The U.S. Transportation Department, headed by former presidential hopeful Pete Buttigieg, announced on November 14 that it will be fining six major airlines a total of more than $7 million for failing to provide timely refunds to their customers. The agency is also ordering the airlines to pay back customers $600 million in refunds
"As people get ready to fly this holiday season, I want customers to know that the D.O.T. has their back," Buttigieg told reporters.
These fines are the result of an ongoing effort by the federal agency to hold airlines accountable for flights that were canceled or significantly delayed. Along with attempting to punish airlines, in August, the Transportation Department also recommended tightening the rules around flight refunds.
"When a flight gets canceled, passengers seeking refunds should be paid back promptly," Buttigieg said on Monday. "Whenever that doesn't happen, we will act to hold airlines accountable on behalf of American travelers and get passengers their money back.
The only U.S. airline involved in the case, budget carrier Frontier Airlines (NASDAQ: ULCC), faces the highest fines at $2.2 million. Frontier also made up the largest portion of the refund pool with $222 million.
Behind Frontier, Air India faced the steepest punishment with $1.4 million in fines and $122 million in refunds, followed by TAP Air Portugal with fines of $1.1 million and $127 million in refunds. Finally, Avianca, El Al, and Aeromexico will each pay less than $1 million in fines and will refund customers $78 million, $62 million, and $14 million respectively.
"This really shouldn't be happening in the first place," Buttigieg said. "And we'll continue ratcheting up the penalty side until we're seeing less of this kind of behavior to begin with."
While Frontier's fines are the highest, it may not be paying the highest amount. That's because the airline was credited by the department for refunds it gave out at the start of the pandemic. The company will only be required to pay around $1 million in fines. For reference, in the third quarter of 2022, Frontier brought in a net income of $31 million.
The fines are a good sign for customer advocates, but analysts say that these penalties aren't likely to make an impact on airline behavior after years of bad actions.
"Why is it that none of these other airlines have been fined?" a senior fellow for aviation at the antitrust nonprofit American Economic Liberties Project, William J. McGee, asked. "And why is it taking so long ... why is it taking (almost) three years to investigate this, particularly since all the data is public?"
Complaints surrounding flight refunds surged at the start of the pandemic. COVID-19 cratered demand for air travel, but the customers who remained faced sweeping flight cancellations and delays. As flight disruptions increased, airlines began refusing to give refunds to customers, leading to mountains of complaints to the Transportation Department.
"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," McGee continued. "The fact is, the biggest offenders here don't seem to be addressed."