Questions and answers about the DOT reimbursement rule for agencies : Travel Weekly

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Marc Pestronk

Q: I understand that under the DOT’s proposed rule, travel agencies would be legally responsible for reimbursing passengers when the carrier cancels or significantly delays a flight.

I have a few questions about the implications of what the DOT is suggesting. Firstly, as you know, most travel advisors are independent contractors (ICs) of hospitality agencies, so would the IC or the host be responsible?

A: Under the Federal Aviation Act of 1958, travel agencies are called “ticket agents” and reimbursement rights would apply to “ticket agents”. The term is defined as a “person who, as principal or agent, sells, [or] sales offers … air transport. The word “person” designates a natural or legal person.

Note that the definition is not limited to CRA or Iatan appointees, or the entity issuing a ticket. Rather, it is anyone who “sells” air travel. Therefore, the refund right could certainly apply to the IC as the seller, although the DOT may intend it to apply only to the officially designated entity, which would be the host. Perhaps the DOT will clarify this issue in the final rule.

Q: Second, I understand that the rule would apply to all US airlines as well as foreign airlines flying to or from the United States. If a foreign airline goes bankrupt and closes without making refunds, as they often do, would the agent really be responsible for refunds?

A: Yes. The travel agent and the airline would be jointly liable, meaning that if the airline didn’t refund because it didn’t have the money, the agent would have to.

Q: Third, if the airline does not make the required refund, when should the agent make the refund out of their own pocket?

A: When a refund is due due to a cancellation or long delay and the passenger refuses to accept a future travel credit, the carrier has seven days to issue a credit card refund and 20 days to make a refund when the passenger has paid by check or other cash equivalent. The same deadlines apply to agents. I realize this result doesn’t make sense because the agent won’t know if the carrier has issued the refund by the time the deadline approaches, so maybe DOT will clarify this issue.

Q: Fourth, if the agent makes a refund, what is the mechanism for getting a refund from the airline?

A: There is no mechanism. Currently, if a ticket is non-refundable, the agent is not authorized to refund it. Presumably, this restriction will change if the DOT rule goes into effect, but if the airline does not agree with the agent’s decision, the agent has no recourse.

Q: Fifth, if the rule is passed, won’t most agents just stop selling airline tickets?

A: I have no doubt that the rule would have such an effect, even if it would hardly be in the public interest.

Mark Pestronk is a Washington-based attorney specializing in travel law. To submit a question for Legal Briefs, write to him at [email protected]

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