Trump Administration Withdraws Airline Passenger Compensation Rule
Proposed Rule Would Have Mandated Cash Payouts
The Trump administration officially scrapped a proposed regulation that required airlines to compensate passengers with cash during major disruptions within carriers’ control. Originally introduced in 2023, the plan aimed to align U.S. protections with Europe by mandating payments ranging from $200 to $775.
Airlines also would have been obligated to provide meals, hotel stays, and rebooking options for stranded passengers facing extended cancellations or significant delays. Proponents argued the regulation would have provided meaningful consumer protections, while critics warned it could raise airline costs and increase passenger fares.
Airlines Applaud Withdrawal While Advocates Object
The U.S. Department of Transportation announced its decision on September 4, 2025, stating the withdrawal aligned with the administration’s deregulatory priorities. Major U.S. carriers strongly opposed the measure, with Airlines for America warning mandatory payouts would inflate ticket prices and reduce scheduling flexibility.
Industry critics contend carriers already face higher operating expenses and that additional regulatory burdens could worsen financial strain across the aviation sector. Consumer advocates, however, expressed disappointment, highlighting passengers’ limited protections under existing rules and calling for stronger measures to safeguard travellers’ rights in disrupted journeys.
Passenger Protections Remain Limited in U.S.
Despite the rescinded rule, passengers maintain limited rights through existing regulations like the “automatic refund rule” covering cancelled flights or baggage issues. Several carriers, including Delta, American, and United, voluntarily provide rebooking options, meal vouchers, or hotel accommodations, though offerings remain inconsistent across the industry.
Consumer groups warn further deregulation under the Trump administration may weaken protections regarding fee transparency, refund obligations, and disability accommodations. Transportation Secretary Pete Buttigieg criticized the decision, citing political ties between current Department of Transportation appointees and airline lobbying efforts, underscoring rising concerns over passenger rights erosion.