New airline bumping and fee rules proposed

The federal government Wednesday proposed new consumer protections for air travelers that would increase compensation for passengers involuntarily bumped on oversold flights.

The rules, announced by Transportation Secretary Ray LaHood, will require airlines to reimburse passengers checked baggage fees, if an airline loses bags or delivers luggage late. Now airlines keep the fees, even if a bag is lost.

In the future, passengers would be able to make and cancel plane reservations within 24 hours without penalty. Some airlines already permit this, said George Hobica, creator of Airfarewatchdog, an airfare comparison website.

The rules would take effect 180 days after a 60-day public comment period, probably in the fall, LaHood said.

The plan extends government fines that took effect in April for U.S. airlines, to include foreign carriers, that strand passengers on airport tarmacs longer than three hours.

Currently, passengers involuntarily bumped from oversold flights receive $400 to $800, depending on the length of delay. The proposed change would increase the penalty to $650 to $1300.

Under the new rule, airlines must prominently post baggage fees, and the refunds and expense reimbursements for bags late or lost.

The Air Transport Association, which represents U.S. airlines, said Wednesday that it is evaluating the proposed rules.

The Transportation Department is seeking public comment on options for air travelers with peanut allergies. Options are: an outright ban of peanut products by U.S. and foreign carriers; banning the products on flights where a passenger has requested a peanut-free flight; requiring a peanut-free buffer zone near a passenger with a medically documented severe peanut allergy, or maintaining the current practice of allowing airlines to serve peanuts.

Going forward, the government will require airlines to advertise full fare prices. Presently, carriers may exclude government taxes and fees in ads.

The public can comment on the proposed regulation on a website, www.regulationroom.org.

"These are good rules, but the question is will it lead to higher fares," Hobica said. "It is going to be a challenge for the airlines to list fares in their ads, with all taxes. That will require added costs and probably discourage more people from flying, once they see the real costs."

The likely result will either be higher ticket prices, or airlines will stop overbooking, he said. "JetBlue doesn't overbook, and they seem to be doing OK," Hobica said.

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

American Airlines subsidiary American Eagle was the most likely to bump passengers in the quarter ended March 31, followed by US Airways Group, Continental Airlines, Express Jet, and Southwest Airlines. JetBlue Airways, which does not operate in Philadelphia, was the least likely to involuntarily bounce passengers.

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.

Bumping begins with a gate clerk asking for volunteers to give up their seats in exchange for cash or a travel voucher for a future flight. That is voluntary bumping. Involuntary bumping is when not enough volunteers give up seats and airlines bounce ticketed passengers, usually those who arrived late, are not frequent fliers, or booked their ticket at a low fare.