The federal government Wednesday proposed what amounts to a consumer bill of rights that would increase compensation for air travelers involuntarily bumped from oversold flights.

The rules, announced by Transportation Secretary Ray LaHood, offer a blanket of consumer protections, including increasing compensation for passengers involuntarily bumped from flights, allowing passengers to make and cancel reservations within 24 hours without penalty, requiring prominently displayed disclosure of baggage fees as well as refunds and expense reimbursement when bags are not delivered on time, requiring complete fare prices in advertising, prohibiting price increases after a ticket is purchased, and mandating timely notice of flight status changes.

The rules would require airlines to refund checked-baggage fees if an airline loses or fails to deliver luggage on time. Now airlines keep the fees even if a bag is lost.

The proposals, likely to go into effect in the fall, would extend fines that went into effect in April for U.S. airlines to foreign carriers that strand passengers waiting on airport tarmacs longer than three hours.

Currently, passengers involuntarily bumped from a flight receive $400 to $800, depending on the delay. That compensation would increase to $650 to $1,300.

"We understand the airline industry has been hard hit by the economy in recent years," LaHood said. "But we also think these proposed rules can be factored into airline scheduling and operational decisions and don't need to be disruptive."

Passengers would have 24 hours to cancel reservations without penalty, something most airlines allow voluntarily now, said George Hobica, creator of Airfarewatchdog, a fare-alert website.

While airlines are unlikely to embrace all the proposals, the Air Transport Association, which represents U.S. airlines, said Wednesday that it was evaluating the proposed rules. Delta Air Lines, Southwest Airlines, and US Airways Group said they were reviewing the proposals.

LaHood estimated the measures would cost airlines $26 million from 2011 through 2020, while providing a "net benefit" of $61.6 million to the flying public.

The Transportation Department is considering banning peanuts from flights to protect travelers with peanut allergies.

The options: Banning peanut products on all flights, banning the products if a passenger has requested a peanut-free flight, requiring a peanut-free "buffer zone" near passengers with allergies, or maintaining the current practice of allowing airlines to serve peanuts.

Under the rules, now open to public comment for 60 days, airlines would have to advertise full fare prices, including all per-passenger taxes and fees. Carriers now can exclude government taxes and fees in ads.

The public can comment on the proposals on a Cornell University website,

Kevin Mitchell, chairman of the Business Travel Coalition in Radnor, applauded LaHood's "aggressive efforts on behalf of consumers." The "wide range of consumer protections" are "comprehensive and timely and represent smart regulation," Mitchell said.

Hobica, of Airfarewatchdog, said airlines would now "think twice" about having a bumping policy. "They don't have to overbook passengers. It's going to be more costly for them, but if they persist in overbooking, then they are going to pay more fines."

Hobica predicted airlines would "pass those costs on to passengers, either in higher fares or increased fees. It's certainly going to benefit the three-quarter million passengers who get bumped, but it may have a negative impact on the billions of passengers who fly every year and don't get bumped. They will probably end up paying a little bit more."

Involuntary bumpings are at their highest level since 2002, up 17 percent in the first quarter this year over the same period in 2009, according to government data.

An American Airlines subsidiary, American Eagle, was the most likely to bump passengers in the quarter ended March 31, followed by US Airways, Continental Airlines, ExpressJet Airlines, and Southwest Airlines. JetBlue Airways, which does not operate in Philadelphia, was the least likely to bounce passengers without their permission.

The Transportation Department wants airlines to be more accountable for seats they oversell. Airlines are allowed to sell more tickets than they have seats for because they rely on passengers, particularly business travelers with refundable tickets, not to show up for flights.

Proposed Air Travel Rules

Increase compensation for involuntary bumping

from the current range of $400-$800 to $650-$1,300, depending on the delay.

Allow passengers to get a refund for canceling reservations within 24 hours.

Require full and prominently displayed disclosure of baggage fees as well as refunds and reimbursements when bags are not delivered on time.

Require full-fare prices in advertising (indicating ticket costs including all fees and taxes).

Prohibit price increases after a ticket is purchased.

Mandate timely notice of flight status changes.

Subject foreign airlines to tarmac-delay rules.

SOURCE: U.S. Department of TransportationEndText

Bump Rate

Passengers denied boarding, for selected airlines, per 10,000 passengers, in the first three months of 2010:

American Eagle 4.59

US Airways 2.96

Continental 2.73

Southwest 2.59

United 1.92

American 1.28

Delta 0.63

SOURCE: U.S. Department

of TransportationEndText