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U.S. Airline Passengers May Get $1,300 for Bumped Flights

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April 20 (Bloomberg) -- U.S. airline passengers can collect $1,300 when they are forced to give up their seat on an overbooked flight, a 63 percent increase, under a federal rule made final today.

Additionally, foreign carriers must release passengers from their aircraft stuck at U.S. airports within four hours or face fines as high as $27,500, and airlines must refund luggage fees if bags are lost, under the regulation issued by the U.S. Transportation Department.

“Airline passengers have a right to be treated fairly,” Transportation Secretary Ray LaHood said in a statement. The rule affects foreign carriers, including British Airways Plc and Air France-KLM Group, and domestic airlines such as Delta Air Lines Inc. and United Continental Holdings Inc.

The action is a victory for consumer advocates such as Kate Hanni, executive director of Napa, California-based FlyersRights.org, who have been pressing for more protections after a LaHood rule last year forced U.S. carriers to let passengers off planes stranded for more than three hours.

The rule will cost carriers $30.7 million over 10 years, with more than two thirds coming from new requirements for fee disclosure, advertising and extension of the tarmac-delay provision to foreign carriers, according to the rule.

Stuck on the Tarmac

“Our member airlines will implement the new rules as efficiently as possible,” Nicholas Calio, chief executive officer of the Air Transport Association in Washington, said in a statement. The trade group’s members include Delta and United.

Passengers on a Cathay Pacific Airways Ltd. flight were stuck on the tarmac at New York’s John F. Kennedy International Airport for almost 12 hours in December as they waited for a gate after a snowstorm. Such delays at Kennedy by international carriers were “an important factor” in deciding to impose the rule, the Transportation Department said in the statement.

Airlines often sell more seats than available on a flight, betting that some travelers won’t show up. When a flight is oversold, carriers typically seek volunteers by offering incentives including vouchers before forcing fliers to give up their seats.

The rate of involuntarily bumping was 1.09 per 10,000 passengers last year, down from 1.23 in the same period of 2009, according to Transportation Department statistics.

Bumping Rates

Passengers can collect $1,300, up from $800 currently, for being bumped from a domestic flight if they arrive at their destination more than two hours later than scheduled, according to the new rule.

Consumers can collect at most $650, up from $400, if they get to their destination within two hours of the scheduled time, under the rule.

The payments were previously raised in 2008, the first increase since 1978. LaHood’s rule adjusts bumping payments for inflation every two years.

The rules also bar carriers from excluding government taxes and fees from fare advertisements and requires them to prominently disclose all potential fees on websites, according to the statement.

LaHood’s rule also would let passengers cancel reservations within 24 hours of booking a flight without penalty, prohibit price increases after tickets are purchased and require airlines to notify consumers of delays of more than 30 minutes.

To contact the reporter on this story: John Hughes in Washington at jhughes5@bloomberg.net.

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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