9. Travel Credits or Voucher

    The NPRM: In the NPRM, the Department addressed various issues 
regarding the travel credits and vouchers to be provided to passengers 
due to government restrictions or health concerns related to a serious 
communicable disease. These issues concern: (1) the appropriate 
validity period of the credits or vouchers provided to consumers, 
including whether an indefinite validity period for credits or vouchers 
issued under this proposal is reasonable (2) the transferability of the 
travel credits or vouchers to others; (3) the value of the travel 
credits or vouchers, including establishing a minimum value of equal to 
or greater than the airfare and allowing a deduction from the credit or 
voucher for service charges by ticket agents when issuing the original 
ticket and credit/voucher processing fees by airlines and ticket 
agents; and (4) the disclosure of any material restrictions, 
limitations, or conditions on the use of the credits and vouchers. More 
specifically, the Department proposed to require airlines and ticket 
agents provide covered passengers non-expiring credits or vouchers for 
future travel and invited comment on requiring that the travel credits 
or vouchers be transferrable at the consumers' discretion. The 
Department also proposed that the travel credits or vouchers issued to 
these consumers be ``a value equal to or greater than the fare 
(including government-imposed taxes and fees and carrier-imposed fees 
and surcharges).'' Further, the Department proposed to allow airlines 
and ticket agents to charge a processing fee for the issuance of 
credits or vouchers and sought comment on whether allowing ticket 
agents to retain the service fees charged when issuing the original 
ticket is reasonable and appropriate.
(1) Validity Period and Transferability
    The Department proposed to require that airlines and ticket agents 
provide non-expiring credits or vouchers for future travel to 
qualifying consumers. The Department sought comments on whether an 
indefinite validity period for credits or vouchers issued under this 
proposal is reasonable, and if not, why and what a reasonable minimum 
validity period should be. Commenters were encouraged to provide 
information on what challenges airlines and ticket agents may face when 
accommodating the redemptions of travel credits and vouchers that have 
no expiration dates. Also, the Department sought comments on whether it 
should require that the travel credit or voucher be transferrable at 
the consumers' discretion. The Department explained that 
transferability would ensure that eligible consumers who spent money on 
tickets that they no longer need wouldn't completely lose the value of 
the tickets.
(2) Value of Tickets and Processing Fees To Issue Travel Credits and 
Vouchers
    The Department proposed that the travel credits or vouchers issued 
to qualified consumers be ``a value equal to or greater than the fare 
(including government-imposed taxes and fees and carrier-imposed fees 
and surcharges).'' The Department also proposed that the credits or 
vouchers include any prepayment of unused ancillary services such as 
baggage fees or seat selection fees as those services have not been 
provided by the carrier.\92\ The Department asked whether airlines 
should be required to offer an option to consumers in which consumers 
may choose to receive the travel credit or voucher redeemable for the 
same itinerary as the original ticket, regardless of what the ticket 
cost is at the time of redemption, noting that as airfare fluctuates, 
some consumers may benefit from and prefer this option if they plan to 
travel on the same itinerary in the future without worrying about price 
increases, while airlines may benefit when the redeemed tickets are 
priced less than the original purchase price of the ticket.
---------------------------------------------------------------------------

    \92\ The Department's rulemaking on Refunding Fees for Delayed 
Checked Bags and Ancillary Services That Are Not Provided proposes 
that airlines must refund any ancillary service fees when a 
passenger traveled on the scheduled or an alternative flight and the 
service was not provided. See 81 FR 75347. That proposal is 
discussed and finalized in Section III of this rule.
---------------------------------------------------------------------------

    Based on the Department's view that neither the airline or ticket 
agent initiated the communicable disease-related change that is 
resulting in the need for a credit or voucher, we proposed to allow 
airlines and ticket agents to charge a processing fee for the issuance 
of credits or vouchers to non-refundable ticket holders when consumers' 
travel plans are affected by concerns related to a serious communicable 
disease, provided that the fee is on a per passenger basis and 
appropriate disclosures were made to the consumer prior to the consumer 
purchasing the airline tickets. The Department sought comments on 
whether it is reasonable to permit airlines and ticket agents to charge 
a processing fee for the issuance of travel credits or vouchers, and if 
so, what type and manner of disclosure would be sufficient to avoid 
consumer confusion for fees applicable for these specific 
circumstances.
(3) Restrictions and Disclosures
    The Department proposed to prohibit conditions, limitations, and 
restrictions imposed on the credits and vouchers that are unreasonable 
and would materially reduce the value of the credits and vouchers to 
consumers as compared to the original purchase prices of the airline 
tickets. The Department provided a list of examples that would be 
deemed unreasonable under the proposal. These examples included a 
credit or voucher that: would severely restrict bookings with respect 
to travel date, time, or routes; can only be used on one booking and 
voids any residual value; or would impose a booking fee for a new 
ticket that reduces the value of the voucher or credit available to be 
used on the new ticket. With regard to material restrictions, 
limitation, and conditions on the use of the credits and vouchers that 
are not deemed unreasonable, the Department proposed to require 
airlines and ticket agents provide full disclosure. The Department 
sought comments on whether regulating the terms and conditions of the 
credits or voucher in this specific context is reasonable and what 
other steps the Department should consider ensuring that passengers

[[Page 32823]]

receiving credits and vouchers for future travel are adequately 
protected.
    Comments Received: The Department received comments on these issues 
from airlines, ticket agents, and consumer rights advocates with the 
validity period for the travel credits and vouchers being the most 
controversial.
(1) Validity Period and Transferability
    A4A expressed strong concerns about the proposal requiring that the 
credits or vouchers be non-expiring, arguing that such requirement 
would lead to rampant fraud and abuse, exposing carriers to significant 
financial and accounting liabilities. A4A commented that the 
requirement would (1) impose financial hardship on carriers by building 
up significant liability on their accounting books that materially harm 
credit ratings; (2) impose administrative costs to carriers by 
requiring permanent record retention and data access on ticket and 
voucher records; (3) cause technical issues to distribution systems as 
those systems need an expiration date populated to function; (4) raise 
tax issues because airlines have to absorb taxes remitted to 
governments that cannot be refunded and repurposed if consumers elect 
to not travel within a reasonably short timeframe; and (5) raise legal 
compliance issues under State escheat laws, if they are not preempted 
by the Department's authority. For these reasons, A4A recommended that 
the Department should not mandate the validity period of credits or 
vouchers longer than one year, and if the credits or vouchers are 
issued during a public health emergency and that emergency lasts beyond 
one year, the Department would require that the airlines extend the 
validity period by one year at a time. A4A's position was supported by 
IATA, RAA, Spirit, Qatar Airways, and SATA. These commenters also were 
against requiring the travel credits or vouchers be transferable, 
arguing that it would create a second-hand market that could lead to 
fraud.
    The ACPAC discussed this issue and voted to recommend that the 
final rule require the travel credits or vouchers be non-expiring and 
transferrable.\93\ Travelers United also supported the proposal to 
require the credits or vouchers to be non-expiring, stating that they 
should be treated as a store credit with no restrictions on booking and 
transferability. It further argued that the current airline credit 
rules are different from airline to airline and the Department should 
adopt a uniform and clear rule for credits and vouchers.
---------------------------------------------------------------------------

    \93\ Three members representing consumer rights advocacy groups, 
State Attorneys General, and airports, respectively, voted for the 
recommendation. The member representing A4A voted against the 
recommendation, stating that the issue of transferability has not 
been analyzed and that requiring transferrable credits may result in 
fraud and abuse.
---------------------------------------------------------------------------

    Most ticket agent representatives, including Travel Management 
Coalition, ABTA, USTOA, and Travel Tech, opposed requiring credits or 
vouchers be non-expiring. They argued that the non-expiring requirement 
creates uncertainties and long-term liability for airlines and ticket 
agents and unreasonable administrative and reporting burdens to them. 
DWHSA, on the other hand, supported the proposal to require credits or 
vouchers be non-expiring, arguing that if some airlines are currently 
offering non-expiring credits, all airlines should be able to do so.
(2) Value of Tickets and Processing Fees To Issue Travel Credits and 
Vouchers
    On the value of the credits or vouchers, A4A commented that the 
Department should allow airlines to adjust the amount to reflect non-
refundable foreign taxes. Several airline commenters expressed their 
support for the proposal to allow airlines and ticket agents to charge 
a service fee for the issuance of the credits or vouchers, and some 
commenters also support the disclosure requirement in relation to the 
service charge. On booking restrictions, A4A opined that DOT should not 
regulate specific terms and conditions of the credits or vouchers. 
Qatar Airways suggested that clarity is needed on the term ``severe 
restriction.'' A4A and IATA commented that the Department should let 
the market determine whether the credits or vouchers can be used for 
booking with one carrier or others. Qatar Airways, on the other hand, 
stated that the credits or vouchers should only be redeemed with the 
issuing airline.
    Travelers United commented that all credits or vouchers issued 
under the proposals should be uniform and clear to passengers and the 
Department should ensure that any residual values after one booking be 
available to consumers. It further stated that the only limitation on 
the credits or vouchers should be that they must be used on the issuing 
airline. Travelers United also provided examples of existing 
restrictions that it believes to be unreasonable, including the 
requirement that the credits or vouchers cannot be used to pay 
ancillary service fees and the requirement that the credits or vouchers 
issued for a business class ticket can only be used to book another 
business class ticket.
    As for processing fees, IATA, Spirit, AAPA, and Qatar Airways 
supported the proposal to allow airlines and ticket agents to charge a 
processing fee for issuing credits or vouchers. Several ticket agent 
representatives also supported the proposal. Two individual consumers 
commented that if airlines are allowed to charge a processing fee, 
there should be a cap or clearly defined limit to these fees. This 
individual opined that if airlines are given too much leeway to 
determine the amount of the fee, consumers may end up paying the fee 
that is the majority of the cost. Another individual commented that 
allowing airlines to charge a processing fee for vouchers would result 
in airlines charging a high fee, removing the consumer protection 
provided by the rule. Another individual commented that it is 
inconsistent for the Department to propose that the credits or vouchers 
be ``a value equal to or greater than the fare'' yet allow airlines to 
charge a processing fee.
(3) Restrictions and Disclosures
    On booking restrictions, A4A opined that DOT should not regulate 
specific terms and conditions of the credits or vouchers. Qatar Airways 
suggested that clarity is needed on the term ``severe restriction.'' 
A4A and IATA commented that the Department should let the market 
determine whether the credits or vouchers can be used for booking with 
one carrier or others. Qatar Airways, on the other hand, stated that 
the credits or vouchers should only be redeemed with the issuing 
airline.
    Travelers United commented that all credits or vouchers issued 
under the proposals should be uniform and clear to passengers and the 
Department should ensure that any residual values after one booking be 
available to consumers. It further stated that the only limitation on 
the credits or vouchers should be that they must be used on the issuing 
airline. Travelers United also provided examples of existing 
restrictions that it believed to be unreasonable, including the 
requirement that the credits or vouchers cannot be used to pay 
ancillary service fees and the requirement that the credits or vouchers 
issued for a business class ticket can only be used to book another 
business class ticket.
    ABTA opposed imposing a blanket requirement on what restrictions 
are permissible for the credits or vouchers, stating that these 
decisions should be made by each business on a case-by-case basis. 
USTOA also commented that the Department should not dictate the 
contractual terms of credits or vouchers.
    DOT Responses:

[[Page 32824]]

(1) Validity Period and Transferability
    The Department has considered airlines' arguments against requiring 
non-expiring travel credits and vouchers and is convinced that although 
the non-expiring feature would provide consumers the maximum 
flexibility to use the credits or vouchers, the difficulty for airlines 
to manage and track these technically perpetual liabilities is not 
trivial. The Department, however, disagrees with airlines' suggestion 
that a one-year validity period is adequate to ensure that consumers 
have sufficient time to use the credits and vouchers. Although airlines 
suggest that the one-year period can be extended if a public health 
emergency extends beyond a year, the Department believes that the 
extension of travel credits or vouchers imposes administrative burdens 
to airlines and potential confusion and uncertainty to consumers. As 
such, we are adopting a final rule requiring that the travel credits or 
vouchers issued under the conditions related to a serious communicable 
disease be valid for at least five years from the date of the issuance. 
The Department views a five-year validity period to be a sufficient 
timeframe to ensure passengers who are affected by a serious 
communicable disease can use the credits or vouchers for future travel 
while not imposing undue burdens on airlines. The Department also notes 
that the five-year validity period is consistent with the Credit Card 
Accountability Responsibility and Disclosure Act of 2009 (CARD Act) 
\94\ and the CFPB regulation implementing the CARD Act, 12 CFR 1005.20, 
which require that the expiration date of a store gift card or gift 
certificate cannot be earlier than 5 years after the date on which the 
gift certificate was issued. Although the travel credits or vouchers 
issued pursuant to this final rule are not ``gift certificates'' or 
``store gift cards'' that are subject to the CARD Act and the CFPB 
rule,\95\ the Department views that adopting a similar restriction on 
the validity period as the CARD Act and its implementing rule benefits 
consumers by avoiding potential confusions arising from different 
regulatory entities' regulations on electronic financial documents 
issued by businesses.
---------------------------------------------------------------------------

