DOT gets more airlines to pay up, announces $600 million in passenger refunds

The U.S. Department of Transportation has gotten six more airlines to pay up.

The Department on Monday announced it had compelled the six airlines to pay more than $600 million total in refunds that had stacked up during the COVID-19 pandemic. On top of the refunds, the airlines must collectively pay $7.25 million in civil penalties for taking too long to refund passengers.

“When a flight gets canceled, passengers seeking refunds should be paid back promptly," Transportation Secretary Pete Buttigieg said in a statement. "Whenever that doesn’t happen, we will act to hold airlines accountable on behalf of American travelers and get passengers their money back. A flight cancellation is frustrating enough, and you shouldn’t also have to haggle or wait months to get your refund.”

In all, the DOT's aviation consumer protection office has assessed $8.1 million in penalties so far this year, a record.

There's only one U.S. carrier on the list of airlines fined on Monday — Frontier Airlines. The ultra-low-cost-carrier must pay back $222 million in refunds and was assessed a $2.2 million penalty.

The five other airlines are:

• Air India, which must pay $121.5 million in refunds and a $1.4 million penalty.
• TAP Portugal, which must pay $126.5 million in refunds and a $1.1 million penalty.
• Aeromexico, which must pay $13.6 million in refunds and a $900,000 penalty.
• El Al, which must pay $61.9 million in refunds and a $900,000 penalty.
• Avianca, which must pay $76.8 million in refunds and a $750,000 penalty.

In a statement, Frontier noted that it's paying $1 million out of pocket, having been given $1.2 million of goodwill credit for providing the refunds.

Frontier Airlines has issued over $92 million in refunds and redeemed credits and vouchers to customers who voluntarily cancelled their non-refundable tickets during the pandemic and were not entitled to a refund under U.S. law. In addition, the company provided over $2.7 million in refunds by voluntarily applying a more generous definition of a significant delay than was in effect at the time for customers who booked and purchased their tickets between March 25 and Oct. 27, 2020. These goodwill refunds of nearly $100 million demonstrate Frontier’s commitment to treating our customers with fairness and flexibility. Under the terms of the Consent Order, Frontier will make a total out-of-pocket payment in the amount of $1 million, having received a $1.2 million goodwill refund credit.

When demand for air travel rapidly dried up at the onset of the COVID-19 pandemic, many airlines severely delayed refunds or offered vouchers instead, in an effort to preserve precious cash. U.S. law requires a refund in a timely fashion when an airline cancels a flight or significantly changes its schedule, though the government has never specifically quantified what constitutes “timely.”

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“The clock effectively starts at the beginning of the pandemic on these enforcement actions and these do represent a final outcome," Buttigieg said in a call with reporters announcing the penalties.

More: Air Canada squeaks away with $2 million fine for not refunding passengers

Monday's action comes almost exactly a year after the DOT fined Air Canada $4.5 million in a long-running refund saga that played out in public, though Air Canada ended up paying just $2 million out of pocket.

And, Buttigieg said, the department is not done yet in seeking big refunds for consumers.

"We have more enforcement actions and investigations underway and there may be more news to come by way of fines," he said.

Buttigieg's DOT has been heavily consumer-focused. Earlier this month, Buttigieg sent a letter to airline leaders with suggestions on how to reduce flight delays around Florida and the Mountain West. Earlier this year, the Department unveiled a dashboard that shows the type of accommodations passengers on U.S. carriers receive when a delay or cancelation is within the airline's control.

"As people get ready to fly this holiday season, we want passengers to know that the USDOT has their back of course when it comes to safety, but also when it comes to meeting these important customer service standards," Buttigieg said.