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Pete Buttigieg thinks airlines are too stingy with refunds. He tells TPG how he wants to fix it

Aug. 09, 2022
8 min read
Pete Buttigieg thinks airlines are too stingy with refunds. He tells TPG how he wants to fix it
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Getting a refund from an airline when things go wrong can feel like pulling teeth. But that could finally be on track to change.

A new set of rules proposed by the Department of Transportation would make it easier for passengers to get refunds from airlines when flights are canceled, delayed or itineraries are altered.

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In an interview with TPG, Transportation Secretary Pete Buttigieg described the proposed rules as building upon federal consumer protections already in place.

"Every step moves us further towards passengers being more protected," he said. "This is based on authorities that have built up over time, but it's clear that the passenger experience isn't good enough, and we need to do more to clarify airlines' responsibilities and to make clear what we're going to do to enforce them."

The rules are not in place yet — and could look different when they are eventually implemented at the end of a fairly lengthy process.

It all begins with a "notice of proposed rulemaking," which once issued by DOT opens the potential rule to a 90-day public comment period. After comments are reviewed, revisions — if warranted — could require another period of public comment. After that, the DOT drafts a proposed final rule, which is reviewed by the Office of Management and Budget for at least another 90 days. Further revisions required by OMB, along with reviews by Congress and the Government Accountability Office, can then take another 60 days.

Related: The DOT wants to make it easier to get a refund for delayed flights

Still, even with all of that, Buttigieg is optimistic that the rules can be in place relatively soon.

"I think we can move this one pretty quickly, barring any surprises," he said. "We are going to be responsive to feedback and the suggestions that come in."

Among those possible surprises could be stronger than expected opposition from the airlines.

"I don't think the airlines look forward to having more accountability thrust on them, but hopefully they understand that this is happening in a climate where people are really frustrated," Buttigieg said. "I say this as somebody who's on a commercial airline flight, if not every day, then several times a week."

The newly proposed rules come after a surge in consumer complaints to the DOT since the start of the pandemic. Complaints intensified this spring as airlines struggled with staffing challenges and weather issues despite selling aggressive schedules. Of 4,344 complaints about airlines received by the DOT in May, 1,326 (30.5%) were about refunds, the agency said.

Buttigieg has been increasingly vocal about these issues throughout the spring and early summer, criticizing airlines for poor performance and suggesting it would prompt future action by the DOT. Airlines, meanwhile, have alternated between apologizing to customers and pointing to issues with the national air traffic control system (air traffic control falls under the Federal Aviation Administration, a branch of the federal DOT).

Buttigieg conceded that staffing levels at air traffic control centers are a "real issue," but added that "it's important to clarify that that hasn't driven the majority of the delays and cancellations that we've seen over the summer."

He also noted that alongside the air traffic control-related closures and slowdowns, some of the issues frustrating passengers are outside of the airlines' control, such as summer thunderstorms.

"Some of the issues are unavoidable, like when you have severe or extreme weather," he added. "But some of them are avoidable, and airlines have to be ready to take responsibility."

Don't miss: Southwest Airlines flight credits will no longer expire, an industry first

Among those issues within airlines' control: scheduling flights based on what they reasonably expect to be able to operate to avoid issues like those earlier this summer.

"It's one of the things I pressed them on after that Memorial Day weekend experience that we had," he said, "and we did see, after that, adjustments and thinning of the schedule that I think has helped lead to there being fewer 'blue sky' delays and cancellations."

Airlines have struggled to meet surging travel demand this spring and summer as pandemic-era staffing shortages have affected operations. While every role and work group has been affected — from customer service representatives and wheelchair pushers to baggage handlers and aircraft marshallers — a shortage of pilots has been among the most acute issues, partly because of how long it takes for new pilots to become qualified.

"Recruiting is important," Buttigieg said, "but retention is also important, and that's why I've been encouraged to see some of the players in the airline space taking these steps to increase pay in a way that I think is responsive to the very competitive nature right now in the market for pilots in particular, but other professionals too."

Still, Buttigieg said, things could have been worse without the pandemic CARES Act and the Payroll Support Program that allowed airlines to keep larger staffs even as travel demand dropped to near zero. While airlines still offered buyouts and early retirements that contributed to the current staffing shortage, mass furloughs and a collapse of the airline industry could have been possible without intervention, he said.

"I think we feel two things at the same time," he said. "One, a level of frustration because we want the airlines to do better. And on the other hand, a level of recognition that America needs a healthy aviation sector and the decision to support workers in that sector was a good one."

"As frustrating as things are right now, imagine where we would be if some of the airlines didn't even exist anymore because they hadn't gotten that support," he added.

The challenge is to support the overall health of the industry — while also regulating it to protect taxpayers and consumers, he said.

See also: Here are the airlines with the most cancellations and delays this summer

"The tough balance we're trying to strike from a policy perspective is make sure that we're supporting airlines that really did take a punch that would not have been survivable in the worst days of COVID," Buttigieg said, "and at the same time, recognize that what we see now are profitable businesses that need to do right by their customers, that need to be held accountable."

The proposed rules would also prohibit expiration dates on flight credits issued under certain pandemic conditions, such as closed borders or health concerns. Most airline flight credits expire within a year of purchase, although Southwest recently removed all expiration dates from its flight credits.

Additionally, airlines that receive federal aid linked to a pandemic would be required to issue cash refunds instead of vouchers. While no airlines publicly disclosed the details surrounding its issued flight credits during the pandemic, a TPG analysis in March, 2021 found that the major airlines had issued approximately 20 million vouchers in 2020, worth around a combined $10.4 billion.

As the airlines continue to staff up, Buttigieg said, the FAA is focusing on hiring more air traffic controllers.

"The disruptions from the pandemic have created a gap in the pipeline for getting air traffic controllers qualified," he said. "But now, of course, we're in a position to address that. We obviously have people physically in place training."

"It's going to take a little while, definitely months in that pipeline, but I've sat with these folks, they're incredible. Obviously the training is very rigorous, for a good reason, which is flight safety," he added.

Despite the challenges, he said he does "see a way through" the worst of the shortages.

In the meantime, despite severe weather this past weekend, leading to thousands of delays and cancellations across the U.S., flight reliability has improved since the worst of the travel chaos in May and June.

Looking ahead, Buttigieg declined to estimate an actual date when the rules could come into effect, but said that "we typically propose that any rule we adopt takes effect within 90 days of being published in normal rulemaking."

Factoring in the entire process, that means that air travelers could potentially see the new rules in place by next year.

In the meantime, the best thing travelers can do is to proactively check their flights in the day leading up to travel and while at the airport up until boarding, to catch problems early and deal with them quickly.

TPG has guides on what to do during delays and cancellations, so be sure to check out our tips:

Featured image by Getty Images
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
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    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

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  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
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  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
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  • No Foreign Transaction Fees on purchases