    \94\ Public Law 111-24, May 22, 2009.
    \95\ The CARD Act and the CFPB implementing rule definitions for 
``gift certificate'' and ``store gift card'' require that the 
instruments must be purchased or issued ``on a prepaid basis'' ``in 
exchange for payment.'' As the travel credits or vouchers under this 
final rule are not purchased or issued on a prepaid basis in 
exchange for payment, they are not considered ``gift certificate'' 
or ``store gift card'' that are subject to the CARD Act and the CFPB 
rule in 12 CFR 1005.20.
---------------------------------------------------------------------------

    Further, the Department is requiring that the credits or vouchers 
issued under this final rule be transferrable to address concerns from 
numerous consumers regarding the situations relating to a serious 
communicable disease that make them unable able to use the travel 
credit or voucher due to their age, health condition, or other reasons. 
For example, in complaints received by the Department during the COVID-
19 pandemic, some elderly passengers with a severe underlying health 
condition expressed that given their ages and the medical conditions 
they have, air travel will not be an activity that they would consider 
in the future even with the COVID-19 public health emergency coming to 
an end. Also, infrequent travelers who booked travel for a specific 
event that was canceled due to a serious communicable disease expressed 
concerns that they have no use for the credits or vouchers because they 
are not likely to have the need to travel in the foreseeable future. 
The Department views these concerns as reasonable grounds for requiring 
the travel credits or vouchers be transferrable so the air 
transportation that these consumers invested their money in can be 
utilized by others of their choosing before expiring.
    The Department is not convinced by the airlines' arguments that 
transferability will invite and increase fraud. The initial issuance of 
the credits and vouchers under this rule are subject to conditions 
airlines are permitted to impose, including documentation proof for 
eligibility. Once they are issued to eligible consumers, whether the 
eligible consumers choose to redeem the credits or vouchers on their 
own or transfer to another individual would not make a difference to 
the airlines financially. We are also not troubled by a secondary 
market made possible by the transferability feature of the credits or 
vouchers in which consumers who obtained the credits or vouchers on 
legitimate grounds can trade them with other consumers in order to 
recoup the value, or the partial value, they paid into the airline 
tickets. To comply with the transferability requirement, airlines may 
simply eliminate the requirement that only the passengers in the 
original bookings may use the credits or vouchers, similar to a store 
gift card that can be redeemed by anyone.
(2) Value of Credits and Vouchers and Service Fee for Processing 
Credits and Vouchers
    The Department is adopting the proposal to require airlines to 
issue credits or vouchers in a value equal to or greater than the fare, 
including carrier-imposed fees and surcharges and government-imposed 
taxes and fees that are not refunded to consumers. To the extent other 
Federal agencies require airlines to refund certain government-imposed 
fees to consumers when the air transportation is not used by 
consumers,\96\ carriers may deduct the amounts of those fees that have 
been refunded to consumers from the value of the travel credits or 
vouchers. With regard to prepaid ancillary service fees, the Department 
notes that the situation discussed here is distinguishable from the 
situations in which airlines are required to refund ancillary service 
fees for services that are not provided. In the situations here, the 
passenger chooses not to travel, and as a result, the pre-paid 
ancillary services are not used. As such, the Department is not 
requiring airlines to refund the ancillary service fees in the form of 
the original payment, and instead, we are requiring that the value of 
the ancillary service fees be included in the value of travel credits 
or vouchers issued.
---------------------------------------------------------------------------

    \96\ See, e.g., the Transportation Security Administration's 
regulation provides that any changes by the passenger to the 
itinerary are subject to additional collection or refund of the 
September 11th Security service fee by the direct air carrier or 
foreign air carrier, as appropriate. 49 CFR 1510.9(b).
---------------------------------------------------------------------------

    Based on the comments received, the Department is adopting the 
proposal to allow airlines to impose a processing fee for issuing 
travel credits or vouchers to eligible passengers, provided that the 
fee is assessed on a per-passenger basis and appropriate disclosures 
regarding the existence and amount of the fee were made to the consumer 
prior to the consumer purchasing the airline ticket. Given that the 
airline is not initiating the change that is resulting in the need for 
a credit or voucher, the Department believes that this strikes the 
right balance between ensuring that consumers receive travel credits 
and vouchers when they do not travel because of government restrictions 
or health concerns related to a serious communicable disease and 
avoiding having airlines bear all the cost for something that was also 
outside their control. If the Department determines that airlines' 
processing fees appear to circumvent the intent behind the requirement 
for consumers to obtain credits or vouchers in equal or greater value 
as the fare, the Department will consider whether further action is 
appropriate.
(3) Restrictions and Disclosures
    With respect to limitations, restrictions, and conditions on the

[[Page 32825]]

credits or vouchers issued under this section, the Department is 
adopting the proposed prohibition on unreasonable terms that would 
materially reduce the value of the credits and vouchers to consumers as 
compared to the original purchase prices of the airline tickets. The 
Department confirms its tentative view stated in the NPRM that 
unreasonable terms include severe restrictions on travel date, time, or 
routes, a requirement that a voucher can only be used on one booking 
and that any residual value would be void afterwards, a restriction 
that the voucher can only be used to cover the base fare of a new 
booking and not taxes and fees or ancillary service fees, a requirement 
that redeeming the credits or vouchers would be subject to a rebooking 
fee or a change fee \97\ that reduces the value of the voucher or 
credit applicable to the new ticket, or a restriction limiting the 
rebooking to certain class(es) of fares such as business class or first 
class. A restriction on the travel date, time, or routes is severe when 
the restriction eliminates a substantial number of choices passenger 
may have for rebooking and is a case-by-case analysis. A restriction on 
what airline(s) the credit or voucher can be used to book with, on the 
other hand, would not be viewed as unreasonable as long as the credit 
or voucher allows, at a minimum, rebooking on the airline for the 
original ticket. Further, for material restrictions, limitation, and 
conditions on the use of the credits and vouchers that are not deemed 
unreasonable, the final rule require airlines provide clear disclosure 
to consumers at the time of issuing credits or vouchers.
---------------------------------------------------------------------------

    \97\ The NPRM's proposed rule text suggests that carriers may 
charge an ``administrative fee'' for rebooking tickets using the 
credits or vouchers. After further consideration, especially 
considering that the rule allows carriers to charge a processing fee 
for issuing the credits or vouchers, the Department believes that it 
is unreasonable for consumers to be charged again when redeeming the 
credits or vouchers. Therefore, the final rule determines that 
charging an administrative fee at the time of rebooking is an 
unreasonable condition.
---------------------------------------------------------------------------

10. Consumer Rights After Acceptance of Travel Vouchers and Credits

    The NPRM: The Department described its tentative view that if an 
airline cancels or makes a significant change to a flight after a 
passenger has already requested to cancel his or her flight due to 
government restrictions or health concerns and received a credit or 
voucher, then the airline or ticket agent should not be required to 
replace that voucher with a refund. The Department stated that it is 
overly burdensome and costly for airlines to apply refund eligibility 
to itineraries that have already been cancelled pursuant to passengers' 
requests prior to the airline's decision to cancel or significantly 
change the flight. The Department cautioned that its Office of Aviation 
Consumer Protection has the authority to investigate whether an airline 
or a ticket agent has engaged in an unfair or deceptive practice when 
it fails to inform a passenger making a request to cancel the itinerary 
that the passenger is eligible for a refund, if the airline or ticket 
agents knows or should have known at the time that a flight has been 
cancelled or significantly changed.
    Comments Received: IATA supported the Department's view that if an 
airline cancels or makes a significant change to a flight after a 
passenger has already requested to cancel his or her a travel itinerary 
and received a credit or voucher, then the airline or ticket agent 
should not be required to replace that voucher with a refund.
    DOT Response: The Department maintains its view that an airline or 
ticket agent should not be required to replace a voucher with a refund 
when an airline cancels or makes a significant change to a flight after 
a passenger has already requested to cancel his or her flight due to 
government restrictions or health concerns and received a credit or 
voucher.

V. Contract of Carriage Provisions Must Not Contradict Requirements of 
This Final Rule

    The Ticket Refund NPRM proposed to include in the new 14 CFR part 
260 a provision that would require airlines to ensure that the terms or 
conditions in their contracts of carriage are consistent with the 
proposed regulation, including the proposals pertaining to airline 
ticket refunds due to airline-initiated cancellation or significant 
change, and the proposals pertaining to refunds of baggage fees for 
significantly delayed bags and refunds of ancillary service fees for 
services that are not provided. In response to this proposal, Travelers 
United urged the Department to require airlines to incorporate their 
customer service plans in their contract of carriage. Several 
individual commenters noted that the language that airlines use in 
their contract of carriage restrict the rights of passengers. In this 
final rule, the Department makes clear that carriers' inclusion of 
terms and conditions in their contract of carriage that are 
inconsistent with the carriers' obligations to provide refunds as 
specified in this rule will be considered an unfair and deceptive 
practice. In addition, the Department prohibits carriers' inclusion of 
terms and conditions in their contract of carriage that are 
inconsistent with the carriers' obligations to provide travel credits 
or vouchers to travelers affected by a serious communicable disease as 
required by this final rule. Reasonable consumers would be misled with 
inaccurate information in airlines' contract of carriage regarding 
their right to a refund, travel credits, vouchers, or other 
compensation. This information is material to consumers as it could 
result in significant financial loss because consumers would 
incorrectly believe that they cannot obtain refunds, travel credits, or 
vouchers that they are entitled to receive under DOT rules. The 
Department has long considered airlines with terms and conditions in 
their contract of carriage that are inconsistent with requirements 
imposed on them to be engaging in an unfair and deceptive practice. The 
Department is not requiring carriers to include their customer service 
plans in their contracts of carriage as suggested by Traveler's United 
but will monitor consumer complaints in this area and determine if we 
need to revisit this issue in the future.

VI. Refunding Airline Tickets to Passengers Affected by a Serious 
Communicable Disease Due to Airlines or Ticket Agents Receiving 
Significant Government Financial Assistance

    To address the concerns by consumers, consumer advocacy groups,\98\ 
and members of Congress \99\ that it is fundamentally unfair for 
airlines receiving government financial assistances during the COVID-19 
to refuse to provide refunds to consumers who were not able to travel 
due to the COVID-19 pandemic, the Department proposed that if a covered 
airline or ticket agent receives significant government financial 
assistance during a public health emergency, the airline or ticket 
agent would be required to provide refunds to consumers who are 
otherwise eligible for travel credits or vouchers under the NPRM. The 
Department further proposed a set of procedures to determine whether a 
covered entity has received ``significant government financial 
assistance,'' which

[[Page 32826]]

includes: applying relevant factors such as the size of the entity, 
revenue, the amount of government financial assistance accepted, and 
total enplanements to the entities; issuing tentative determinations on 
which entities have received significant government assistance; and 
finalizing the determinations based on public comments.
---------------------------------------------------------------------------

    \98\ See, e.g., Airlines: Give Us Refunds, Not Vouchers, 
petition by Consumer Reports, https://action.consumerreports.org/20200420_finance_airlinerefundpetition. Consumer Reports, Letter to 
Sect. Buttigieg, https://advocacy.consumerreports.org/wp-content/uploads/2021/11/CR-letter-to-Sec-Buttigieg-consumer-complaints-11-18-21-FINAL-2.pdf.
    \99\ See, e.g., Senator Edward J, Markey and Richard Blumenthal 
press release, https://www.markey.senate.gov/news/press-releases/senators-markey-and-blumenthal-blast-airlines-inadequate-response-to-their-request-to-eliminate-expiration-dates-for-all-pandemic-related-flight-credits.
---------------------------------------------------------------------------

    The Department received numerous comments from airline and ticket 
agent representatives, expressing their concerns about the Department's 
authorities for this proposal as well the practicality of the proposed 
procedure to determine which entity has received ``significant 
government financial assistance.'' Consumers and their representatives 
supported this requirement but did not articulate the reason(s) for 
their support of this proposal. Although the Department continues to 
view that airlines and ticket agents receiving significant financial 
assistance from governments during a public health emergency should do 
more to assist airline passengers who are impacted by the public health 
emergency, we have concluded that more time is needed to consider the 
information provided to the Department and to determine whether 
additional information is needed for a final rule that is beneficial to 
consumers. As such, we are deferring whether to finalize this proposal 
to another rulemaking action.

