The Department of Transportation (DOT) recently finalized a rule that has significant implications for travel agents across the country. This rule, which was initially proposed in August 2022, aims to hold agents responsible for refunds in cases where an airline delays or cancels a flight. Prior to the finalization of the rule, there was concern within the industry about the potential negative impact it could have on travel agents.
Changes in the Final Rule
Despite initial concerns about the rule being overly burdensome for travel agents, the DOT made some adjustments based on feedback from industry stakeholders. The final rule specifies that travel agencies are only responsible for refunds in situations where they are the credit or debit card merchant after selling directly to consumers. Additionally, agencies may be held responsible when accepting payment by cash or check. This limited scope of responsibility provides some relief for agencies that were worried about being held accountable for all airline ticket refunds.
Under the new rule, travel agencies must make refunds out of their own funds within specific deadlines outlined by the DOT. These deadlines vary depending on the type of payment method used for the original purchase. For credit card purchases, refunds must be issued within seven business days, while refunds for cash, check, or debit card payments must be made within 20 calendar days. This requirement puts agencies in a challenging position, especially if an airline cancels or delays a flight and fails to provide reimbursement.
Challenges and Opportunities
The DOT’s final rule introduces new challenges for travel agents in terms of financial liability and operational processes. In order to comply with the refund requirements, agencies will need to establish clear communication and cooperation channels with airlines to ensure timely refunds for affected clients. This increased level of coordination may lead to new opportunities for collaboration and innovation within the industry.
Despite the adjustments made in the final rule, many agencies are still concerned about the financial burden it will place on their businesses. The requirement to issue refunds even in cases where the agency is not holding the client’s money at the time of the flight disruption could lead to significant losses for some agencies. As a result, there is a possibility that more agencies will choose to stop selling airline tickets altogether to avoid potential risks and liabilities.
The DOT’s final rule on airline ticket refunds has both positive and negative implications for travel agents. While the adjustments made in the final rule provide some relief for agencies, the overall impact of the rule on the industry remains to be seen. Agencies will need to adapt to the new requirements and find ways to mitigate the financial risks associated with issuing refunds for flight cancellations and delays.