New Airline Passenger Protection Rules Up Lost Baggage Fees, Penalties for Carriers

April 20, 2011— -- For Americans who have had their baggage lost on flights, or who have spent hours stuck on the tarmac without being allowed to use the bathrooms, a new set of rules the Department of Transportation put in place today will come as a relief.

The Obama administration has introduced new passenger protection measures that would impose fines on airlines for losing baggage and kicking off travelers from overbooked flights.

Under the new guidelines, airlines would have to reimburse baggage fees in the case of a lost bag, in addition to the compensation they already pay. There will be an additional charge for unreasonable delays in getting passengers their bags, though the DOT has not clarified what it considers unreasonable.

For international flights, air carriers will have to use the fee applied at the beginning of a passenger's itinerary, even if it's with a partner flight.

In recent years, airlines have hiked their fees for checked bags -- some charging as much as $35 for the first piece -- but consumer groups complain that service has yet to improve.

Airlines lost more than 2 million bags in 2010 and more than 2.1 million in 2009, according to the DOT.

Airlines would also be in double trouble for bumping passengers involuntarily off overbooked airlines. They would have to pay twice what they pay now if they can't get a passenger on another flight between one to two hours of the original flight. Airlines currently have to pay $400. That penalty would double to $800 and increase to $1,300 for a longer delay.

More than 65,000 passengers were unwillingly bumped from their flights last year.

Air carriers would also have to include taxes and fees and other costs -- including what they charge for pillows, checked bags and food -- in the price when advertising their fares. This requirement, the DOT says, would make it easier for passengers to compare prices among airlines.

Passengers could hold reservations for 24 hours without paying or incurring a cancellation penalty, a policy that some U.S. carriers apply but not all.

"Passengers like to be treated with fairness. They like to be treated with respect, particularly when they're paying large sums of money to board an airplane and for a ticket," Transportation Secretary Ray LaHood told ABC News. "We think this is a fairness issue for passengers, and we think this will help the airlines."

International passengers will also get reprieve from long delays on the tarmac. Foreign carriers and international flights would only be allowed a stay on the tarmac for a maximum of four hours before they have to return to the gate.

Domestic flights are only allowed three hours on the tarmac before they have to return to the gate, under new rules passed in December 2009, which also mandated airlines to provide access to bathrooms and water.

The guidelines were spurred by a JetBlue incident in 2007 that left passengers stranded on the tarmac at John F. Kennedy airport in New York for up to 11 hours.

The rule helped decrease tarmac delays significantly, the DOT says. Only 16 such incidents were reported between May and February, compared with 664 between May 2009 and February 2010.

But other reports have suggested that the decline is misleading, and that the rule has led to more cancellations that inadvertently cause passengers more harm and cost airlines billions of dollars.

There was a 40 percent increase in flight cancellations mainly because of the new consumer protection regulations on tarmac delays, according to an analysis conducted last year by George Washington University and industry researchers.

Some fear that the new set of guidelines announced today could have similar unintended consequences. Some industry groups are already saying that the new rules would increase costs for airlines and result in higher prices for passengers.

"Market forces – not additional regulations – are already providing customer benefits," the Air Transport Association, which represents airlines, said in a statement today. "Without comprehensive data and appropriate benchmarks, it is difficult to accurately evaluate regulatory effectiveness or whether existing rules should be modified. Airlines should have more flexibility in making operational judgment calls to ensure that they are getting the maximum number of customers to their destinations reliably and safely."

There's also some apprehension about whether they will ultimately change behavior.

But officials insist the new rules will improve the passenger experience and make airlines more accountable.

"We've proven that these enforcements do work and that passengers like them, and that even some airlines are now saying that it was probably a good thing that we did this," LaHood said. "I'm hoping that they agree that passengers should be treated with respect and should be treated with the idea that when they're paying a lot of money to board a plane that they ought to get the service that they're paying for."