VII. Effective Date and Compliance Periods

    The NPRM: The Ticket Refund NPRM proposed that any final rule 
adopted would take effect 90 days after the publication in the Federal 
Register. The Department invited comments on whether 90 days is the 
appropriate interval for implementation of the proposed requirements if 
adopted. The Ancillary Fee Refund NPRM did not propose an effective 
date for provisions finalized under that NPRM.
    Comments Received: On the Ticket Refund NPRM, a number of airline 
commenters asserted that the proposed 90-day implementation timeframe 
is inadequate, reasoning that airlines need additional time to revise 
refund policies regarding when a passenger is entitled to a refund and 
to train their staff. They also commented that additional time is 
needed to adjust IT systems to reflect how vouchers should be granted. 
Some airlines suggested that a 180-day implementation period is 
warranted while others argued that an implementation period of no 
shorter than one year should be granted. ASTA also asserted that ticket 
agents will need additional time to assess how a final rule would 
impact them and decide whether they want to continue to sell airline 
tickets as merchants of record and make necessary adjustments 
accordingly. ASTA further requested that the Department clarify how it 
interprets the application of the rule's effective date with respect to 
ticket sale date, travel date, and the date a refund request is 
submitted.
    On the Ancillary Fee Refund NPRM, the NPRM did not propose an 
implementation period. A4A and IATA in their comments requested that 
the Department provide one-year for airlines to implement the 
requirements relating to refunding baggage fees for delayed bags and 
ancillary service fees for services not provided. A4A specified that if 
the Department requires ``automatic'' refunds for baggage fees, 
carriers will need significant amount of time to work with distribution 
channel stakeholders to build, test, and implement new payment and 
refund channels beyond airfare. IATA also commented that additional 
time is needed due to the complexity of airline systems and procedure 
and the potential involvement of multiple airlines and distribution 
channels. The ACPAC recommended that all final provisions of the final 
rule be effective after 90 days of its publication in the Federal 
Register.\100\
---------------------------------------------------------------------------

    \100\ The three members representing consumer rights advocacy 
groups, State Attorneys General, and airports support this 
recommendation. The member representing A4A opposes this 
recommendation, stating that some of the provisions, if finalized, 
will require airlines to make significant changes and the 90-day 
implementation period is not adequate to implement those changes.
---------------------------------------------------------------------------

    DOT Responses: The Department has considered the comments and 
determined that an extended implementation period for certain 
provisions is warranted. First and foremost, although this final rule 
will become effective 60 days after its publication in the Federal 
Register, carriers and ticket agents will have different implementation 
periods for different provisions. For provisions regarding ticket 
refunds due to airline cancellation or significant change, refunds of 
baggage fees for significantly delayed bags, and refunds of ancillary 
service fees when services are not provided, regulated entities will 
have six months from the date of publication of the final rule, or 
October 28, 2024, to implement the relevant requirements. The 
Department views the six-month implementation period as appropriate for 
airlines and ticket agents to modify their policies, procedures and IT 
systems and to train staff on the relevant requirements on ticket and 
ancillary fee refunds (including refunding fees for significantly 
delayed checked bags). The Department considers the six months 
compliance period to be necessary for carriers and ticket agents to 
establish or enhance processes and procedures to communicate with one 
another to comply with these requirements.
    For the provision regarding issuing travel credits or vouchers to 
passengers who are affected by a serious communicable disease, carriers 
will have 12 months from the date of the final rule's Federal Register 
publication, or April 28, 2025, to fully implement the requirements. 
The Department believes that this implementation period is sufficient 
for carriers to revise IT systems for the issuance, tracking, and 
redemption of travel credits or vouchers meeting the regulatory 
requirements, to establish procedures with respect to requesting and 
reviewing supporting medical documentations from passengers, and to 
train staff with regard to providing customer service on related 
matters.

VIII. Severability

    This final rule includes four major components that enhance 
protections of airline passengers (ticket refunds due to airline 
cancellation or significant change, baggage fee refunds for 
significantly delayed bags, ancillary service fee refunds for services 
not provided, and consumer protections for airline passengers affected 
by a serious communicable disease), each of which is issued pursuant to 
separate and independent legal authorities and operates independently 
on its own. Were any component of this final rule stayed or invalidated 
by a reviewing court, the components that remained in effect would 
continue to provide vital protections to airline passengers. The 
implementation of each component and the consumer protection provided 
by each component do not hinge on other components of the rule. 
Therefore, each of the four components of the final rule are severable. 
In the event of a stay or invalidation of any part of any rule, or of 
any rule as it applies to certain regulated entities, the Department's 
intent is to otherwise preserve the rule to the fullest possible 
extent.

Regulatory Analyses and Notices

A. Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures and Executive Order 13653 (Improving 
Regulation and Regulatory Review)

    The final rule meets the threshold for a significant regulatory 
action as defined

[[Page 32827]]

in section (3)(f)(1) of Executive Order (E.O.) 12866, ``Regulatory 
Planning and Review,'' as amended by E.O. 14094, ``Modernizing 
Regulatory Review,'' because it is likely to have an annual effect on 
the economy of $200 million or more, as adjusted by OMB pursuant to 
section 3(f)(1). Table X summarizes the expected economic impacts of 
the final rule.
    The lack of universal definitions for ``cancellation'' and 
``significant itinerary change'' has created inconsistency among 
carriers in granting consumers airline ticket refunds. The final rule 
will reduce these inconsistencies by defining these terms and will 
reduce the resources consumers need to expend to obtain the refunds 
they are owed. Consumer time savings are estimated to be about $3.8 
million annually.
    This rule implements a 2016 statutory mandate and requires that 
airlines refund baggage fees when a bag is delivered to a consumer with 
a delay of 12 hours or more for domestic flights, 15 hours for 
international flights with a duration of 12 hours or less, and 30 hours 
for international flights with a duration of over 12 hours. The final 
rule also implements a 2018 mandate and requires airlines to refund 
fees collected for ancillary services they fail to provide. The 
expected economic impacts of these provisions consist of $16.0 million 
annually in increased refunds to consumers and $7.1 million annually in 
administrative costs for the airlines.
    The final rule requires airlines to provide transferable travel 
credits or vouchers, valid for at least five years, to passengers who 
cancel travel for reasons related to a serious communicable disease. 
The impacts of this requirement depend upon many factors, including the 
presence and nature of a pandemic, whether airlines can enforce basic 
economy change restrictions though collecting documentation from 
consumers regarding whether they have or may have a serious 
communicable disease, and the value assigned to a case of avoided 
disease. Expected societal benefits are from infected air passengers 
canceling planned air travel due the option of receiving the five-year 
travel credit and the reduction in exposure of uninfected passengers to 
serious contagious disease. Estimated annual costs would be $3.4 
million outside of a pandemic or $482.0 million during a pandemic. 
While data to quantify benefits are insufficient, a break-even analysis 
illustrates the thresholds for the monetized value for a case of 
avoided disease and the travel credit effectiveness rates that could 
yield benefits that exceed costs.

               Table 3--Summary of Annual Economic Impacts
                       [Millions of 2022 dollars]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
       Cancelled flight and significant change of flight itinerary
------------------------------------------------------------------------
Benefits (+):
    Consumer time savings.................  $3.8
Costs (-).................................  de minimis
Net benefits (costs)......................  $3.8
Transfers:
    Increased airline ticket refunds        Unquantified.
     (airlines to consumers).
------------------------------------------------------------------------
  Refunds of fees for significantly delayed bags and ancillary fees not
                                provided
------------------------------------------------------------------------
Benefits (+)..............................  n/a
Costs (-):
    Administrative........................  $7.1
Net benefits (costs)......................  ($7.1)
Transfers:
    Baggage fee refunds (airlines to        $16.0
     consumers).
------------------------------------------------------------------------
     Vouchers or travel credits for passengers affected by a serious
                          communicable disease
------------------------------------------------------------------------
Benefits (+):
    Reduction in cases of serious           Unquantified.
     communicable disease.
Costs (-):
    Documentation.........................  $3.4 (non-pandemic) or
                                             $482.0 (pandemic).
Net benefits (costs)......................  Unquantified.
------------------------------------------------------------------------

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA) (5 U.S.C. 601, et 
seq.) requires Federal agencies to review regulations and assess their 
impact on small entities unless the agency determines that a rule is 
not expected to have a significant economic impact on a substantial 
number of small entities. This final rule would have some impact on air 
carriers and ticket agents that qualify as small entities. To assess 
the impact of this final rule, the Department has prepared a final 
regulatory flexibility analysis (FRFA), as set forth in this section.
    As required by the Regulatory Flexibility Act (5 U.S.C. 601, et. 
seq., the FRFA includes:
     A statement of the need for and objectives of the rule;
     A statement of the significant issues raised by the public 
comments in response to the initial regulatory flexibility analysis, a 
statement of the assessment of the agency of such issues, and a 
statement of any changes made in the proposed rule as a result of such 
comments;
     The response of the agency to any comments filed by the 
Chief Counsel for Advocacy of the Small Business Administration (SBA 
Advocacy) in response to the proposed rule, and a detailed statement of 
any change made to the proposed rule in the final rule as a result of 
the comments;
     A description and estimate of the number of small entities 
to which the rule will apply or an explanation of why no such estimate 
is available;
     A description of the projected reporting, recordkeeping 
and other compliance requirements of the rule, including an estimate of 
the classes of small entities which will be subject to the requirement 
and the type of

[[Page 32828]]

professional skills necessary for preparation of the report or record; 
and
     A description of the steps the agency has taken to 
minimize the significant economic impact on small entities consistent 
with the stated objectives of applicable statutes, including a 
statement of the factual, policy, and legal reasons for selecting the 
alternative adopted in the final rule and why each one of the other 
significant alternatives to the rule considered by the agency which 
affect the impact on small entities was rejected.
    A statement of the need for and objectives of the rule is provided 
elsewhere in the preamble to this final rule and not repeated here. 
Similarly, the Department provides in the COMMENTS AND RESPONSES 
section a statement of the significant issues raised by the public 
comments in response to the initial regulatory flexibility analysis or 
the economic impacts of the rule and explains how DOT assessed these 
issues and made changes, if any, to the final rule as a result. DOT did 
not receive any comments from the Chief Counsel for Advocacy of the 
Small Business Administration (SBA Advocacy) in response to the 
proposed rule, the initial regulatory flexibility analysis, or the 
economic impacts of the rule.
Small Entities Affected
    The proposed rule would affect air carriers and ticket agents that 
qualify as small entities. For air carriers, the Department defines 
small entities based on the standard published in 14 CFR 399.73. An air 
carrier is a small entity if it provides air transportation exclusively 
with small aircraft, defined as any aircraft originally designed to 
have a maximum passenger capacity of 60 seats or less or a maximum 
payload capacity of 18,000 pounds or less. In 2022, 24 air carriers 
meeting these criteria reported passenger traffic data to the Bureau of 
Transportation Statistics.\101\ These carriers reported operating 
revenues in 2018 ranging from $1 million to $84 million.
---------------------------------------------------------------------------

    \101\ Bureau of Transportation Statistics. ``T1: U.S. Air 
Carrier Traffic and Capacity Summary by Service Class.'' https://www.transtats.bts.gov/Fields.asp?gnoyr_VQ=FJH. Small entities have a 
``CarrierGroupNew'' code of 5. Accessed Nov. 15, 2023.

                    Table 4--Affected Small Airlines
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
40-Mile Air.
Air Excursions LLC.
Alaska Central Express.
Bering Air Inc.
Empire Airlines Inc.
FOX AIRCRAFT, LLC.
Grant Aviation.
Iliamna Air Taxi.
Island Air Service.
J&M Alaska Air Tours, Inc. (Alaska Air Transit).
Junipogo, LLC (70 North Air).
Kalinin Aviation LLC (Alaska Seaplanes).
Katmai Air.
Maritime Helicopters, Inc.
New Pacific Airlines (Ravn Alaska).
Paklook Air, Inc (Airlift Alaska, Yute Commuter).
PM Air, LLC.
Ryan Air.
Scott Air LLC (Island Air Express).
Smokey Bay Air Inc.
Spernak Airways Inc.
Venture Travel LLC (Taquan Air Service).
Warbelow.
Wright Air Service
------------------------------------------------------------------------
Source: BTS Air Carrier Summary Data (Form 41 and 298C Summary Data).
  ``T1: U.S. Air Carrier Traffic and Capacity Summary by Service
  Class.'' BTS Air Carrier Report (Form 298C-F1).

    For ticket agents, the Department defines small entities based on 
the size standards published by the Small Business Administration in 13 
CFR 121.201. These size standards use the North American Industry 
Classification System (NAICS), which does not have a category 
specifically for ticket agents. Instead, the closest corresponding 
industry is travel agencies (NAICS code 561510). Establishments in this 
industry primarily act as agents in selling travel, tour, and 
accommodation services to the public and commercial clients. An 
establishment in this industry is a small entity if it has total annual 
revenues below $22 million. This amount excludes funds received in 
trust for an unaffiliated third party, such as bookings or sales 
subject to commissions, but includes commissions received.
    Data from the 2017 Economic Census provide an estimate of the 
number of small-entity ticket agents in the United States.\102\ This 
survey, conducted every five years by the US Census Bureau, is the 
official national measure of businesses and includes information on 
employment and revenue by industry. The survey groups firms by NAICS 
code and by revenue size, with $25 million being the closest threshold 
amount to the small-entity standard of $22 million. In 2017, 7,827 
travel agency establishments had annual revenues of less than $25 
million (Table 5). Not all travel agencies serve as ticket agents, 
however, making the number an over-estimate of affected small entities. 
The number is also an over-estimate because some of the firms may have 
annual revenues greater than $22 million.
---------------------------------------------------------------------------

    \102\ U.S. Census Bureau. 2022. ``Economic Census.'' https://www.census.gov/programs-surveys/economic-census.html.

