Major U.S. airlines have urged the U.S. Transportation Department (USDOT) to abandon a review that could require them to compensate passengers for flight disruptions. The review, launched by the Biden administration in December, seeks public input on whether airlines should provide cash compensation for delays and cancellations caused by carriers, similar to regulations in the European Union and Canada.

Industry Warns of Rising Costs and Higher Airfares

Airlines for America (A4A), a trade group representing major carriers such as American Airlines, Delta Air Lines, and United Airlines, argued that the proposed compensation requirement would significantly increase airline costs and lead to higher ticket prices. The group also claimed USDOT lacks the legal authority to enforce such a rule.

“Airlines do not need further incentive to provide quality service,” A4A stated, emphasising that carriers already offer accommodations such as meals and hotel stays during significant disruptions.

Spirit Airlines voiced strong opposition, warning that the proposal might push airlines to operate flights that should otherwise be delayed or canceled due to safety concerns. The International Air Transport Association (IATA), which represents airlines globally, also criticided mandatory compensation, calling such programs “wealth transfer tools” that have cost airlines billions without reducing disruptions.

USDOT’s Proposed Compensation Structure

Under the review, USDOT suggested compensation amounts based on the length of the delay:

• $200–$300 for domestic delays of at least three hours
• $375–$525 for delays of six hours
• $750–$775 for delays of nine hours or more

Then-Transportation Secretary Pete Buttigieg stated in December that the rules would create financial incentives for airlines to improve service and reliability.

Legal Challenges and Uncertain Future

President Biden initially announced in May 2023 that his administration would draft rules requiring airlines to compensate passengers for delays. Currently, airlines are required to refund customers for canceled flights but not for delays.

The industry pushback follows a recent legal win for airlines when a U.S. court blocked the Biden administration’s 2024 rule requiring airlines to disclose service fees upfront, citing procedural missteps by USDOT.

With airlines resisting further regulation and legal challenges mounting, the future of passenger compensation rules remains uncertain.