The Department of Transportation (DOT) recently finalized a rule that has significant implications for travel agencies. This rule requires agents to be responsible for refunds in cases where an airline delays or cancels a flight. While the initial proposal was met with criticism for being overly burdensome on travel agents, the final rule has been modified to alleviate some of these concerns.
Under the final rule, agencies are only responsible for refunds in situations where they were the credit or debit card merchant after selling directly to consumers. Additionally, they may be held accountable when accepting payment by cash or check. This means that agencies will need to make refunds out of their own funds within specified deadlines, regardless of whether they still hold the client’s money at the time of the flight disruption.
The definition of “ticket agent” in this rule is broad enough to encompass non-ARC-appointed agencies and independent contractors. This means that independent contractors who collect payments from clients, issue receipts, and remit the funds to their host agencies will also be required to facilitate refunds in the event of a flight cancellation or substantial delay.
The DOT’s rule outlines specific criteria for when a delay triggers the refund requirement, such as at least three hours for domestic flights and six hours for international flights. The deadlines for processing refunds are also clearly defined, with seven business days for credit card purchases and 20 calendar days for cash, check, or debit card transactions.
The implementation of this rule necessitates new levels of cooperation and communication between airlines and agencies to prevent any disruptions or chaos. To allow for a smooth transition, the DOT has delayed the effectiveness of the refund requirements for six months. Despite these adjustments, the rule still poses a significant burden on many agencies and may lead to a decrease in the number of agencies selling airline tickets.
While the DOT’s final rule is less stringent than initially proposed, it still presents challenges for travel agencies. By requiring agencies to take on additional responsibilities for refunds, the rule may result in financial strain and operational changes for many businesses in the travel industry. As agencies navigate these new requirements, collaboration with airlines and effective communication will be key to minimizing the impact of this rule on their operations.
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