Transportation Dept. Wants Airlines to Refund Fees If Lost Luggage Isn't Returned In 12 Hours

The U.S. Transportation Department plans to propose a requirement that airlines must issue refunds for checked baggage fees if lost luggage is not returned within 12 hours. The proposal would also compel airlines to give refunds for extra services like in-flight internet if the airline was not able to successfully provide them.

A Transportation Department official said the bureau would release the proposal in the next few days, and it could be put in place by the summer of 2022, the Associated Press reported. The 12-hour deadline for returning lost luggage would apply only to U.S. flights, while international flights would be allotted a 25-hour deadline.

Currently, airlines are only required to issue refunds if bags are completely lost, with the exception that must cover "reasonable" expenses that come as a result of a temporarily lost bag. The baggage refund proposal is the first of several airline regulations the Biden administration plans to enact, according to a senior Transportation Department official, who spoke on condition of anonymity.

For more reporting from the Associated Press, see below.

Last year, more than 100,000 consumers complained to the government about airline service. Refunds were the biggest gripe, although most claimed airlines refused to give refunds to consumers who canceled trips because of the pandemic. The Transportation Department is seeking a $25.5 million fine against Air Canada, but has not taken action against other carriers over refunds for canceled flights.

In 2019, the last full year before the pandemic, passengers paid U.S. airlines $5.76 billion in fees on checked bags, according to the Transportation Department. That dropped to $2.84 billion last year when travel slumped because of the pandemic. The figures do not include fees for carry-on bags.

For many years, customers could check one or two bags on almost any airline without paying a fee. That began to change during a travel slump caused by the financial crisis of 2008. Now, most U.S. airlines other than Southwest charge even for a single bag, although fees are usually waived for customers who buy high-fare tickets or carry the airline's credit card.

American Airlines generated $2 billion from checked-bag fees over the past two years, followed by Delta Air Lines and United Airlines, each around $1.5 billion. Because of their smaller size, discount airlines including Spirit and Frontier reap less money but get a higher percentage of revenue from the fees.