DOT seeks comments on overbooked-flights compensation rule

Andrew Compart, Travel Weekly, 7/10/2007

The Dept. of Transportation is asking for public comment on a possible doubling or tripling of the limit in compensation airlines must provide to passengers who are bumped from oversold flights, in what would be the first increase in the amount in nearly three decades.

The DOT also is asking for public comment on whether the compensation requirements, which currently apply only for aircraft with 60 seats or more, also should apply to aircraft with 31 to 60 seats.

In addition, the DOT is asking whether it should provide more clarity on boarding priority rules. The government currently gives the airlines a wide latitude in determining those rules, as long as the rules do not provide any "undue or unreasonable preference."

The DOT isn't considering any options that would take away that latitude, but said it might provide examples of what it would consider a "permissible boarding criteria," such as a passenger's time of check-in, fare or frequent flyer status.

Comments on the department's Advance Notice of Proposed Rulemaking are due in 60 days. The notice should be available as of July 10 on the Internet at http://dms.dot.gov, docket OST-01-9325 (when using the docket's search engine, type in "9325").

DOT figures show 55,828 passengers were involuntarily bumped from their flights in 2006 on the 18 largest U.S. airlines. That's still just 1.01 people bumped per 10,000 passengers, but that figure was the highest level since 2000 and the upward trend has continued through the first quarter of 2007, with a rate of 1.45 per 10,000 passengers.

Under current federal rules, if a flight is oversold the airline must first seek volunteers who are willing to give up their seats in return for compensation offered by the airline. The airline may bump passengers involuntarily if not enough of them volunteer, and these passengers are eligible for cash compensation in most circumstances.

If the airline can arrange alternate transportation that is scheduled to arrive at the passenger's destination within two hours of the planned arrival time of the oversold flight -- or within four for international flights -- the compensation is the amount of the fare to the passenger's destination with a $200 maximum. That means the airline does not have to give the passenger more than $200, even if his fare is higher than $200.

If the airline cannot meet these deadlines, the amount of compensation doubles, with a $400 maximum.

Those payments are in addition to the value of the passenger's ticket, which the passenger can use for alternate transportation or have refunded if not used.

The federal government doubled the maximum levels to $200 and $400 in 1978, as part of an effort to discourage overbooking, but has not touched them since.

In seeking comment on possible changes, the DOT is asking for comment on five compensation options. They are:

  • Increasing the $200 compensation limit to $624 and the $400 limit to $1,248, which are what the amounts would be today if inflation were taken into account;
  • Increasing the limits to $290 and $580, a figure reached by applying the 44.8% increase since 1978 in the average amount consumers are paying in cents per mile for airline tickets;
  • Doubling the limits to $400 and $800;
  • Eliminating all compensation limits and making compensation equal to the value of the ticket, with the payment doubling for longer delays;
  • Leaving the current limits in place.

The DOT also wants comments on whether it should periodically adjust the levels for inflation, perhaps every two years, as it has already decided to do for baggage liability.