         Table 5--Travel Agency Establishments by Revenue, 2017
------------------------------------------------------------------------
                        Annual revenue                           Firms
------------------------------------------------------------------------
Less than $100,000...........................................      1,470
$100,000 to $249,999.........................................      1,774
$250,000 to $499,999.........................................      1,441
$500,000 to $999,999.........................................      1,290
$1,000,000 to $2,499,999.....................................      1,069
$2,500,000 to $4,999,999.....................................        462
$5,000,000 to $9,999,999.....................................        221
$10,000,000 to $24,999,999...................................        100
                                                              ----------
    Total....................................................      7,827
------------------------------------------------------------------------
Notes: NAICS code 561510.
Source: U.S. Census Bureau, 2017 Economic Census.

Compliance Requirements and Costs
    As described in more detail elsewhere in the preamble of this final 
rule, the Department provides definitions and refund requirements for 
cancelled flight and significant change of flight itinerary. The 
Department also specifies requirements for significantly delayed bags 
and ancillary fees that passengers pay for that are not provided. The 
Department also establishes requirements for airlines to provide 
vouchers or travel credits to passengers whose travel plans are 
disrupted by circumstances beyond their control related to a serious 
communicable disease.
    As described in the Regulatory Impact Analysis for the final rule, 
the primary costs for the final rule that would be incurred by business 
are administrative costs from baggage and ancillary fee refund 
requirements and those related to the collection of documentation of 
serious contagious disease from passengers. Some small carriers that 
qualify as small businesses operate flights as part of a code-share 
arrangement with a larger carrier. In these cases, the larger carrier 
collects the baggage fees and other ancillary service fees and would be 
responsible for the refunds under the proposal. Therefore, overall 
costs to small businesses are likely lower than if small carriers 
collected the fees in all cases, though the Department acknowledges 
that some small carriers still collect the fees and would therefore be 
responsible for any refunds due as a result of the rule. As described 
in the baggage fee refund analysis, estimated annual refund payments 
and administrative costs for carriers ($9.3 million + $3.9 million) 
would account for about 0.2

[[Page 32829]]

percent of airlines' annual baggage fee revenues ($6.8 billion in 2022, 
the year used in the analysis). The Department acknowledges that the 
annual bag fee revenues for small carriers are likely lower than those 
of large carriers, but their estimated annual refund payments and 
administrative costs are also likely lower than those of large 
carriers. As baggage handling and tracking technologies improve, we 
expect that the percentage of delayed bags affected by the rule and 
resulting economic effects will decrease further.
    The number of passengers who would submit documentation to small 
carriers is difficult to predict, but a hypothetical example 
illustrates the potential economic costs associated with the 
documentation for small air carriers. In 2022, small air carriers in 
the United States made over 1.02 million passenger trips.\103\ If 
passengers needed to restrict travel for 5% of the trips and provide 
airlines with documentation, passengers would submit approximately 
51,000 forms. We assume that a customer service representative working 
for an airline or ticket agent would need an average of 5 minutes 
(0.083 hours) to review documentation and request additional 
documentation if needed, for a total of approximately 4,236 hours.
---------------------------------------------------------------------------

    \103\ Bureau of Transportation Statistics. Air Carrier 
Statistics (Form 41 Traffic)--All Carriers: T-100 Segment (All 
Carriers). United States Department of Transportation. https://www.transtats.bts.gov/Fields.asp?gnoyr_VQ=FMG. Accessed 10 Jan 2024.
---------------------------------------------------------------------------

    To estimate the value of the time air carriers would spend 
reviewing documentation, we use median wage data from the Bureau of 
Labor Statistics. For customer service representatives, the fully 
loaded wage rate is $25.68, using a $18.16 median hourly wage for 
customer services representatives in May 2022,\104\ multiplied by 1.41 
to account for employer benefit costs. The total estimated annual cost 
of the forms would be approximately $109,000, or about $4,500 per small 
carrier on average. This amounts to about 0.1 percent of total 
operating revenue per small carrier on average. Some of these costs, or 
additional costs, could be borne by small ticket agents.
---------------------------------------------------------------------------

    \104\ Bureau of Labor Statistics. ``Occupational Employment and 
Wage Estimates, May 2022: National estimates for customer service 
representatives.'' https://www.bls.gov/oes/current/oes434051.htm.
---------------------------------------------------------------------------

Regulatory Alternatives and Minimization of Impacts on Small Entities
    As described in the following paragraphs, several alternatives 
considered by the Department have had would different impacts on small 
businesses. The Department considered these alternatives and describes 
in the paragraphs that follow the steps the Department has taken to 
minimize the significant economic impact on small entities consistent 
with the stated objectives of applicable statutes, including a 
statement of the reasons for selecting the alternative adopted in the 
final rule and why the Department rejected other significant 
alternatives that affect the impact on small entities.
    One alternative considered as part of the proposed rule was to 
require cash refunds to consumers as a condition of accepting 
significant government assistance. After considering the comments 
received, the Department concluded that more time is needed to consider 
the information provided and determine whether additional information 
is needed for a final rule that benefits consumers. Therefore, the 
Department did not adopt this alternative, and the final rule will 
therefore have a smaller impact on small businesses.
    The Department also considered an alternative to limit the scope of 
the rule to specifying definitions for ``significant change in 
itinerary'' and ``cancellation.'' The Department rejected this 
alternative, however, based on its conclusion that removing the portion 
of the rule related to serious communicable diseases would undermine 
the Department's goal to protect consumers' financial interests when 
the disruptions to their travel plans were caused by public health 
concerns beyond their control. The Department also believes that 
protecting consumers' financial interests would further incentivize 
persons not to travel if they have or may have a serious communicable 
disease. Nonetheless, in adopting the final rule to protect consumers 
affected by a serious communicable disease, the Department imposes the 
requirements only on airlines but not ticket agents, including ticket 
agents that qualify as small businesses, thereby decreasing the impact 
on these small entities. For airlines that qualify as small businesses, 
although they are required to provide travel credits or vouchers to 
consumers who choose not to travel to protect themselves or others from 
a serious communicable disease, they are not required to accept a 
consumer's self-diagnosis of a medical condition consistent with public 
health guidance issued by CDC, comparable agencies in other countries, 
or WHO. The Department views this change as a way to reduce fraud and 
abuse and decrease the impact on small airlines.
    In determining what constitutes a significant itinerary change, the 
Department evaluated three alternative timeframes for early departures 
or delayed arrivals that would constitute a significant itinerary 
change. The first alternative reflects the timeframes set forth in the 
proposed rule: three hours for domestic itineraries and six hours for 
international itineraries as the times that would be considered 
significant. A second alternative left the timeframes for early 
departure and late arrival undefined, essentially maintaining the 
status quo. A third alternative considered was to adopt a tiered 
structure based upon such factors as total travel time. The final rule 
adopts the three- and six-hour timeframes from the proposed rule. The 
Department rejected the alternative of leaving the timeframes 
undefined. While leaving the timeframes undefined grants the most 
flexibility to the airlines, it would not achieve the same consistency 
as a uniform standard, which is an objective sought by this rulemaking. 
The Department rejected a tiered approach because of its complexity and 
potential difficulties in implementation for airlines as well 
comprehension on the part of consumers.
    With regard to the significant change in flight itinerary because 
of a downgrade in available amenities, the proposed rule included 
aircraft changes that lead to a significant downgrade of available 
amenities or travel experiences for all passengers. For the final rule, 
except for a downgrade in the class of service, the downgrade of 
available amenities applies to passengers with disabilities. The final 
rule clarifies that it refers to travel on a substitute aircraft that 
results in one or more accessibility features needed by the passenger 
being unavailable and changes in connecting airport for persons with 
disabilities. The Department altered the scope of passengers covered 
because of the ambiguity and subjectivity of what constitutes 
significant downgrade in amenities and travel experience. By retaining 
applicability to persons with disabilities, the final rule recognizes 
that aircraft substitutions can result in discomfort and inconveniences 
when an accessible feature needed by a passenger with a disability is 
unavailable.
    Another alternative considered by the Department and adopted in the 
final rule is to extend the length of baggage delivery delay for long-
haul international flights (flights with a duration of more than 12 
hours) under which a refund of baggage is required, from the 25-hour 
standard proposed in the NPRM to the 30-hour standard adopted in the 
final rule. This final rule, however, also shortened the length of 
baggage delivery delay for other

[[Page 32830]]

international flights (flights with a duration of 12 hours or less) 
under which a refund of baggage fee is required, from the 25-hour 
standard proposed in the NPRM to the 15-hour standard adopted in the 
final rule. The final rule decreases the impact on small carriers 
operating long-haul international flights and increases the impact on 
small carriers operating shorter international flights. The Department 
made the changes based on its view that setting a different standard 
for long-haul international flights incentivizes carriers to deliver 
the delayed bags as soon as possible to avoid refunding baggage fee, 
which benefits consumers and airlines. The Department further views 
that a shorter timeframe for delivering delayed bags on shorter 
international flights is beneficial to consumers and ensures that the 
baggage delivery delay standard is appropriate considering the ability 
of carriers to transport the delayed bags on its next available flight, 
other carriers' flights, or through courier services.
    The Department also considered whether to finalize the proposed 
requirement that airlines and ticket agents give non-expiring travel 
credits or vouchers to passengers who do not travel due to government 
restrictions or advice from a medical professional related to a serious 
communicable disease. Although the non-expiring feature would provide 
consumers the maximum flexibility to use the credits or vouchers, the 
Department recognizes the difficulty in managing and tracking them 
indefinitely. Thus, the Department adopted a final rule requiring that 
the travel credits be valid for at least five years from the date of 
the issuance. The Department views a five-year validity period a 
sufficient timeframe to ensure passengers who are affected by a serious 
communicable disease can use the credits while reducing burdens on 
airlines.

C. Executive Order 13132 (Federalism)

    This final rule has been analyzed in accordance with the principles 
and criteria contained in Executive Order 13132 (``Federalism''). This 
notice does not propose any provision that: (1) has substantial direct 
effects on the States, the relationship between the national government 
and the States, or the distribution of power and responsibilities among 
the various levels of government; (2) imposes substantial direct 
compliance costs on State and local governments; or (3) preempts State 
law. States are already preempted from regulating in this area by the 
Airline Deregulation Act, 49 U.S.C. 41713. Therefore, the consultation 
and funding requirements of Executive Order 13132 do not apply.

D. Executive Order 13175

    This final rule has been analyzed in accordance with the principles 
and criteria contained in Executive Order 13175 (``Consultation and 
Coordination with Indian Tribal Governments''). Because none of the 
provisions finalized in this rule would significantly or uniquely 
affect the communities of the Indian tribal governments or impose 
substantial direct compliance costs on them, the funding and 
consultation requirements of Executive Order 13175 do not apply.

