Under a proposal put forward by the Transportation Department on Dec. 5, airlines would have to compensate passengers for cancellations and delays of more than three hours.
The rule would apply only in cases where the delay or cancellation is the fault of the airline and not caused by external factors such as weather.
The DOT has yet to develop a specific proposal on compensation amounts and is asking for public feedback on the subject. As a starting point, the department said it is considering a tiered approach, starting at between $200 and $300 for domestic delays of at least three hours but less than six. The DOT is contemplating passenger payments of $375 to $525 for delays of at least six hours and compensation of between $750 and $775 for longer delays.
The department is also considering whether small airlines should pay less than larger ones and whether compensation should be required when passengers are given notice of an itinerary delay or cancellation a week, or multiple weeks, in advance of the scheduled flight.
"Americans know the importance of a robust airline industry, which is why this country -- and U.S. taxpayers -- kept U.S. airlines afloat when the Covid pandemic threatened their very existence," DOT secretary Pete Buttigieg said in a prepared statement. "Now that we are on the other side of the pandemic and air travel is breaking records, we must continue to advance passenger protections. This action we're announcing is another step forward into a better era for commercial air travel -- where the flying public is better protected and passengers aren't expected to bear the cost of disruptions caused by airlines."
The proposed compensation requirements didn't come as a surprise. The Biden administration first announced plans to put such a proposal forward in May of last year. But the process has seemingly sped up in the administration's 11th hour. The proposed rulemaking had been scheduled to be published in January. Still, the DOT under the next Trump administration will have the final say on whether to implement such regulations.
Airlines will undoubtedly fight the proposal. In a statement, Airlines for America (A4A) said its members don't need further incentive to provide quality service.
"A4A carriers are providing automatic refunds if the passenger chooses not to be rebooked -- regardless of whether the significant delay or cancellation is within the carrier's control -- and also providing reimbursements for food, transportation and lodging for significant controllable delays," the group said. "Mandating additional cash compensation -- beyond what airlines already provide -- will drive up ticket prices, make air travel less accessible for price-sensitive travelers and negatively impact carrier operations."
Canada, the U.K., Brazil and the EU already require airlines to pay cash compensation for long delays and cancellations. Maximum compensation requirements under the EU regulation are 600 euros.
The DOT is also proposing that in cases of controllable cancellations and significant delays, airlines must pay for overnight accommodations, ground transportation to and from the hotel, a meal and passenger rebooking costs. At present, all 10 of the primary mainline U.S. carriers commit to meal compensation within their contract of carriage, while all but Frontier commit to providing accommodations and ground transportation. But federal regulations would take such decisions out of carriers' hands.
According to data that U.S. airlines submit to the DOT, over 60% of domestic flight delays of three hours or longer were airline-caused, the DOT said. Other major causes were weather and air traffic control backups.
As part of developing the new regulations, the DOT hopes to more clearly define how airlines must classify delays that have more than one cause.
The compensation proposal is just the latest in a series of airline consumer measures the Biden administration's DOT has taken. Most recently, new rules requiring airlines to proactively offer and provide refunds for cancellations and long delays took effect in late October.
The public has 60 days to comment on the compensation proposal. Comments can be submitted at the regulations.gov website, docket number DOT-OST-2024-0062.