Late Bags, Bumped Flight? Airlines Pay Up

June 2, 2010— -- After two years of new fees and restrictions to fly the friendly skies, airline passengers were offered a bit of relief today when the Department of Transportation announced new proposals that would force domestic airlines to refund some of those new charges if their service is below par.

Among the most significant, airlines would soon have to reimburse passengers when they don't deliver luggage on time and pay more money to passengers who are involuntarily bumped from flights.

The proposed rules are the latest in a series of new, stricter rules that the Obama administration has imposed against the airlines, including a controversial regulation that limits how long passengers can be in a plane stuck on a tarmac.

Among the highlights of the proposals announced today by U.S. Transportation Secretary Ray LaHood:

"Airline passengers have rights and should be able to expect fair and reasonable treatment when they fly," LaHood said. "With this rulemaking, we're proposing to strengthen the consumer protections enacted last month and raise the bar for airlines when it comes to treating passengers fairly."

The DOT proposals now enter a 180 day public hearing process before going into effect.

Stay Up to Date on the Latest Travel Trends from ABC News on Twitter

The checked baggage rules might win the biggest cheers from consumers who have been annoyed with a bevy of new fees that airlines have imposed in the last two years.

"A lot of consumers wonder why they are paying a checked bag fee and not getting insurance against their bag not getting there or not getting there in a timely fashion," said Rick Seaney, CEO of airfare-search site FareCompare.com and an ABCNews.com columnist.

Seaney said that some airlines, like Alaska Airlines, have a policy of refunding the fee if the bags don't arrive timely on the carousel.

Another big change involves involuntary the penalty for airlines that bump passengers from flights involuntarily.

Currently, airlines must pay $400 to passengers who are forced off a flight but rebooked on another flight that arrives within two hours of their original scheduled arrival for domestic flights, or within four hours if it's an international flight. That fee rises to $800 if passengers arrive after those time limits.

The DOT is proposing to increase those limits to $650 and $1,300 respectively and then increase them every two years in step with inflation.