E. Paperwork Reduction Act

    This final rule imposes a new collection of information that would 
require approval by the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act of 1995 (Pub. L. 104-13, 49 U.S.C. 3501 et seq. 
The Department has sought approval from OMB for the collection of 
information established in this final rule. The Department will publish 
a separate notice in the Federal Register announcing OMB approval of 
the new collection and advising the public of the OMB control number 
associated with the new collection.
    The new collection of information established in this final rule 
relates to allowing airlines to require passengers requesting travel 
credits or vouchers because their travel is affected by a serious 
communicable disease to provide documentation. Specifically, the 
Department allows airlines to require passengers wishing to cancel a 
flight itinerary that is still operated to provide documentation 
demonstrating that that they are prohibited from travel or are required 
to quarantine for a substantial portion of the trip by a governmental 
entity in relation to a serious communicable disease, or that they are 
advised by a licensed treating medical professional not to travel to 
protect themselves or others from a serious communicable disease. For 
this information collection, a description of the respondents and an 
estimate of the annual recordkeeping and periodic reporting burden are 
set forth below:
    Requirement to Prepare and Submit to Airlines Documentations 
Demonstrating a Passenger is Eligible for Travel Credits or Vouchers 
Due to a Reason Related to A Serious Communicable Disease.
    Respondents: Passengers prohibited or required to quarantine for a 
substantial portion of the trip by a governmental entity in relation to 
a serious communicable disease, passengers advised by a licensed 
treating medical professional not to travel by air because they have or 
may have contracted a serious communicable disease such that their 
travel would pose a threat to the health of others, and passengers 
advised by a licensed treating medical professional not to travel to 
protect themselves from a serious communicable disease during a public 
health emergency.
    Number of Respondents: The number of respondents would vary greatly 
depending on whether there is a public health emergency and the 
magnitude of that public health emergency. When there is a public 
health emergency with a similar magnitude of the COVID-19 pandemic, the 
number of respondents could potentially be very high. According to data 
provided by A4A, the airlines provided exchanges of tickets to about 
180 million passengers between March 2020 and February 2021. Industry 
further suggests in comments on the proposed rule that about 15 percent 
of consumers who need to make ticket changes might opt for a travel 
credit instead of an immediate ticket change. Thus, we estimate that of 
the 180 million consumers provided ticket changes in the baseline, 27 
million would be the number of respondents who need to submit the 
documentation to receive the five-year travel credit under the final 
rule.\105\ For purposes of this PRA burden analysis, we assume that the 
number of medical assistants developing the documentation and airline 
customer service representatives reviewing the documentation equal the 
number of customers providing responses.\106\
---------------------------------------------------------------------------

    \105\ In the NPRM, we estimated 5.58 million respondents based 
on the Department's data showing that in 2020, U.S. airlines 
enplaned 558 million fewer passengers in domestic air transportation 
than in 2019. We estimated that if 1% of this reduction was due to 
passengers unable or are advised to not travel for a qualifying 
reason and required by airlines and ticket agents to submit 
documentation, there would be 5.58 million respondents. For the 
final rule, we increased this number based on the data provided by 
A4A as a reasonable upper bound, because not all of the 15% of 
passengers who seek a travel credit or voucher would be entitled to 
one under this final rule.
    \106\ This number may be an overestimate because the same 
airline customer service representatives likely review multiple 
documentation submissions.
---------------------------------------------------------------------------

    Estimated Annual Burden on Respondents: We estimate that each 
respondent would need 30 minutes (0.5 hours) to obtain a documentation 
from a medical professional per response, per year. We also estimate 
that a medical assistant would need 15 minutes (0.25 hours) to provide 
consultation to the passenger or to prepare the documentation. We 
further estimate that a customer service representative working for an 
airline would need an

[[Page 32831]]

average of 5 minutes (0.083 hours) to review the documentation and 
request additional documentation if needed. Passengers would spend a 
total of approximately 13.5 million hours per year (0.5 hours x 27 
million passengers) to obtain the documentation. Medical assistants 
would spend a total of 6.75 million hours per year (0.25 hours x 27 
million forms) to prepare the forms. Airline customer service 
representatives would spend approximately 2,241,000 hours (0.083 hours 
x 27 million forms) per year to review the documentation.
    To calculate the hourly value of time spent on the documentation, 
we used median wage data from the Bureau of Labor Statistics as of May 
2022. Respondents would obtain, present, and submit the documentation 
on their own time without pay and we estimate the value of this 
uncompensated activity using a post-tax wage estimate of $18.48 per 
hour ($22.26 median hourly wage for all occupations minus a 17% 
estimated tax rate). For medical assistants, we used a fully loaded 
wage of $25.94 ($18.40 hourly wage multiplied by 1.41 to account for 
employer benefit costs.) For customer service representatives, we use 
an estimate of $25.61 per hour ($18.16 median hourly wage times a wage 
multiplier of 1.41). In the scenario that there is a public health 
emergency, the total annual estimated documentation costs of the forms 
would be approximately $482 million (Table 6).\107\
---------------------------------------------------------------------------

    \107\ The estimated costs calculated here assume that there is a 
public health emergency. The Regulatory Impact Analysis accompanying 
this rule estimated the cost to be about $3.4 million when there is 
not a public health emergency.

                             Table 6--Example Annual Cost Estimate for Documentation
----------------------------------------------------------------------------------------------------------------
                                                                                                     Estimated
              Group                    Forms      Hours per form    Total hours     Hourly time        costs
                                                                                       value        (millions)
----------------------------------------------------------------------------------------------------------------
People restricting travel.......      27,000,000             0.5      13,500,000          $18.48    $249,480,000
Medical assistants..............      27,000,000            0.25       6,750,000           25.94     175,095,000
Customer service representatives      27,000,000           0.083       2,241,000           25.61      57,392,010
----------------------------------------------------------------------------------------------------------------

    The Department has identified a number of disclosure requirements 
in this final rule subject to approval by the Office of Management and 
Budget under the PRA. These requirements are: (1) as specified in 14 
CFR 259.5(b)(6), carriers must disclose to consumers in their customer 
service plans that consumers are entitled to a refund if this is the 
case when offering travel credits, vouchers, or other compensation in 
lieu of refunds, and to disclose any material restrictions, conditions, 
or limitations on travel credits, vouchers, or other compensation 
offered, regardless of whether consumers are entitled to a refund; (2) 
as specified in 14 CFR 259.5(b)(7), carriers must include in their 
customer service plans a statement regarding compliance with the 
requirements of part 262 regarding vouchers for consumers in 
circumstances relating to serious communicable diseases; (3) as 
specified in 14 CFR 260.4(d), carriers that failed to provide ancillary 
services paid for by a passenger must notify another carrier that is 
responsible for refunding the ancillary service fee about the service 
failure; (4) as specified in 14 CFR 260.5(c), carriers that receive 
MBRs must notify another carrier that is responsible for refunding 
baggage fees about the baggage delay; (5) as specified in 14 CFR 
260.6(d), carriers that set a deadline for consumers to respond to 
alternative transportation offers must adopt and post on their websites 
their policies regarding how to treat consumers not responding by the 
deadlines; (6) as specified in 14 CFR 260.6(e), carriers must notify 
affected consumers about cancellation or significant changes, rights to 
refunds, offers of alternatives, and any deadline to respond; (7) as 
specified in 14 CFR 260.6(f), carriers must notify ticket agents that 
are the merchants of record for the ticket sales whether a consumer is 
eligible for a refund; (8) as specified in 14 CFR 262.8, carriers must 
disclose material restrictions, conditions, or limitations on vouchers 
provided to consumers in relation to a serious communicable disease; 
(9) as specified in 14 CFR 399.80(l), ticket agents must disclose to 
consumers that they are entitled to a refund if this is the case when 
offering travel credits, vouchers, or other compensation in lieu of 
refunds, and must also disclose any material restrictions, conditions, 
or limitations on travel credits, vouchers, or other compensation 
offered, regardless of whether consumers are entitled to a refund; and 
(10) as specified in 14 CFR 399.80(l), ticket agents must disclose at 
the time of ticket purchase any service fees that are not refundable. 
DOT will request comment on and seek approval from OMB for these 
disclosure requirements and publish separate notice in the Federal 
Register advising of the OMB Control Number(s) when OMB approves the 
information collection(s).
    Notwithstanding any other provisions of law, no person shall be 
subject to penalty for failing to comply with a collection of 
information if the collection of information does not display a 
currently valid OMB control number.

F. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (UMRA) requires, at 2 
U.S.C. 1532, that agencies prepare an assessment of anticipated costs 
and benefits before issuing any rule that may result in the expenditure 
by State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. As described elsewhere in the preamble, 
this final rule may have an effect on the private sector that exceeds 
this threshold. The UMRA permits agencies to provide the assessment 
required by UMRA as part of any other assessment prepared in support of 
the rule, and the Department has provided the assessment required by 
UMRA within the RIA prepared in support of the final rule.

G. National Environmental Policy Act

    The Department has analyzed the environmental impacts of this 
action pursuant to the National Environmental Policy Act of 1969 (NEPA) 
(42 U.S.C. 4321 et seq.) and has determined that it is categorically 
excluded pursuant to DOT Order 5610.1C, Procedures for Considering 
Environmental Impacts (44 FR 56420, October 1, 1979). Categorical 
exclusions are actions identified in an agency's NEPA implementing 
procedures that do not normally have a significant impact on the 
environment and therefore do not require either an

[[Page 32832]]

environmental assessment (EA) or environmental impact statement (EIS). 
See 40 CFR 1508.4. Paragraph 4.c.6.i of DOT Order 5610.1C categorically 
excludes ``[a]ctions relating to consumer protection, including 
regulations.'' This final rule relates to consumer protection. The 
Department does not anticipate any environmental impacts, and there are 
no extraordinary circumstances present in connection with this 
rulemaking.

    Signed this 1st day of April, 2024, in Washington DC.
Peter Paul Montgomery Buttigieg,
Secretary of Transportation.

List of Subjects

14 CFR Part 259

    Air Carriers, Consumer Protection, Reporting and Recordkeeping 
Requirements.

14 CFR Part 260

    Air carriers, Consumer protection.

14 CFR Part 262

    Air carriers, Consumer protection.

14 CFR Part 399

    Administrative practice and procedure, Air carriers, Air rates and 
fares, Air taxis, Consumer protection, Small businesses.

    For the reasons set forth in the preamble, the Department amends 
title 14 CFR Chapter II as follows:

PART 259--ENHANCED PROTECTIONS FOR AIRLINE PASSENGERS

0
1. The authority citation for 14 CFR part 259 continues to read as 
follows:

    Authority: 49 U.S.C. 40101(a)(4), 40101(a)(9), 40113(a), 41702, 
41708, 41712, and 42301.


0
2. Amend Sec.  259.3 by adding the definitions for ``Business days,'' 
``Prompt refunds,'' and ``Serious communicable disease,'' in 
alphabetical order to read as follows:


Sec.  259.3  Definitions.

    Business days means Monday through Friday excluding Federal 
holidays in the United States.
* * * * *
    Prompt refunds means refunds made within 7 business days of a 
refund becoming due as required by 14 CFR 374.3 for credit card 
purchases, and within 20 calendar days of a refund becoming due for 
cash, check, debit card, or other forms of purchases.
    Serious communicable disease means a communicable disease as 
defined in 42 CFR 70.1 that can cause serious health consequences 
(e.g., breathing problems, organ damage, neurological difficulties, 
death) and can be easily transmitted by casual contact in an aircraft 
cabin environment (i.e., easily spread to others in an aircraft cabin 
through general activities of passengers such as sitting next to 
someone, shaking hands, talking to someone, or touching communal 
surfaces). For example, the common cold is readily transmissible in an 
aircraft cabin environment but does not have severe health 
consequences. AIDS has serious health consequences but is not readily 
transmissible in an aircraft cabin environment. Both the common cold 
and AIDS would not be considered serious communicable diseases for 
purposes of this part. SARS is readily transmissible in an aircraft 
cabin environment and has severe health consequences. SARS would be 
considered a serious communicable disease for purposes of this part.
* * * * *


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3. Amend Sec.  259.5 by revising paragraphs (a), (b)(3), and (b)(5); 
redesignating paragraphs (b)(6) through (b)(12) as paragraphs (b)(8) 
through (b)(14), and adding new paragraphs (b)(6) and (b)(7); and 
revising the newly designated paragraphs (b)(8) and (b)(11) to read as 
follows:


Sec.  259.5  Customer Service Plan.

    (a) Adoption of Plan. Each covered carrier must adopt a Customer 
Service Plan applicable to its scheduled flights as specified in 
paragraphs (b)(1) through (14) of this section and adhere to the plan's 
terms.
    (b) * * *
* * * * *
    (3) Delivering baggage on time, including making every reasonable 
effort to return mishandled baggage within 12 hours for domestic 
flights and within 15 or 30 hours for international flights consistent 
with the requirement of 14 CFR 260.5, compensating passengers for 
reasonable expenses that result due to delay in delivery as required by 
14 CFR part 254 for domestic flights and as required by applicable 
international treaties for international flights, and reimbursing 
passengers for any fee charged to transport a bag if that bag is 
significantly delayed or lost as required by 14 CFR 260.5;
* * * * *
    (5) Providing prompt refunds in the original form of payment (i.e., 
money is returned to an individual using whatever payment method the 
individual used to make the original payment, such as a check, credit 
card, debit card, cash, or airline miles) when ticket or ancillary 
service fee refunds, including checked bag fee refunds, are due 
pursuant to 14 CFR part 260 unless the consumer agrees to receive the 
refunds in a different form of payment that is a cash equivalent 
payment as defined in 14 CFR 260.2. Carriers may not retain a 
processing fee for issuing refunds that are due;
    (6) Disclosing that consumers are entitled to a refund if that is 
the case when offering alternative transportation, travel credits, 
vouchers, or other compensation in lieu of refunds consistent with the 
requirement in 14 CFR 260.7. Disclosing any material restrictions, 
conditions, or limitations on travel credits, vouchers, or other 
compensation offered, regardless of whether consumers are entitled to a 
refund as described in 14 CFR 260.8 and 14 CFR 262.8.
    (7) Providing, upon request, travel credits or vouchers that are 
transferrable and do not expire for at least five years from the date 
of issuance to a consumer due to a serious communicable disease 
impacting travel as described in 14 CFR part 262.
    (8) Properly accommodating passengers with disabilities as required 
by part 382 of this chapter and as set forth in the carrier's policies 
and procedures and properly refunding passengers with disabilities and 
individuals in the same reservation as the individual with a disability 
who do not want to continue travel without the individual with a 
disability as required by 14 CFR 260.6(c);
* * * * *
    (11) Disclosing refund policies as required by 14 CFR part 260, 
cancellations policies, frequent flyer rules, aircraft seating 
configuration, and lavatory availability on the selling carrier's 
website, and upon request, from the selling carrier's telephone 
reservations staff;
* * * * *


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4. Add part 260 to read as follows:

PART 260--REFUNDS FOR AIRLINE FARE AND ANCILLARY SERVICE FEES

Sec.
260.1 Purpose.
260.2 Definitions.
260.3 Applicability.
260.4 Refunding fees for ancillary services that consumers paid for 
but that were not provided.
260.5 Refunding fees for significantly delayed or lost bags.
260.6 Refunding fare for flights cancelled or significantly changed 
by carriers.
260.7 Notifying consumer of refund right before offering travel 
credit or voucher.

