Overbooking in the USA

In the United States, overbooking is a common practice among airlines, where they sell more tickets than the actual number of available seats on a flight. This is done based on the assumption that some passengers may not show up, allowing the airline to maximize their revenue.

If you are involuntarily denied boarding due to overbooking and the airline cannot find an alternative arrangement that gets you to your destination within a certain timeframe, you may be entitled to compensation. The amount of compensation is generally based on the length of the delay and the price of your ticket, up to a certain limit set by the Department of Transportation (DOT).

The compensation limits are as follows:

1. 200% of One-Way Fare:  If the airline arranges alternative transportation that arrives at your destination within one to two hours (for domestic flights) or one to four hours (for international flights) of your originally scheduled arrival time.
2. 400% of One-Way Fare:  If the airline arranges alternative transportation that arrives at your destination more than two hours later (for domestic flights) or more than four hours later (for international flights) than your originally scheduled arrival time.

Flight Delays/Cancellations in the USA

Additional travel expenses can quickly add up if your itinerary does not go to plan.  In order to protect passengers from flight delays and cancellations, the Department of Transportation has put together a framework for handling these situations.

Passengers entitled to refunds if flight is canceled or significantly altered, this includes departure/arrival delays of:

• Domestic Flights: Over 3 hours
• International Flights: Over 6 hours

Baggage delay refunds: Passengers are eligible for refunds if their baggage is not returned within the designated timeframes: 

• within 12 hours of a domestic flight’s arrival at the gate or 
• within 15-30 hours of an international flight’s arrival at the gate, depending on the flight duration

Refunds for unprovided services like Wi-Fi: Passengers entitled to refunds if airlines fail to provide paid services like Wi-Fi, seat selection, or inflight entertainment.

Key Stipulations:

The DOT’s rule aims to simplify the refund process for passengers, ensuring they receive the compensation they are owed. The final rule mandates that refunds must adhere to the following guidelines:

• Automatic Issuance: Airlines must automatically issue refunds without passengers having to explicitly request them.
• Prompt Processing: Refunds must be processed promptly by airlines and ticket agents. For credit card purchases, refunds are due within seven business days, and for other payment methods, refunds must be issued within 20 calendar days.
• Cash or Original Payment Method: Airlines and ticket agents must provide refunds in cash or the original form of payment used for the purchase (e.g., credit card or airline miles). Vouchers, travel credits, or alternative forms of compensation cannot be substituted unless the passenger chooses to accept them.
• Full Amount Refunded: Passengers are entitled to a full refund of the ticket purchase price, minus the value of any portion of transportation already used. This refund must include all government-imposed taxes and fees as well as airline-imposed fees.

It’s important to note that these rules will be implemented at a future date after the bill has been passed.

Graphic Explaining the Breakdown of Claims by Miles – USA

The expected claim for a delay or cancellation by a US-operated flight varies from airline to airline.  

Summary of New DOT Rules and Airline Lawsuit

New DOT Rules on Airline Fees and Refunds

Disclosure of Fees: Airlines must disclose all fees upfront, including charges for checked bags, carry-on bags, and reservation changes or cancellations. These fees cannot be hidden behind hyperlinks.

Automatic Refunds: Airlines are required to automatically issue refunds if a flight is canceled or significantly changed (more than 3 hours for domestic flights, 6 hours for international flights). Refunds are also required if checked bags are significantly delayed (over 12 hours for domestic, 15 to 30 hours for international) or if ancillary services (like Wi-Fi or seat selection) are not provided.

Refunds Format: Refunds must be in cash or the original form of payment unless the passenger willingly accepts travel vouchers.

Implementation Date: These rules will go into effect on October 28, 2024.

Additional Information:

The rules are part of the DOT’s efforts to expand passenger rights and eliminate “junk fees.”

A future rule addressing family seating fees is expected, and an online family seating dashboard is already available.  

These rules are expected to be enacted on October 28, 2024.

Airline Lawsuit Against DOT

Plaintiffs: Major airlines (American, Delta, United, JetBlue, Hawaiian, and Alaska) and Airlines for America have filed a lawsuit against the DOT.

Arguments: Airlines claim the rule will confuse passengers and argue that regulating private business operations in a thriving marketplace is beyond DOT’s authority.

DOT’s Defense: The DOT plans to vigorously defend the rule, emphasizing its intention to protect consumers from hidden fees and ensure price transparency.

Context:

Southwest Airlines’ Stance: Southwest, which did not join the lawsuit, supports clear fee disclosures and recently launched a compensation program for delays, showing a different approach compared to the suing airlines.