Airlines face strict automatic refund rules on flights through the United States from tomorrow following a crackdown by the authorities there. 

Air New Zealand is one airline affected. In information for agents, it outlined details of new refunds of tickets and ancillary fees available in “certain situations” and other measures that have been hailed as a big win for consumers. 

The US Department of Transport (DoT) announced the new rules in April, which are aimed at holding airlines to clear and consistent standards when they cancel, delay or substantially change flights, and will require automatic cash refunds to be issued within weeks. They will also require them to reveal all fees before a ticket is bought. 

In advice to travel agents, Air NZ says the rule covers all flights to and from the US, regardless of where the passenger is scheduled to commence their journey or where the ticket is purchased. 

It covers any journey to, from or transiting the US, which includes connecting flights within New Zealand, or from Australia and Pacific Island ports which connect to services to or from the US as part of the same ticket. 

The rule also covers journey to or from Britain, Europe or Canada, which transit via the US. Air NZ flies to five US destinations which provide transit stops to other countries. 

Customers are entitled to a full refund of any unused fares, taxes and ancillary product fees when their flight is either cancelled or significantly changed and they choose not to travel. 

A significantly changed flight is defined where: 

• Departure or arrival is delayed/changed more than six hours (from the original departure time when a customer purchased their tickets) or when the flight is cancelled. 
• Additional connection points are added to a journey. 
• Customers are downgraded to a lower cabin. 
• Departure is from a different airport than the original booked itinerary. 
• Customers with a disability are required to connect via airports that are different to the original booked itinerary. 
• Customer with a disability are re-accommodated on a different aircraft, where one or more accessibility features are unavailable. 

This rule applies to both schedule change and disrupted scenarios, from any time after a booking is ticketed, the airline advises agents. 

The refund rule applies to situations which are both controllable and uncontrollable – so the airline must advise customers of their rights to a refund, regardless of the reason for the disruption. 

“As an agent, you must inform customers of their eligibility to receive a refund if they choose not to travel, at the same time we/you offer an alternative flight schedule.” 

This information on a customer’s eligibility to receive a refund, (should they choose not to travel) will be included in all scheduled change and disrupt communications to customers (where there is a delay or flight time change of six hours or more). 

“Please note, as an agent, your customer will not receive schedule change communication from Air New Zealand.” 

Where a customer is eligible, a refund must be provided for any unused fare, taxes or fees for ancillary products relating to the flight. Service fees are not required to be refunded under this rule. 

If the customer commences their journey on the new flight schedule, then they have accepted the alternative flight schedule and are not eligible for a refund. 

But if a flight is diverted on-route for refuelling or a medical emergency, customers are not eligible for any refund. 

Automated refunds 

Customers are now entitled to a refund when a US or foreign carrier cancels or makes a significant change to a scheduled flight under the following parameters: 

• Change to arrival or departure time of more than six hours (international flights) 
• Flight departs or arrives from a different airport 
• Increase in the number of connections 
• Connections at different airports or flights on different aircraft that are less accessible or accommodating to a passenger with a disability. 

“It is important if assisting a customer with alternate transportation arrangements in this scenario that you must now advise the customer of their right to a refund before making an offer for alternative transportation, travel credits, vouchers or other compensation. Air New Zealand will continue to notify customers of their entitlement in a disrupt situation. For a schedule change, you are now required to inform the customer of their right to a refund under the above scenarios.” 

No authority is required from Air NZ to refund under this scenario. 

The refund can then in turn be requested by an agent’s GDS flight booking system within 12 months from the date of issue. 

Delayed baggage 

Customers are now entitled to a refund if their baggage is significantly delayed under the following conditions: 

• Passengers who file a mishandled baggage report are entitled to a refund of their checked baggage fee, where baggage is not delivered within: 
• 15 hours of arrival time international flights – less than 12 hours 
• 30 hours of arrival time international flights – more than 12 hours 
• 12 hours of arrival time domestic flights 
• This includes overweight/anything paid at the airport 

The airline that took the payment for the baggage is responsible for providing the refund to the customer. It is the airline that files the mishandled report that is responsible for telling the carrier who took the payment to facilitate the refund. 

For these scenarios, Air NZ says its centralised baggage department will contact the customer/agent to notify of the refund (dependent on if the customer paid baggage fees through an agent or directly with Air NZ). 

As an agent, they would only be involved for refunding pre-paid bags, as excess baggage will be paid directly to the customer. 

Add-on services not provided 

Customers are entitled to a refund if their add-on services are not provided under the following: 

• Passengers are entitled to a refund where the airline fails to provide: 
• Paid ancillary products 
• Seat Selection 

If the customer hasn’t been re-allocated a seat or is unhappy with their new seat assignment, no authority is required from the airline to refund under this scenario, Air NZ told agents. 

When the DOT changes were announced, AirHelp, a Berlin-based company that assists passengers with airline claims, called it a “massive step forward and huge improvement in consumer rights and protection”. 

Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.