[[Page 32833]]

260.8 Disclosing material restrictions, conditions, and limitations.
260.9 Providing prompt refunds.
260.10 Contract of carriage provisions related to refunds.

    Authority:  49 U.S.C. 40101(a), 41702, and 41712.


Sec.  260.1  Purpose.

    The purpose of this part is to ensure that carriers promptly refund 
consumers for: (1) fees for ancillary services related to air travel 
that consumers paid for but were not provided; (2) fees to transport 
checked bags that are lost or significantly delayed; and (3) airfare 
for a flight that is cancelled or had a significant change of flight 
itinerary where the consumer does not accept the change to the flight 
itinerary, alternative transportation, airline voucher or credit, or 
other compensation offered by the carrier.


Sec.  260.2  Definitions.

    As used in this part:
    Air carrier means a citizen of the United States undertaking by any 
means, directly or indirectly, to provide air transportation.
    Ancillary service means any optional service related to air travel 
that a covered carrier provides for a fee, beyond passenger air 
transportation. Such services may include, but are not limited to, 
transport of checked or carry-on baggage, advance seat selection, 
access to in-flight entertainment programs or Wi-Fi, in-flight 
beverages, snacks, meals, pillows and blankets, seat upgrades, and 
lounge access.
    Automatic refund means issuing a refund to a consumer without 
waiting to receive an explicit refund request, when the consumer's 
right to a refund is undisputed because the contracted service was not 
provided and either the consumer rejected the alternative offered or no 
alternative was offered.
    Break in journey means any deliberate interruption by a passenger 
of a journey between a point in the United States and a point in a 
foreign country where there is a stopover at a foreign point scheduled 
to exceed 24 hours. If the stopover is 24 hours or less, whether it is 
a break in journey depends on various factors such as whether the 
segment between two foreign points and the segment between a foreign 
point and the United States were purchased in a single transaction and 
as a single ticket/itinerary, whether the segment between two foreign 
points is operated or marketed by a carrier that has no codeshare or 
interline agreement with the carrier operating or marketing the segment 
to or from the United States, and whether the stopover at a foreign 
point involves the passenger picking up checked baggage, leaving the 
airport, and continuing the next segment after a substantial amount of 
time.
    Business days means Monday through Friday, excluding Federal 
holidays in the United States.
    Cancelled flight or flight cancellation means a covered flight with 
a specific flight number scheduled to be operated between a specific 
origin-destination city pair that was published in the carrier's 
Computer Reservation System at the time of the ticket sale but not 
operated by the carrier.
    Cash equivalent means a form of payment that can be used like cash, 
including but not limited to a check, a prepaid card, funds transferred 
to a consumer's bank account, funds provided through digital payment 
methods (e.g., PayPal, Venmo), or a gift card that is widely accepted 
in commerce. It is not cash equivalent if consumers bear the burden for 
transaction, maintenance, or usage fees related to the payment.
    Checked bag means a bag, special item (e.g., musical instrument or 
a pet), or sports equipment (e.g., golf clubs) that was provided to a 
covered carrier by or on behalf of a passenger for transportation in 
the cargo compartment of a scheduled passenger flight. A checked bag 
includes a gate-checked bag and a valet bag.
    Class of service means seating in the same cabin class such as 
First, Business, Premium Economy, or Economy class, which is defined 
based on seat location in the aircraft and seat characteristics such as 
width, seat recline angles, or pitch (including the amount of legroom).
    Covered carrier means an air carrier or a foreign air carrier 
operating to, from, or within the United States, conducting scheduled 
passenger service.
    Covered flight means a scheduled flight operated or marketed by a 
covered carrier to, from, or within the United States, including 
itineraries with brief and incidental stopover(s) at a foreign point 
without a break in journey.
    Foreign air carrier means a person, not a citizen of the United 
States, undertaking by any means, directly or indirectly, to provide 
foreign air transportation.
    Individual with a disability has the same meaning as defined in 14 
CFR 382.3.
    Merchant of record means the entity (carrier or ticket agent) 
responsible for processing payments by consumers for airfare or 
ancillary services or products (including the transport of checked 
bags), as shown in the consumer's financial charge statements, such as 
debit or credit card charge statements.
    Prompt refunds means refunds made within 7 business days of a 
refund becoming due as required by 14 CFR 374.3 for credit card 
purchases and within 20 calendar days of a refund becoming due for 
cash, check, debit card, or other forms of purchases.
    Significant change of flight itinerary or significantly changed 
flight means a change to a covered flight itinerary made by a covered 
carrier where as the result of the change:
    (1) The consumer is scheduled to depart from the origination 
airport three hours or more for domestic itineraries and six hours or 
more for international itineraries earlier than the original scheduled 
departure time;
    (2) The consumer is scheduled to arrive at the destination airport 
three hours or more for domestic itineraries or six hours or more for 
international itineraries later than the original scheduled arrival 
time;
    (3) The consumer is scheduled to depart from a different 
origination airport or arrive at a different destination airport;
    (4) The consumer is scheduled to travel on an itinerary with more 
connection points than that of the original itinerary;
    (5) The consumer is downgraded to a lower class of service;
    (6) The consumer who is an individual with a disability is 
scheduled to travel through one or more connecting airports different 
from the original itinerary; or
    (7) The consumer who is an individual with a disability is 
scheduled to travel on substitute aircraft on which one or more 
accessibility features needed by the customer are unavailable.
    Significantly delayed checked bag means a checked bag not delivered 
to or picked up by the consumer or another person authorized to act on 
behalf of the consumer within 12 hours of the last flight segment's 
arrival for domestic itineraries, within 15 hours of the last flight 
segment's arrival for international itineraries with a non-stop flight 
segment between the United States and a foreign point that is 12 hours 
or less in duration, and within 30 hours of the last flight segment's 
arrival for international itineraries with a non-stop flight segment 
between the United States and a foreign point that is more than 12 
hours in duration. The 15-hour and 30-hour standards apply to domestic 
segments of international itineraries.

[[Page 32834]]

Sec.  260.3  Applicability.

    This part applies to: covered carriers that are the merchants of 
record; covered carriers that operate the flight or, for multiple-
carrier itineraries, covered carriers that operate the last segment of 
a flight where a ticket agent is the merchant of record for a checked 
bag fee; and covered carriers that fail to provide an ancillary service 
(other than checked bag service) for which the consumer paid where a 
ticket agent is the merchant of record for an ancillary service fee 
other than checked bag fee.


Sec.  260.4  Refunding fees for ancillary services that consumers paid 
for but that were not provided.

    (a) A covered carrier that is the merchant of record shall provide 
a prompt and automatic refund to a consumer for any fees it collected 
from the consumer for ancillary services if the service was not 
provided through no fault of the consumer (e.g., prepaid ancillary 
service not utilized by the consumer because of flight cancellation, 
significant change, or oversale situation; service not provided because 
of aircraft substitution, equipment malfunction, etc.). If a ticket 
agent is the merchant of record for a checked bag fee and the checked 
bag service was not provided (or was significantly delayed) through no 
fault of the consumer, the carrier that operated the flight, or for 
multiple-carrier itineraries, the carrier that operated the last 
segment of the consumer's itinerary is responsible for providing a 
prompt and automatic refund of the checked bag fee, consistent with 
Sec.  260.5. If a ticket agent is the merchant of record for fees for 
all other ancillary services, the carrier that operated the flight and 
failed to provide the service through no fault of the consumer is 
responsible for providing a prompt and automatic refund.
    (b) In situations where the ancillary service the consumer paid for 
(other than the service of transporting a checked bag) is not available 
for all the passengers who paid for that service (e.g., Wi-Fi not 
available for all passengers on a flight, lounge access not available 
for all passengers on a certain date), a carrier's obligation under 
paragraph (a) of this section to provide a prompt and automatic refund 
begins when the information about the unavailability of the service is 
known by the carrier that failed to provide the service, and, if 
applicable, relayed as provided in paragraph (d) of this section to the 
carrier responsible for providing a prompt refund as specified in 
paragraph (a) of this section.
    (c) In situations where the ancillary service the consumer paid for 
(other than the service of transporting a checked bag) is not available 
to an individual or several individuals, rather than to all the 
passengers who paid for that service, a carrier's obligation under 
paragraph (a) of this section to provide a prompt and automatic refund 
begins when the consumer affected by the service failure notifies the 
operating carrier that failed to provide the ancillary service about 
the unavailability of the service and that information has been 
confirmed and, if applicable, relayed as provided in paragraph (d) of 
this section to the carrier responsible for providing a prompt refund 
as specified in paragraph (a) of this section. Notification of the 
unavailability of the ancillary service by a consumer is considered a 
request for a refund.
    (d) In situations where a carrier is the merchant of record for a 
fee for an ancillary service and the carrier that operates the flight 
where the ancillary service was not provided are different entities, 
the operating carrier that failed to provide the ancillary service must 
timely notify the carrier that is the merchant of record about the 
unavailability of the ancillary service. Notification by the operating 
carrier as set forth in this paragraph is necessary for the obligation 
to provide a prompt refund of ancillary service fees in paragraphs (b) 
and (c) of this section to apply. The obligation set forth in this 
paragraph for the operating carrier to timely notify the carrier that 
is the merchant of record does not apply when the failure to provide 
service relates to transporting checked bags. Timely notification 
requirements pertaining to refunds for fees charged to transport 
checked bags are set forth in Sec.  260.5(c).


Sec.  260.5  Refunding fees for significantly delayed or lost bags.

    A covered carrier that is the merchant of record or, if a ticket 
agent is the merchant of record, the covered carrier that operated the 
flight or the last flight segment in a multiple-carrier itinerary, must 
provide a prompt refund to a consumer of any fee charged for 
transporting a lost bag or a significantly delayed checked bag, as 
defined in Sec.  260.2 of this part and determined according to 
paragraph (a) of this section, subject to the conditions in paragraphs 
(b) and (c) of this section.
    (a) Determining the length of delay for the bag. For the purpose of 
determining whether a checked bag is significantly delayed as defined 
in Sec.  260.2, the length of delay is calculated from the time the 
passenger is given the opportunity to deplane from a flight at the 
passenger's final destination airport (the beginning of the delay) to 
the time that the carrier has delivered the bag to a location agreed 
upon by the passenger and carrier (e.g., passenger's home or hotel) or 
the time that the bag has been picked up by the passenger or another 
person acting on behalf of the passenger at the passenger's final 
destination airport (the end of the delay).
    (b) Notification by passenger about lost or significantly delayed 
bag. A covered carrier does not have an obligation to provide a refund 
of the fee for a lost or significantly delayed checked bag unless a 
passenger files a Mishandled Baggage Report (MBR) for the lost or 
delayed bag with the carrier that operated the flight, or for multiple-
carrier itineraries, the carrier that operated the last segment of the 
consumer's itinerary.
    (c) Notification by carrier that received an MBR about lost or 
significantly delayed checked bag. Except when the carrier responsible 
for providing a prompt refund for a baggage fee as specified in this 
section is the same carrier that received the MBR, a covered carrier 
that received the MBR must timely notify the carrier responsible for 
providing a prompt refund that the bag has been lost or significantly 
delayed when this is the case. A covered carrier's obligation to 
provide a prompt refund of a baggage fee for a lost bag or a 
significantly delayed checked bag as defined in Sec.  260.2 is 
conditioned upon the carrier that received the MBR notifying the 
carrier responsible for providing a prompt refund that the bag has been 
lost or significantly delayed.
    (d) Automatic refunds. An automatic refund of a bag fee is due when 
a checked bag is significantly delayed as determined according to 
paragraph (a) of this section, the passenger has filed an MBR as 
provided in paragraph (b) of this section, and, if applicable, 
notification has been provided by the carrier that received the MBR as 
set forth in paragraph (c) of this section.
    (e) Amount of the refund. The amount of the refund issued to a 
consumer must be a value equal to or greater than the fee that the 
consumer paid to transport his/her checked bag.
    (1) For carriers that adopt an escalated baggage fee scale for 
multiple bags checked by one passenger, the amount of baggage fee 
refund issued to the passenger can be determined based on the unique 
identifier assigned to the significantly delayed or lost bag that 
correlates to the baggage fee charged for that bag at the time of 
checking. If there is no such unique identifier assigned, carriers must 
refund the highest per bag fee or fees charged for the multiple bags.

