U.S. DoT says Frontier and foreign airlines must pay travelers $600 million in refunds

The U.S. Department of Transportation on Monday said it has ordered Frontier Airlines and five foreign carriers to pay about $600 million in refunds to travelers whose flights were canceled or significantly changed by the airlines.

Passenger complaints about refunds from airlines surged early in the pandemic when travel restrictions and concerns over Covid-19 sent travel demand down to the lowest levels in decades.

Complaints about airline refunds accounted for 87% of the 102,560 complaints logged with the DOT in 2020 and about 60% of the 49,958 complaints in 2021. Travelers are entitled to a refund when airlines cancel their flights, but many customers were offered vouchers when airlines slashed flights during the pandemic.

The DOT and Transportation Secretary Pete Buttigieg have vowed to beef up consumer protections against airlines, proposing stricter rules for when travelers are owed refunds. Buttigieg has also sparred with airlines over the causes of a spike in flight delays and cancellations this spring and summer.

Frontier Airlines has been required to pay $222 million in refunds, the Department of Transportation said Monday. The agency fined the ultra-low-cost carrier $2.2 million for delays in paying out the refunds to customers.

Frontier earned a $31 million profit last quarter on $906 million in revenue as travel demand and fares continued their rebound from the depths of the pandemic.

“It shouldn’t take an enforcement action from the U.S. Department of Transportation to get airlines to pay refunds that they’re required to pay,” Buttigieg said on a call with reporters Monday.

He said there are more investigations underway. Blane Workie, assistant general counsel for the DOT’s Office of Aviation Consumer Protection, said on the call that there were no other pending cases over refunds against U.S. airlines.

The DOT fined Air India $1.4 million, TAP Portugal $1.1 million, Aeromexico and Israel’s El Al $900,000 apiece and Colombia-based Avianca $750,000. DOT said those five airlines together had to pay just over $400 million in refunds.

Last year, the DOT fined Air Canada a record $4.5 million over refund delays, more than half of which would go to reimburse travelers.

Leslie Josephs www.cnbc.com