American, Delta, United, Southwest, Alaska, and Other Airlines May Face USD 200 Flight Delay Compensation Under DOT’s New Proposed Rules: What You Need To Know

The U.S. Department of Transportation (DOT) has introduced a new rulemaking initiative aimed at strengthening protections for passengers affected by flight cancellations or significant changes caused by airlines, including American, Delta, United, Southwest, and Alaska. The Advance Notice of Proposed Rulemaking (ANPRM) seeks public input on a proposed regulation that would require airlines to compensate passengers with cash payments, offer free rebooking on the next available flight, and cover additional costs such as meals, overnight accommodations, and transportation expenses when disruptions are caused by the airline. These disruptions could include mechanical failures or issues with the airline’s IT systems.

Challenges for Travelers Facing Airline Cancellations and Delays: A Call for Better Protection

Flight cancellations and extensive delays can cause significant hardship, stress, and financial burden for travelers. A report from the Government Accountability Office (GAO) revealed that from July 2021 to April 2022, flight cancellations potentially impacted over 15 million passengers, while flight delays affected more than 116 million. Data from U.S. airlines submitted to the Department of Transportation (DOT) shows that over 60% of domestic flight delays exceeding three hours in both 2022 and 2023 were caused by the airline.

Several countries, including Canada, Brazil, the European Union, and the United Kingdom, have introduced consumer protection measures that ensure compensation and services for passengers when airlines are responsible for significant delays. For instance, a study found that the European Union’s compensation and service requirements reduced the likelihood and duration of flight delays.

During the COVID-19 pandemic, U.S. airlines received $54 billion in taxpayer-funded bailouts, helping the industry recover and meet the surge in travel demand. Yet, despite this financial support, no U.S. airline currently offers cash compensation to passengers for delays or cancellations caused by the airline. However, following actions from the DOT, several airlines now provide at least $50 in credits or vouchers for such disruptions. Additionally, due to DOT pressure, the ten largest U.S. airlines have pledged to rebook stranded passengers at no extra charge and offer meals during airline-caused disruptions. Nine airlines have also committed to covering lodging and related transportation costs. Still, airlines maintain the ability to adjust their customer service policies at their discretion, making it unclear when they are responsible for a delay or cancellation.

Passengers often struggle to hold airlines accountable for their promises because there is no legal requirement for airlines to notify travelers about their rights to services under customer service plans. These plans are typically vague, and passengers must request services in person at the airport. Frontline staff may not always know whether a delay is caused by the airline, and often lack sufficient vouchers to accommodate all affected passengers. Moreover, airlines generally do not provide clear information on how or when they will reimburse passengers who pay out of pocket for necessary expenses.

The U.S. Department of Transportation (DOT) is proposing new rulemaking to address gaps in airline passenger protections, specifically aimed at ensuring stranded passengers receive timely compensation and services during disruptions. The proposed rules would establish clear baseline standards for what airlines are required to deliver when disruptions are caused by circumstances within their control, such as cancellations or lengthy delays.

Cash Compensation for Airline-Caused DisruptionsThe DOT is considering requiring airlines to automatically pay cash compensation to passengers whose trip disruptions are caused by the airline. Under the proposed tiered compensation structure, passengers could receive:

Additionally, the DOT is considering whether smaller airlines should pay lower compensation amounts than larger carriers and whether compensation should be required for cancellations or significant delays that are communicated to passengers in advance.

Free Rebooking on the Next Available FlightThe rulemaking proposes requiring airlines to offer free rebooking on the next available flight when:

Airlines would be required to rebook passengers on the next available flight with the same carrier or its branded codeshare partners. If no flights are available within 24 hours, the airline would need to rebook passengers with another carrier with which they have a commercial agreement.

Meals, Lodging, and Transportation CoverageThe DOT is also considering requiring airlines to provide meals, overnight lodging, and related transportation expenses for passengers stranded during disruptions. This would include setting clear standards for what must be covered and how often services must be provided during prolonged delays. Additionally, airlines may be required to automatically pay a minimum reimbursement for these services when they are not provided upfront, up to a maximum reimbursement limit per service.

Soliciting Public FeedbackThe rulemaking seeks public comment on several key points:

Under Secretary Pete Buttigieg, the U.S. Department of Transportation (DOT) has made significant strides in expanding airline passenger rights, issuing historic fines against airlines for consumer violations, and securing the largest returns in refunds and reimbursements for passengers in the Department’s history.

Automatic Refund RuleOne of the most notable consumer protections introduced under this administration is the Automatic Refund Rule. This final rule mandates that airlines provide automatic cash refunds to passengers in a variety of situations, including:

The rule ensures that refunds are processed automatically, promptly, and in the original form of payment. These protections are set to fully take effect in 2024, with key provisions going into effect on May 16, 2024, when the FAA Reauthorization Act of 2024 is signed into law, and the remaining refund protections beginning on October 28, 2024. Passengers can better understand their rights through the new explainer provided by DOT.

Billions in Refunds and ReimbursementsSince President Biden took office, DOT has overseen the return of nearly $4 billion in refunds and reimbursements to airline passengers. This includes over $600 million in reimbursements to passengers affected by the Southwest Airlines holiday meltdown in 2022. These enforcement actions have ensured that consumers are compensated for service failures.

Stronger Airline Oversight and PenaltiesUnder Secretary Buttigieg, DOT has ramped up its enforcement efforts, issuing nearly $225 million in penalties against airlines for consumer protection violations. In contrast, between 1996 and 2020, the DOT issued only $70 million in penalties for similar violations, highlighting a significant increase in accountability during this administration.

Expanded Enforcement CapacityTo further protect consumers, DOT launched a new partnership with a bipartisan group of state attorneys general. This initiative aims to expedite the review of consumer complaints, hold airlines accountable, and safeguard passengers’ rights in the face of growing air travel demand.

Record Low Flight CancellationsIn 2023, the U.S. saw the lowest flight cancellation rate in over a decade, with cancellations falling below 1.2%. This milestone was achieved despite record-high levels of air travel, demonstrating the effectiveness of DOT’s policies and oversight in ensuring reliable air service.

Inquiries on Privacy Practices and Rewards ProgramsDOT is also conducting its first-ever industry-wide review of airline privacy practices and initiating its first inquiry into airline rewards programs. These reviews are intended to enhance transparency and ensure that consumers are not being unfairly treated in relation to their personal data or loyalty program benefits.

In addition to finalizing rules for automatic refunds and consumer protections against surprise fees, the U.S. Department of Transportation (DOT) has introduced new proposals aimed at further enhancing the rights of airline passengers.

Banning Family Seating Junk FeesDOT has proposed a ban on family seating junk fees, ensuring that parents can sit with their children without paying extra. Prior to pressure from President Biden and Secretary Buttigieg last year, no airline had committed to guaranteeing fee-free family seating. Today, four airlines have stepped up to offer this guarantee, while DOT continues to work on formalizing the family seating junk fee ban.

Protecting Passengers Who Use WheelchairsIn another key proposal, DOT is working to expand protections for passengers who use wheelchairs. The new rules aim to ensure that passengers with mobility challenges can travel safely and with dignity. The Department is actively working on a final rule to strengthen these rights.