[[Page 32835]]

    (2) For a carrier that offers a baggage fee subscription program 
where consumers can pay a subscription fee that covers fees for checked 
bags for a specified period, the carrier must refund the lowest amount 
of the baggage fee the carrier charges another passenger of similar 
frequent flyer status and in the same class of service without the 
subscription when a passenger subscribing to the program has a 
significantly delayed or lost bag.
    (f) Exemptions from the refund obligation. A covered carrier is 
exempted from the obligation to refund the fee for a significantly 
delayed bag in situations where the delay resulted from:
    (1) A passenger's failure to pick up and recheck a bag at the first 
international entry point into the United States as required by U.S. 
Customs and Border Protection;
    (2) A passenger's failure to pick up a checked bag that arrived on 
time at the passenger's ticketed final destination due to the fault of 
the passenger if documented by the carrier (e.g., passenger ended the 
travel before reaching the final destination on the itinerary--``hidden 
city'' itinerary, or the passenger failed to pick up the bag before 
taking a flight on a separate itinerary); and
    (3) A passenger's voluntary agreement to travel without the checked 
bag on the same flight as described in paragraph (g) of this section.
    (g) Voluntary separation from bag. A carrier may require a 
passenger who fails to meet the minimum check-in time requirement for a 
flight or is a standby passenger for a flight (i.e., a passenger who 
lacks a reservation on that flight and is waiting at the gate for a 
seat to be available on the flight) to agree to a new baggage delivery 
date and location in situations where the carrier is unable to place 
the passenger's checked bag on that flight because of the limited time 
available. The carrier must not require the passenger to waive the 
right to a refund of bag fees if the bag is lost, the right to 
compensation for damaged, lost, or pilfered bags, or the right to 
incidental expenses reimbursement arising from delayed bags beyond the 
agreed upon delivery date, consistent with the Department's regulation 
in 14 CFR part 254 and applicable international treaties.


Sec.  260.6  Refunding fare for flights cancelled or significantly 
changed by carriers.

    (a) Carriers' obligation to provide prompt refunds. A covered 
carrier that is the merchant of record must provide a prompt and 
automatic refund of the airfare (including all government-imposed taxes 
and fees and all mandatory carrier-imposed charges) to a consumer for a 
cancelled flight or a significantly changed flight as set forth in 
paragraph (b) of this section.
    (b) Automatic refunds. Automatic refunds of the airfare are due to 
a consumer when the consumer's right to a refund is undisputed because 
a carrier cancels a flight or makes a significant change of flight 
itinerary as described in paragraphs (b)(1) through (b)(6) of this 
section:
    (1) A carrier does not offer alternative transportation for a 
canceled flight or travel credits, vouchers, or other compensation in 
lieu of a refund to a consumer (the date the flight was canceled is 
considered the date the consumer requested a refund).
    (2) A carrier does not offer alternative transportation for the 
significantly changed flight or travel credits, vouchers, or other 
compensation in lieu of a refund to the consumer who rejected a 
significantly changed flight (the date the consumer rejects the 
significantly changed flight itinerary is considered the date the 
consumer requested a refund);
    (3) A carrier offers a significantly changed flight or alternative 
transportation for a significantly changed or a canceled flight, or 
offers travel credits, vouchers, or other compensation in lieu of a 
refund to the consumer, but the consumer rejects the alternative 
transportation and compensation offered (the date the passenger rejects 
the offers is considered the date the passenger requested a refund);
    (4) A carrier offers a significantly changed flight or alternative 
transportation for a significantly changed or a canceled flight, but 
the consumer does not respond to the offers on or before a response 
deadline set by the carrier as described in paragraph (d) of this 
section and the consumer has not accepted any offer for travel credits, 
vouchers, or other compensation in lieu of a refund, and the carrier's 
policy is to treat a lack of a response as a rejection of the 
alternative transportation offered (the date the carrier-imposed 
deadline expired is considered the date the consumer requested a 
refund);
    (5) A carrier does not offer the consumer the options of traveling 
on a significantly changed flight or traveling on an alternative 
flight, but offers travel credits, vouchers, or other compensation in 
lieu of a refund to the consumer, and the consumer does not respond to 
the alternative compensation offered within a reasonable time, in which 
case the lack of a response is deemed a rejection (the date the 
reasonable time has passed as determined by the carrier is considered 
the date the consumer requested a refund); or
    (6) A carrier offers a significantly changed flight or alternative 
transportation for a significantly changed or a canceled flight and 
offers travel credits, vouchers, or other compensation in lieu of a 
refund and the carrier has not set a deadline to respond, the consumer 
does not respond to the alternatives offered, and the consumer does not 
take the flight (the date the alternative flight was operated without 
the passenger on board is considered the date the passenger requested a 
refund).
    (c) Individuals with a Disability. A carrier that is the merchant 
of record must provide a prompt refund to an individual with a 
disability upon notification by the individual with a disability that 
he/she does not want to continue travel because of the significant 
changes described in paragraphs (c)(1) through (c)(3) of this section. 
The carrier must also provide a prompt refund to any individuals in the 
same reservation as the individual with a disability who do not want to 
continue travel without the individual with a disability in situations 
described in Sec.  260(c)(1) through (c)(3).
    (1) The individual with a disability is downgraded to a lower class 
of service that results in one or more accessibility features needed by 
the individual becoming unavailable.
    (2) The individual with a disability is scheduled to travel through 
one or more connecting airports that are different from the original 
itinerary.
    (3) The individual with a disability is scheduled to travel on a 
substitute aircraft on which one or more accessibility features 
available on the original aircraft needed by the individual are 
unavailable.
    (d) Carrier-imposed response deadline for alternative 
transportation. A carrier may establish a reasonable deadline for a 
consumer to accept or reject an offer of a significantly changed flight 
or alternative transportation following a canceled flight or a 
significantly changed flight itinerary. Carrier refund obligations when 
a deadline is established are as described in paragraphs (d)(1) through 
(d)(3) of this section.
    (1) For a consumer who rejected the offer of a significantly 
changed flight or alternative transportation for a significantly 
changed or a canceled flight by the deadline established by the carrier 
and has rejected any offer of travel credit, voucher, or other

[[Page 32836]]

compensation in lieu of a refund, the carrier must provide a refund 
within 7 business days of the rejection date for tickets purchased with 
credit cards and within 20 calendar days of the rejection date for 
tickets purchased with other payments.
    (2) A refund is not due to the consumer if the offer of a 
significantly changed flight or alternative transportation for a 
significantly changed or a canceled flight is accepted by the deadline 
established by the carrier, or if an offer of travel credit, vouchers, 
or compensation in lieu of a refund is accepted.
    (3) A carrier that sets a deadline must adopt and post on its 
website its policy specifying whether, upon receiving no response from 
the consumer at the expiration of the deadline of the offer of a 
significantly changed flight or offer of an alternative transportation, 
the carrier will deem that the offer of significantly changed flight or 
alternative transportation has been rejected by the consumer and issue 
an automatic refund for the airfare or will deem that the offer of 
significantly changed flight or alternative transportation has been 
accepted by the consumer. A carrier must not deem an offer for travel 
credits, vouchers, or other compensation in lieu of a refund to be an 
acceptance when the consumer does not respond to the offer. Carriers 
must adhere to their published policies.
    (e) Notification to consumers. (1) Upon the occurrence of a flight 
cancellation or a significant change, a covered carrier must timely 
notify affected consumers about the cancellation or significant change, 
consumers' rights to a refund if this is the case, any offer of 
alternative transportation and other options such as travel credits, 
vouchers, or other compensation in lieu of a refund, any deadline that 
the carrier imposes for consumers to reject the offer of significantly 
changed flight or alternative transportation, and the policy that the 
carrier has adopted regarding consumers' not responding by any deadline 
established by the carrier, as provided in paragraph (d) of this 
section.
    (2) For carriers that provide notification subscription services to 
passengers, notification under paragraph (e)(1) of this section must be 
provided through media that the carriers offer and the subscribers 
choose, including emails, text messages, and push notices from mobile 
apps.
    (f) Carriers' obligation to notify ticket agents. In situations 
where a ticket agent is the merchant of record for the transaction, 
after receiving a refund request by a consumer through the ticket 
agent, the carrier that canceled or significantly changed the flight 
must inform the ticket agent without delay whether the consumer is 
eligible for a refund under this section (i.e., whether the consumer 
has accepted the significantly changed flight, the alternative 
transportation, or other compensation offered in lieu of refunds). A 
ticket agent's obligation to provide a refund starts when the ticket 
agent receives such notification from the carrier.


Sec.  260.7  Notifying consumers of right to refund when offering 
alternative transportation or travel credit or voucher.

    If a carrier offers alternative transportation or alternative forms 
of compensation such as travel credits, vouchers, or other compensation 
in lieu of the refund, the carrier must first disclose to consumers 
that they are entitled to a refund if that is the case. A carrier must 
not deem a consumer to have accepted an offer for travel credits, 
vouchers, or other compensation in lieu of a refund unless the consumer 
affirmatively agrees to the alternative form of compensation.


Sec.  260.8  Disclosing material restrictions, conditions, or 
limitations.

    A carrier must clearly disclose, no later than at the time of 
voucher or credit offer, any material restrictions, limitations, or 
conditions on travel credits, vouchers, or other compensation, 
including but not limited to validity period, advance purchase 
requirement, capacity restrictions, and blackout dates, regardless of 
whether consumers are entitled to a refund.


Sec.  260.9  Providing prompt refunds.

    When a refund of a fare or a fee for an ancillary service, 
including a fee for lost or significantly delayed checked baggage, is 
due pursuant to this part, the refund must be issued promptly in the 
original form of payment (i.e., money is returned to an individual 
using whatever payment method the individual used to make the original 
payment, such as a check, credit card, debit card, cash, or airline 
miles) unless the consumer agrees to receive the refunds in a different 
form of payment that is a cash equivalent as defined in Sec.  260.2. 
Carriers may not retain a processing fee for issuing refunds that are 
due.


Sec.  260.10  Contract of Carriage provisions related to refunds.

    A carrier must not include terms or conditions in its contract of 
carriage inconsistent with the carriers' obligations as specified by 
this part. Any such action will be considered an unfair and deceptive 
practice within the meaning of 49 U.S.C. 41712.

0
5. Add Part 262 to read as follows:

PART 262--TRAVEL CREDITS OR VOUCHERS DUE TO A SERIOUS COMMUNICABLE 
DISEASE

Sec.
262.1 Purpose.
262.2 Definitions.
262.3 Applicability.
262.4 Passengers entitled to receive travel credits or vouchers.
262.5 Documentation.
262.6 Value of travel credits or vouchers.
262.7 Processing fee.
262.8 Disclosure of restrictions, conditions or limitations.
262.9 Contract of carriage.

    Authority:  49 U.S.C. 40101(a), 41702, and 41712.


Sec.  262.1  Purpose.

    The purpose of this part is to ensure that carriers provide travel 
credits or vouchers, upon request, to consumers who are restricted or 
prohibited from traveling by a governmental entity due to a serious 
communicable disease (e.g., as a result of a stay at home order, entry 
restriction, or border closure) or are advised by a licensed treating 
medical professional consistent with public health guidance issued by 
the U.S. Centers for Disease Control and Prevention (CDC) or the World 
Health Organization (WHO) not to travel to protect themselves or others 
from a serious communicable disease.


Sec.  262.2  Definitions.

    As used in this part:
    Air carrier means a citizen of the United States undertaking by any 
means, directly or indirectly, to provide air transportation.
    Break in journey means any deliberate interruption by a passenger 
of a journey between a point in the United States and a point in a 
foreign country where there is a stopover at a foreign point scheduled 
to exceed 24 hours. If the stopover is 24 hours or less, whether it is 
a break in journey depends on various factors such as whether the 
segment between two foreign points and the segment between a foreign 
point and the United States were purchased in a single transaction and 
as a single ticket/itinerary, whether the segment between two foreign 
points is operated or marketed by a carrier that has no codeshare or 
interline agreement with the carrier operating or marketing the segment 
to or from the United States, and whether the stopover at a foreign 
point involves the passenger picking up checked baggage, leaving the 
airport,

[[Page 32837]]

and continuing the next segment after a substantial amount of time.
    Covered carrier means an air carrier or a foreign air carrier 
operating to, from or within the United States, conducting scheduled 
passenger service.
    Covered flight means a scheduled flight operated or marketed by a 
covered carrier to, from, or within the United States, including 
itineraries with brief and incidental stopover(s) at a foreign point 
without a break in journey.
    Licensed treating medical professional means an individual, 
including a physician, a nurse practitioner, a physician's assistant, 
or other medical provider, who is licensed or authorized under the law 
of a State or territory in the United States or a comparable 
jurisdiction in another country to engage in the practice of medicine 
to diagnose or treat a patient for a health condition that is the 
reason for the passenger to request a travel credit or voucher under 
Sec.  262.4(b) and (c).
    Merchant of record means the entity (carrier or ticket agent) 
responsible for processing payment by the consumer for airfare or 
ancillary services or products, as shown in the consumer's financial 
charge statements such as debit or credit card charge statements.
    Foreign air carrier means a person, not a citizen of the United 
States, undertaking by any means, directly or indirectly, to provide 
foreign air transportation.
    Public health emergency has the same meaning as defined in 42 CFR 
70.1.
    Serious communicable disease means a communicable disease as 
defined in 42 CFR 70.1 that can cause serious health consequences 
(e.g., breathing problems, organ damage, neurological difficulties, 
death) and can be easily transmitted by casual contact in an aircraft 
cabin environment (i.e., easily spread to others in an aircraft cabin 
through general activities of passengers such as sitting next to 
someone, shaking hands, talking to someone, or touching communal 
surfaces). For example, the common cold is readily transmissible in an 
aircraft cabin environment but does not have severe health 
consequences. AIDS has serious health consequences but is not readily 
transmissible in an aircraft cabin environment. Both the common cold 
and AIDS would not be considered serious communicable diseases for 
purposes of this part. SARS is readily transmissible in an aircraft 
cabin environment and has severe health consequences. SARS would be 
considered a serious communicable disease for purposes of this part.


