Feds scrap proposal to offer cash to airline passengers for flight disruptions

The Department of Transportation is dropping a proposed rule that would have required airlines to offer cash to passengers whose flights were disrupted. 

The rule, which never went into effect, would have required carriers to provide compensation “to mitigate passenger inconveniences” for cancellations or delays that were within a carrier’s control. 

Reuters was the first to report that the Transportation Department was shelving the proposal. 

The proposal was introduced under President Biden and then-Transportation Secretary Pete Buttigieg. It would’ve required airlines to pay up to $300 for domestic delays of three to six hours and up to $775 for flight delays lasting at least nine hours. 

“The ability of airlines to choose the services that they provide to mitigate passenger inconveniences resulting from flight disruptions under current U.S. law contrasts with consumer protection regimes in other jurisdiction,” the proposed rule states. 

In a statement, a spokesperson for the Department of Transportation told CBS News: “We will faithfully implement all aviation consumer protection requirements mandated by Congress, including the requirement to refund ticket prices to passengers in the case of airline canceled or substantially delayed flights when consumers choose not to travel. Some of the rules proposed or adopted by the previous administration, however, went beyond what Congress has required by statute, and we intend to reconsider those extra-statutory requirements.”

“This action does not change the Department’s commitment or intent to carry out the consumer protection mandates from Congress in the recent FAA Reauthorization Act, including provisions relating to refunds. Instead, the action is part of USDOT’s effort to ensure the traveling public is treated fairly while also acknowledging the realities of carriers’ operations and the impact of overly burdensome regulations on the American people,” the DOT spokesperson said.  

Although airlines guarantee rebooking, plus meals and lodging vouchers, for customers affected by flight delays and cancellations, none guarantee cash compensation for such inconveniences.  

Airlines were opposed to the proposed regulation when it was announced in December. At the time, Airlines for America, a trade group representing the nation’s carriers, said it would “drive up ticket prices, make air travel less accessible for price-sensitive travelers and negatively impact carrier operations.”

The group on Thursday cheered the Transportation Department’s decision to drop the compensation proposal.

“We are encouraged by this Department of Transportation reviewing unnecessary and burdensome regulations that exceed its authority and don’t solve issues important to our customers,” Airlines for America said in a statement. “We look forward to working with DOT on implementing President Trump’s deregulatory agenda.” 

The DOT is also reviewing what types of flight cancellations trigger refunds for consumers, and is considering repealing a Biden-era rule that requires airlines to disclose ancillary fees upfront to help consumers avoid unexpected charges.