Soon after the U.S. Department of Transportation (DOT) announced a final rule requiring airlines to automatically and promptly refund consumers when it cancels or significantly changes a flight, significantly delays checked bags or fails to provide the extra services the passenger purchased, the American Society of Travel Advisors (ASTA) said the department made a “profound error.”
Most notably, as the rule reads, merchant-of-record ticket agents will be responsible for providing consumer refunds regardless of whether they possess the funds from the airline. Despite ASTA’s years-long effort to educate Congress and the DOT, this final rule “indicates a complete lack of understanding of how [its] predominantly small business community sells airline tickets.”
“The Department of Transportation made a profound error in this final rule,” said ASTA President and CEO Zane Kerby. “Our primary concern for our members has always been the potential that regulations aimed at protecting consumers could harm the small travel agencies who book air tickets. And that is precisely what happened. Travel agencies sold 40 percent of airline tickets in 2023, and the DOT doesn’t understand that in the limited situations where the agency is the merchant of record, payment is immediately passed on to the airline.”
Kerby does agree with the DOT in that “for far too long, consumers have borne the brunt of airline bad behavior … But to put the onus of providing that refund on small business merchants of record will be catastrophic to this industry.” These types of transactions make up a significant portion of business for many small travel agencies, especially those who specialize in group travel, said Kerby.
He concluded: “This is a clear case of a federal agency overcorrecting a problem. Now more than ever, we urge leaders in the House and Senate to maintain Section 710 of the House bill to reauthorize the FAA [H.R. 3935] which ensures ticket agents—nearly 80 percent of whom are female small business owners—are not responsible for providing airline refunds when they are not in possession of the funds.”
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