Sec.  262.3  Applicability.

    This part applies to all covered carriers that are the merchant of 
record for a covered flight or the operating carrier of a covered 
flight when a ticket agent is the merchant of record.


Sec.  262.4  Passengers entitled to receive travel credits or vouchers.

    A covered carrier as identified in Sec.  262.3 must provide a 
transferrable travel credit or voucher that does not expire for at 
least five years from the date of issuance to consumers described in 
paragraphs (a) to (c) of this section.
    (a) The consumer is prohibited from travel to, from, or within the 
United States or is required to quarantine at the destination as shown 
on the consumer's itinerary for more than 50% of the length of the trip 
(excluding travel dates) because of a U.S. (Federal, State, or local) 
or foreign government restriction or prohibition (e.g., stay at home 
order, entry restriction, border closure, or quarantine notice) in 
relation to a serious communicable disease. The consumer must have 
purchased the airline ticket before a public health emergency was 
declared for the origination or destination of the consumer's scheduled 
travel or, if there is no declaration of a public health emergency, 
before the government prohibition or restriction applicable to the 
origination or the destination of the consumer's scheduled travel was 
imposed.
    (b) There is a public health emergency applicable to the 
origination or destination of the consumer's itinerary, the consumer 
purchased the airline ticket before the public health emergency was 
declared, the consumer is scheduled to travel during the public health 
emergency, and the consumer is advised by a licensed treating medical 
professional not to travel by air to protect himself or herself from a 
serious communicable disease.
    (c) Regardless of whether there is a public health emergency, the 
consumer is advised by a licensed treating medical professional not to 
travel by air because the consumer has or is likely to have contracted 
a serious communicable disease, and the consumer's condition is such 
that traveling on a commercial flight would pose a direct threat to the 
health of others.


Sec.  262.5  Documentation.

    In the absence of an applicable determination issued by the 
Department of Health and Human Services that requiring the 
documentation specified in paragraphs (b) or (c) of this section is not 
in the public interest, as a condition for issuing the travel credits 
or vouchers in Sec.  262.4, carriers may require, as appropriate, 
documentation specified in paragraphs (a) to (c) of this section.
    (a) For any consumer requesting a travel credit or voucher because 
of a government restriction or prohibition pursuant to Sec.  262.4(a), 
carriers may require the consumer to provide the applicable current 
government order or other document demonstrating how the government 
order prohibits the consumer from travel to, from, or within the United 
States as scheduled or requires the consumer to quarantine for more 
than 50% of the length of the consumer's scheduled trip at the 
destination (excluding travel dates) as shown on the passenger's 
itinerary.
    (b) For any consumer requesting a travel credit or voucher to 
protect his or her health pursuant to Sec.  262.4(b), carriers may 
require the consumer to provide a valid medical certificate as set 
forth in paragraphs (b)(1) and (b)(2) of this section.
    (1) For purposes of paragraph (b) of this section, a medical 
certificate means a written statement from a licensed treating medical 
professional stating that it is his/her professional opinion, based on 
the medical condition of the individual and current medical knowledge 
on the relevant serious communicable disease, including public health 
guidance issued by CDC or WHO, if available, that the individual should 
not travel during the current public health emergency by commercial air 
transportation to protect his or her health from a serious communicable 
disease.
    (2) To be valid, a medical certificate under paragraph (b) of this 
section must be dated after the declaration of the relevant public 
health emergency and no earlier than one year before the scheduled 
travel date and include information regarding the licensed treating 
medical professional's license (the date of issuance, type of the 
license, State or other jurisdiction in which the license was issued).
    (c) For any consumer requesting a travel credit or a voucher to 
protect the health of others pursuant to Sec.  262.4(c), carriers may 
require the consumer to provide a valid medical certificate as set 
forth in paragraphs (c)(1) through (c)(3) of this section. For any 
consumer who informed carriers that there is not adequate time to 
obtain and submit a valid medical certificate as set forth in 
paragraphs (c)(1) through (c)(3) of this section before the scheduled 
travel date, carriers must allow submission of the medical certificate 
within a reasonable time after the scheduled travel date.
    (1) For purposes of paragraph (c) of this section, a medical 
certificate means

[[Page 32838]]

a written statement from a licensed treating medical professional 
stating that it is his/her professional opinion, based on the medical 
condition of the individual and current medical knowledge of the 
relevant serious communicable disease, including public health guidance 
issued by CDC or WHO, if available, that the individual should not 
travel by commercial air transportation on the date of the scheduled 
travel to protect the health of others from a serious communicable 
disease because the individual has or is likely to have contracted a 
serious communicable disease .
    (2) To be valid, a medical certificate under paragraph (c) of this 
section must include information regarding the licensed treating 
medical professional's license (the date of issuance, type of the 
license, State or other jurisdiction in which license was issued).
    (3) For a medical certificate under paragraph (c) of this section, 
carriers may require that it be dated close to the travel date, as 
determined based on the current medical knowledge and applicable public 
health guidance issued by CDC or WHO regarding the contagious period of 
the relevant serious communicable disease.


Sec.  262.6  Value of travel credits or vouchers.

    Upon confirming a consumer's eligibility for a travel credit or 
voucher pursuant to this paragraph, a carrier must promptly issue the 
travel credit or voucher with a value equal to or greater than the fare 
(including government-imposed taxes and fees and carrier-imposed 
charges and prepaid ancillary service fees for services not utilized by 
the consumer). If a consumer has obtained a refund of the September 
11th Security Fee or other government-imposed taxes and fees, then 
those fee amounts may be deducted from the consumer's travel credit or 
voucher. Nothing in this section relieves the carrier of its obligation 
to comply with the requirements of other Federal agencies relating to 
the refund of government-imposed taxes and fees.


Sec.  262.7  Processing fee.

    A carrier may retain a processing fee for issuing the travel 
voucher or credit, as long as the fee is on a per-passenger basis and 
the existence and amount of the fee is clearly and prominently 
disclosed to consumers at the time they purchased the airfare.


Sec.  262.8  Disclosure of restrictions, conditions or limitations.

    A carrier shall not impose unreasonable restrictions, conditions or 
limitations on the travel credits or vouchers, including a validity 
period that is shorter than five years from the date of issuance, a 
restriction on the transferability of the credits or vouchers to 
another individual, conditions that severely restrict booking with 
respect to travel date, time, route, or class of service; a limitation 
that allows redemption only in one booking and renders any residual 
value void; or a limitation that only allows the value of the credits 
or vouchers to apply to the base fare of a new booking but not 
government-imposed taxes or fees, carrier imposed fees, or ancillary 
service fees. A carrier must clearly disclose, no later than at the 
time of voucher or credit issuance, any material restrictions, 
limitations, or conditions on the use of the credits and vouchers that 
are not deemed unreasonable, including but not limited to advance 
purchase requirement or capacity restrictions and blackout dates.


Sec.  262.9  Contract of carriage.

    A carrier shall not include terms or conditions in its contract of 
carriage inconsistent with the carriers' obligations as specified by 
this part. Any such action will be considered an unfair and deceptive 
practice within the meaning of 49 U.S.C. 41712.

PART 399--STATEMENTS OF GENERAL POLICY [AMENDED]

0
6. The authority citation for part 399 continues to read as follows:

    Authority:  49 U.S.C. 40113(a), 41712, 46106, and 46107.


0
7. Amend Sec.  399.80 by revising paragraph (l) to read as follows:


Sec.  399.80  Unfair and deceptive practices of ticket agents.

* * * * *
    (l) Failing to make a prompt refund of airfare (including all 
government-imposed taxes and fees and all mandatory carrier-imposed 
charges) to a consumer, upon request, for a cancelled flight or a 
significantly changed flight itinerary if the consumer chooses not to 
travel or accept compensation in lieu of a refund in situations 
described in 14 CFR 260.6(b)(1) through (6) and 14 CFR 260.6(c)(1) 
through (3) when the ticket agent is the merchant of record. Failing to 
provide a prompt refund of airfare (including all government-imposed 
taxes and fees and all mandatory carrier imposed charges), upon 
request, for a significantly changed flight itinerary to consumers on 
the same reservation as an individual with a disability who does not 
want to continue travel because of a significant change described in 
paragraph (l)(1)(vii)(E) of this section related to downgrades or 
paragraph (l)(1)(vii)(G) of this section related to aircraft 
substitution which result in one or more accessibility features needed 
by the individual with a disability becoming unavailable or because of 
the significant change described in paragraph (l)(1)(vii)(F) of this 
section related to change in connecting airports. A prompt refund is 
one that is made within 7 business days of the ticket agent receiving 
information from a carrier as specified in 14 CFR 260.6(f), as required 
by 12 CFR part 1026 for credit card purchases, and within 20 calendar 
days of refund becoming due for cash, check, debit card, or other forms 
of purchases. Ticket agents must provide the refunds in the original 
form of payment (i.e., money is returned to individual using whatever 
payment method the individual used to make the original payment, such 
as a check, a credit card, a debit card, cash, or airline miles), 
unless the consumer agrees to receive the refund in another form of 
payment that is cash equivalent. A ticket agent may retain a service 
fee charged when issuing the original ticket to the extent that service 
is for more than processing payment for a flight that the consumer 
found. That fee must be on a per-passenger basis and its existence, 
amount, and the non-refundable nature if that is the case must be 
clearly and prominently disclosed to consumers at the time they 
purchase the airfare. Ticket agents may offer alternative 
transportation, travel credits, vouchers, or other compensation in lieu 
of refunds, but must first inform consumers that they are entitled to a 
refund if that is the case. Ticket agents must clearly disclose any 
material restrictions, conditions, and limitations on travel credits, 
vouchers, or other compensation they offer.
    (1) For purposes of paragraph (l) of this section, the following 
definitions apply:
    (i) Business days means Monday through Friday, excluding Federal 
holidays in the United States.
    (ii) Cancelled flight or cancellation means a flight with a 
specific flight number scheduled to be operated between a specific 
origin-destination city pair that was published in a carrier's Computer 
Reservation System at the time of the ticket sale but was not operated 
by the carrier.
    (iii) Cash equivalent means a form of payment that can be used like 
cash, including but not limited to a check, a prepaid card, funds 
transferred to the passenger's bank account, funds provided through 
digital payment methods (e.g., PayPal, Venmo), or a gift

[[Page 32839]]

card that is widely accepted in commerce. It is not cash equivalent if 
consumers bear the burden for maintenance or usage fees related to the 
payment.
    (iv) Class of service means seating in the same cabin class such as 
First, Business, Premium Economy, or Economy class, which is defined 
based on seat location in the aircraft and seat characteristics such as 
width, seat recline angles, or pitch (including the amount of legroom).
    (v) Covered flight means a scheduled flight to, from, or within the 
United States.
    (vi) Merchant of record means the entity responsible for processing 
payments by consumers for airfare, as shown in the consumer's financial 
charge statements such as debit or credit card charge statements.
    (vii) Significant change of flight itinerary or significantly 
changed flight means a change to a flight itinerary consisting of 
covered flight(s) made by a U.S. or foreign carrier where:
    (A) The consumer is scheduled to depart from the origination 
airport three hours or more for domestic itineraries and six hours or 
more for international itineraries earlier than the original scheduled 
departure time;
    (B) The consumer is scheduled to arrive at the destination airport 
three hours or more for domestic itineraries or six hours or more for 
international itineraries later than the original scheduled arrival 
time;
    (C) The consumer is scheduled to depart from a different 
origination airport or arrive at a different destination airport;
    (D) The consumer is scheduled to travel on an itinerary with more 
connection points than that of the original itinerary;
    (E) The consumer is downgraded to a lower class of service;
    (F) The consumer with a disability is scheduled to travel through 
one or more connecting airports that are different from the original 
itinerary; or
    (G) The consumer with a disability is scheduled to travel on 
substitute aircraft on which one or more accessibility features needed 
by the passenger are unavailable.
* * * * *
[FR Doc. 2024-07177 Filed 4-25-24; 8:45 am]
BILLING CODE 4910-9X-P