Airlines may have to pay more for bumping passengers

U.S. Transportation Secretary Ray LaHood is proposing a plan to raise the maximum amount that airlines must pay passengers who get involuntarily bumped by carriers.

LaHood wants to raise the payment by 63 percent to $650 if passengers arrive within two hours of their original flight time, and $1,300 if not. The current payment rates stand at $400 and $800.

Carriers bumping passengers rose in three of the past four years. In 2009, it jumped 10 percent to more than 762,422, according U.S. Department of Transportation data.

From Bloomberg:

LaHood’s proposal also would let passengers cancel reservations within 24 hours of booking a flight without penalty, require carriers to refund baggage fees when luggage is delivered late and bar price increases after tickets are purchased. The rules will take effect by the fall after a comment period, LaHood said.

The planned regulation would adjust the bumping amount for inflation every two years.

In April, a rule went into effect that imposed high fines when airlines fail to let passengers off plans stuck on tarmacs for three hours.

After two down years, the Air Transport Association projects air travel will be up this summer, about 1 percent. But stronger travel demand may run smack dab into a smaller airline industry, as Jeff Horwich reports.