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:

Passengers must be allowed to cancel reservations within 24 hours without penalty.

Baggage fees must be full and prominently displayed.

Refunds and expense reimbursements must be provided when bags are not delivered on time.

Price increases after a ticket is purchased are prohibited.

Timely notice of flight status changes is mandated.

"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.

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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.

Bigger Refunds for Passengers Bumped from Flights

For passengers, the help could not come soon enough. While fewer people are flying these days, airlines have cut the number of available flights so much that more and more bumpings are occurring.

Last year there were 762,422 passengers bumped from flights, up 10 percent from the year before and the highest number since 2002. In the first quarter of this year, that number went up 17 percent.

"The airlines are cutting back because of the economy and the planes are fuller. So I've seen more bumping going on," said John DiScala, a blogger known as Johnny Jet.

The vast majority of those bumpings were voluntary -- instances in which gate agents asked people if they would pick a later flight in exchange for a credit to be used on a future trip.

Those credits -- and other perks such as upgrades and lounge access -- can vary widely, DiScala said.

"It all depends on how desperate the airline is to get the other paying customers on. There's a lot of flexibility and the gate agent has a lot of discretion," he said.

DiScala warns however, before you volunteer, ask that the gate agent doesn't give away your seat until they are positive they will need it. Otherwise, you might lose that exit-row seat or that cushy aisle location.

"It's obviously awesome for us, consumers," DiScala said.

Some question whether bumping is necessary at all.

"Overselling planes is just something airlines with modern reservation systems, mostly non-refundable tickets with $150-250 change fees and 24-hour online check-in just shouldn't have to do anymore, it's so 1995," Seaney said.

"At least one airline -- JetBlue -- doesn't oversell flights, so the argument that it is too painful to end the practice with fuller flights, especially this summer, doesn't hold much water," he said.

Seaney said most people are willing to take pre-boarding incentives to be voluntarily bumped, but that his guess is that most of them "don't know they are due a decent chunk cold hard cash at the gate if they get involuntarily bumped."

George Hobica, president of airfarewatchdog.com, also notes JetBlue's no-bumping policy.

"It makes me wonder why other airlines can't as well. I understand why airlines overbook flights, basically to increase their profits, but it leads to a miserable customer experience for thousands of travelers every year," Hobica said. "Perhaps there is a better solution, because even with higher fines, passengers still will miss important events, lose scarce vacation time, and suffer stress."

Airlines are allowed to sell more tickets than they have seats on the assumption that some passengers -- usually those with refundable tickets -- won't show up. Some travelers' groups, such as FlyersRights.org, want a limit on how many extra seats airlines can sell per flight. But industry insiders say that may be impractical, because no-show rates vary by route, day and even hour.

When a flight is overbooked, airlines must first ask for volunteers before involuntarily bumping ticket holders. While volunteers can get travel vouchers for future flights, people forced off flights must be paid in cash or check.

Sometimes the airlines abuse the rules. The Transportation Department recently fined Southwest Airlines $200,000 for shortcomings in its bumping practices.

In the first three months of this year, American Eagle, the regional affiliate of American Airlines, was most likely to bump passengers involuntarily. US Airways, Continental, ExpressJet and Southwest were next. For several years, JetBlue has been the least likely to bump -- it says it gives customers $1,000 if they're booted off a flight.

Last year, one in every 763 passengers got bumped from a flight, according to government figures.

Allison Danziger, director of TripAdvisor Flights said very few passengers are forced off a flight -- roughly 0.12 percent.

However, the new regulations could make airlines become more conservative in their overbooking policies, she said. That means the lowest-priced tickets might no longer be sold.

"So there's a possibility that tickets for most passengers could become more expensive," Danziger said.

Danziger offers a series of tips to help travelers avoid being bumped:

Make sure you have a seat assignment when booking your flight. Don't worry if it is a middle seat or if you and your travel companions are unable to find seats next to one another. As long as you have a seat assignment and check in on time, it's highly unlikely that you will be involuntarily bumped.

If you're traveling with children and are unable to find seats next to each other, I'd still recommend choosing your seats in advance, as oftentimes other passengers will make changes to accommodate family needs. Also, if you do get a middle seat, check back frequently as you can generally change your seat at any point up until the time you check in for your flight.

Check in online well before your flight departure time. By checking in you are basically telling the airline that yes, I will be on that flight and yes, I do need the seat I reserved in advance.

Make sure you get to the gate area at least 20 minutes before the flight leaves. Once everyone is boarded, the flight attendants will go on board and count heads and seats, and if there is one empty seat and you have missed the cutoff they will give your seat to someone waiting in the jetway. It's important not to be late, especially if a flight is full.

If you do get involuntarily bumped, ask the airline for a written statement detailing your rights as a passenger so you are fully informed (airlines are required to do this under current regulations). Airlines are required to give passengers who are involuntarily bumped compensation in the form of check or cash, so we recommend requesting this form of compensation as opposed to an airline credit, as travel credits can sometimes be more difficult to fulfill.

With reports from The Associated Press.