The Transportation Department said Monday it had fined half a dozen airlines totaling more than $7 million for failing to make timely refunds to customers. The department’s intervention helped the airlines make more than $600 million in refunds, it said.
Frontier Airlines, a budget airline based in Denver, was fined $2.2 million, more than any other company. It was the only U.S. airline to be penalized as part of Monday’s announcement and has issued $222 million in refunds, according to the department.
The refunds were intended to compensate passengers for flights that were canceled, significantly delayed or otherwise substantially changed, the department said.
“As people get ready to fly this holiday season, I want customers to know that the DOT has their back,” the transportation secretary, Pete Buttigieg, said during a phone call with reporters.
Air India was fined the second largest, at $1.4 million, and TAP Air Portugal was fined $1.1 million. The remaining three airlines – Aeromexico, El Al and Avianca – pay less than $1 million each. Including the fines announced Monday, the department’s Office of Aviation Consumer Protection imposed a record $8.1 million in fines in 2022.
In a statement, Frontier said it had spent about $100 million on what it described as “goodwill refunds” that were not required by law. The airline will pay just $1 million of the $2.2 million fine, as the transportation department credited it for refunding passengers who canceled non-refundable tickets early in the pandemic.
The announcement followed months of growing complaints from travelers about delays, cancellations and other issues. Airlines have had a booming business since this summer as more people have shifted spending from goods to travel and other services after two years of the pandemic. Many people were so eager to travel that they were willing to pay much higher ticket prices.
In recent months, the Transportation Security Administration has been screening more than two million people per day on average at airport checkpoints, or about 95 percent more than during a comparable period in 2019.
The fines announced Monday are part of an ongoing effort by the Transportation Department to hold the industry accountable. This summer, for example, it unveiled a consumer dashboard to encourage airlines to commit to free hotel stays and meals when travel is severely disrupted. The department has also proposed stricter rules on how airlines and travel search websites disclose fees for services such as baggage check-in and seat selection.
In August, the department also proposed a rule that would more clearly define when airlines would issue refunds. The airline industry countered, arguing that most companies offer refunds when they are due and the rule could have unintended consequences.
And while consumer groups embraced that proposal, they also complained that the department had acted too slowly, preventing airlines from repaying customers the money they owed, especially early in the pandemic.
Some analysts had a similar reaction to Monday’s news.
“Airlines that brazenly circumvent the rules deserve a fine, but this latest round of enforcement from the USDOT comes nearly three years late and leaves out the most egregious American violators,” said William J. McGee, a senior fellow for aviation at the American Economic Liberties Project, a non-profit organization that promotes antitrust law. Mr McGee said the country’s biggest airlines deserved punishment for other missteps, including widespread operational meltdowns this summer.
Mr Buttigieg said some of the customer complaints targeted by the fines announced on Monday concerned trips scheduled for this year.
“While we handle tens of thousands of complaints submitted by a team of about three dozen people, we move quickly to make sure airlines understand they are responsible for the rules and for treating customers as they say they will . ” he said.
The department has ongoing investigations into chargebacks, though not targeting U.S. airlines, officials said. Mr Buttigieg said that while the department was more focused on ensuring refunds than collecting fines, he had nonetheless asked staff to investigate 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 will continue to increase the penalties until we see less of this kind of behavior in the beginning.”
The department said the fines had not yet been paid, but affected passengers should have been refunded or notified that they were eligible for a refund.
