President Joe Biden has announced that his administration is planning to create new rules that will require airlines to pay cash compensation to passengers for significant flight delays or cancelations caused by carriers. 

The move is part of the Biden administration’s efforts to improve consumer protections for domestic and international flights with a US origin or destination. The US Department of Transportation did not give specifics on the amount of compensation, but it asked airlines last year whether they would pay at least $100 for delays of three hours or more caused by them.

Transportation Secretary Pete Buttigieg has emphasized the need for airlines to accept their responsibility to serve passengers better, especially as summer travel will put immense pressure on the system. The department plans to write regulations that will require airlines to cover expenses such as meals and hotels if they are responsible for stranding passengers. Most carriers have already agreed to provide these services voluntarily but have resisted providing cash compensation for delays. 

The Transportation Department notes that no US carrier has agreed to provide cash compensation for delayed or canceled flights under carriers’ control.

Some carriers are privately questioning the department’s legal authority to mandate compensation for delays, and it could take years to finalize the rules. Reuters cited the July 2021 proposal to require airlines to refund fees for delayed baggage or onboard services like wifi connections that don’t work — almost two years on and this has yet to be finalized.

The Biden administration has proposed other new consumer protections, on top of objecting to family seating fees and investigating ten carriers that failed to provide refunds. It has also put pressure on Southwest Airlines to compensate passengers better after a holiday meltdown led to over 16,000 flight cancelations.

Airlines have debated with the Biden administration over who was to blame for the hundreds of thousands of flight disruptions last year. Airlines for America, a trade association representing Delta Air Lines, United Airlines, American Airlines, and others, has insisted that they “have no incentive to delay or cancel a flight and do everything in their control to ensure flights depart and arrive on time, but safety is always the top priority.”

The Federal Aviation Administration (FAA) has also acknowledged that it does not have enough air traffic control staff and is operating 10% fewer flights than it did in 2019 to ease the pressure on the system.

The proposed compensation for US passengers is a significant step towards improving consumer protection for air travel. Still, the final regulations may take some time to finalize and face opposition from some airlines.

In the European Union and some other countries, airlines are liable to pay compensation of up to 600 euros ($663) to passengers for most significant delays.

Information for this story was found via Twitter, Reuters, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.