U.S. Fines Airlines More Than $7 Million for Not Providing Refunds
The Transportation Department said on Monday that it had fined a half-dozen airlines a total of more than $7 million for failing to provide timely refunds to customers. The department’s intervention contributed to the airlines’ issuing more than $600 million in refunds, it said.
Frontier Airlines, a budget carrier based in Denver, was fined $2.2 million, more than any other company. It was the only U.S. airline penalized as part of Monday’s announcement and has issued $222 million in refunds, according to the department.
The refunds were meant to compensate passengers for flights that were canceled, significantly delayed or otherwise altered substantially, the department said.
“As people get ready to fly this holiday season, I want customers to know that the D.O.T. has their back,” the transportation secretary, Pete Buttigieg, said on a call with reporters.
Air India was assessed the second-largest fine, of $1.4 million, and TAP Air Portugal was fined $1.1 million. The remaining three carriers — Aeromexico, El Al and Avianca — will each pay less than $1 million. Including the penalties announced on Monday, the department’s Office of Aviation Consumer Protection has issued a record $8.1 million in fines in 2022.
In a statement, Frontier said it had issued about $100 million in what it described as “good-will refunds” that were not legally required. The airline will pay only $1 million of the $2.2 million fine because the Transportation Department credited it for providing refunds to passengers who canceled nonrefundable tickets early in the pandemic.
The announcement followed months of growing complaints from travelers about flight delays, cancellations and other problems. Airlines have enjoyed a booming business since this summer, as more people have shifted their spending from goods to travel and other services after two years of the pandemic. Many people have been so eager to travel that they have been willing to pay much higher ticket prices.
In recent months, the Transportation Security Administration has screened an average of more than two million people a day at airport checkpoints, or about 95 percent as many as it screened during a similar period in 2019.
The fines announced on Monday are part of a continuing effort by the Transportation Department to hold the industry to account. This summer, for example, it unveiled a consumer dashboard to encourage airlines to commit to providing free hotel stays and meals when travel is severely disrupted. The department has also proposed stricter rules for how airlines and travel-search websites disclose fees for services like checking bags and seat selection.
In August, the department also proposed a rule that would more clearly define when airlines would issue refunds. The airline industry pushed back, arguing that most companies offer refunds when they are due and that the rule could have unintended consequences.
And while consumer groups embraced that proposal, they also complained that the department had acted too slowly, allowing airlines to not refund customers money they were owed, particularly early in the pandemic.
Some analysts had a similar reaction to Monday’s news.
“Airlines that brazenly skirt the rules deserve to be fined, but this latest round of enforcement from the U.S. D.O.T. comes almost three years too late and leaves out the most egregious U.S. offenders,” said William J. McGee, a senior fellow for aviation at the American Economic Liberties Project, a nonprofit that promotes antitrust legislation. Mr. McGee said the nation’s largest airlines deserved punishment over other missteps, including widespread operational meltdowns this summer.
Mr. Buttigieg said some of the customer complaints addressed by the fines announced on Monday were related to travel scheduled for this year.
“Even though we are dealing with tens of thousands of complaints fielded by a team of about three dozen people, we are moving quickly to make sure airlines understand that they are accountable for the rules and for treating customers the way that they say they will,” he said.
The department still has open refund investigations, although not any that are directed at U.S. carriers, officials said. Mr. Buttigieg said that, while the department was more focused on ensuring that refunds were paid than on collecting fines, he had nonetheless asked staff to look into whether the penalties were sufficient to prevent such behavior in the future.
“This really shouldn’t be happening in the first place,” he said. “And we’ll continue ratcheting up the penalty side until we’re seeing less of this kind of behavior to begin with.”
The department said that the fines had not yet been paid but that affected passengers should have received refunds or been notified that they were eligible for refunds.