Everything you need to know about the new denied boarding compensation rules

Editor’s note: This is part six in a series about the Transportation Department’s sweeping new airline passenger protection rules. You can read the entire document here (.DOC). Please take a moment to comment on these proposed rules at Regulationroom.org. The future of air travel depends on it.

The problem with proposed rulemakings is that they often run on forever, and the journalists who are supposed to review them and report back gloss over the really important material.

Result? You get the headline: “Government to raise denied boarding compensation.” And that’s it.

But there’s more — so much more — when it comes to the proposed overbooking rules.

Let’s start with the preliminary regulatory analysis (PDF), which succinctly defines the problem of denied boarding.

Overbooking is the airline industry’s original sin. Selling more tickets than your have seats is a practice that predates deregulation, and the consequences of it have been written into law for half a century.

And what are the consequences? At the moment, involuntarily bumped travelers are required to be given denied boarding compensation equal to 100 percent of the fare (200 percent if alternative transportation is not provided within the specified time limits) to the next stopover on the flight itinerary, up to the cap specified in the regulation.

Two years ago, the maximums were raised from $200 to $400 when alternative transportation is provided by the carrier within two hours for domestic flights and within four hours for international flights and from $400 to $800 otherwise.

But that’s not enough. And here’s why, according to the government:

Since May 2008 when the new rule was issued, despite these higher denied boarding compensation amounts, we have seen an increase in involuntary denied boardings. Load factors are also increasing, making it less likely that “bumped” passengers are being conveniently accommodated on other flights.

We are therefore concerned about whether the current rule adequately encourages carriers to seek volunteers to give up their seats and whether the minimum denied boarding compensation amount adequately compensates those passengers that are involuntarily “bumped” from their flights.

How does the Transportation Department intend to improve its denied compensation, or DBC, rules?

1) Increase the minimum DBC limits to take account of the increase in the Consumer Price Index (CPI) since 1978.

2) Implement an automatic inflation adjuster for minimum DBC limits.

3) Clarify that DBC must be offered to “zero fare ticket” holders who are involuntarily bumped.

4) Require that a carrier verbally offer cash/check DBC if the carrier verbally offers a travel voucher as DBC to passengers who are involuntarily bumped.

5) Require that a carrier inform passengers solicited to volunteer for denied boarding about its principal boarding priority rules applicable to the specific flight and all material restrictions on the use of that transportation.

The most important point for air travelers, as correctly pointed out by all of those headline-writers, is that the amount of denied boarding compensation would go up. The department proposed revising the minimum amounts by using the Consumer Price Index for All Urban Consumers (CPI-U), rounded to the nearest $25, with the base of $200/$400 for the maximum DBC amounts in the year 1978.

That would bring the maximum DBC amounts for involuntarily oversold passengers to $650/$1,300 as of January 1, 2010.

There are lots of details that have yet to be worked out. One of the most interesting to me is a new disclosure requirement for denied boarding compensation.

We are concerned that … passengers who are verbally offered a travel voucher may not have time to read the written notice and are not in fact verbally told by an agent that they are entitled to compensation by cash or check. Likewise, they may not be adequately informed of any conditions or limitations placed on the vouchers they are receiving.

Accordingly, we are proposing that in any case in which a carrier verbally offers an involuntarily bumped passenger free or reduced-rate air transportation as an alternative to cash DBC, it also must at the same time verbally advise that passenger of his or her right to insist on compensation by cash or check and the actual amount of such compensation that would be due and of any conditions or restrictions applicable to the vouchers.

No two ways about it: This highly detailed rulemaking is telling airlines exactly what they must do, point by point, when they deny you boarding.

Is it necessary? Absolutely. Denied boarding problems have plagued my readers for too long, and the penalties have been laughable.

What about the cost? The preliminary analysis concludes “it is not possible to determine the number or share of passengers who would have been involuntarily bumped, but who chose to accept travel vouchers or coupons instead.” But it’s a safe bet that if these rules are adopted, it will cost airlines who overbook in a big way.

The Rulemaking Series

I’ve written this series of posts in order to help you understand the Transportation Department’s proposed rules and offer the most informed feedback during its commenting period. Please take a moment to read them and then tell the government what you think at Regulationroom.org.

Part 1: New tarmac delay contingency plans — what’s in it for you?

Part 2: Government will require airlines to offer “complete picture” of ground delays

Part 3: New rules would require airlines to meet “minimum” customer service standards

Part 4: Government to airlines: Put it in the contract!

Part 5: New requirements would force international airlines to monitor and respond to passenger complaints

Part 6: Everything you need to know about the new denied boarding compensation rules

Part 7: The truth about the government’s new “full fare” disclosure rule

Part 8: Transportation Department wants airlines to reveal all fees and an airfare — or two

Part 9: New rule: No more price increases after you buy a ticket

Part 10: Airlines must “promptly” notify passengers of flight delays under proposed rule

Part 11: No more lawsuit limits for passengers under proposed government rules

Part 12: The hard facts about the peanuts-on-a-plane rule everyone’s talking about

If you have any feedback on this series, please send me an email. And thanks for reading.

(Photo: hugo vk/Flickr Creative Commons)

Underwritten by

Elliott Advocacy is underwritten by Cavalry Travel Insurance

Cavalry takes the worry of out travel by providing 24/7 access to medical and security professionals combined with the best medical evacuation and security extraction services. Cavalry gets you home safely when you need it most. Learn more at Cavalrytravelinsurance.com.

Elliott Advocacy is underwritten by Seven Corners

Seven Corners has helped customers all over the world with travel difficulties, big and small. As one of the few remaining privately owned travel insurance companies, Seven Corners provides insurance plans and 24/7 travel assistance services to more than a million people each year. Because we’re privately held, we can focus on the customer without the constraints that larger companies have. Visit Seven Corners to learn more.

Elliott Advocacy is underwritten by Sodexo North America

Sodexo North America Sodexo North America is part of a global, Fortune 500 company with a presence in 80 countries. Sodexo is a leading provider of integrated food, facilities management and other services that enhance organizational performance, contribute to local communities and improve quality of life for millions of customers in corporate, education, healthcare, senior living, sports and leisure, government and other environments daily. Learn more at Sodexoinsights.com.

Elliott Advocacy is underwritten by Travelex Insurance Services

Travelex Insurance Services is a leading travel insurance provider in the United States with over 55 years combined industry expertise of helping people dream, explore and travel with confidence. We offer comprehensive travel insurance plans with optional upgrades allowing travelers to customize the plans to fit their needs. Compare plans, get a quote and buy online at Travelexinsurance.com.

Elliott Advocacy is underwritten by AirHelp

AirHelp is the world’s leading flight delays compensation company, helping passengers apply for compensation following a delayed or canceled flight or when boarding has been denied. It is AirHelp’s mission to fight for passenger rights by holding airlines accountable for flights disruptions that are out of passengers’ control. AirHelp has already helped 5 million people, taking the stress out of applying for compensation and making it as hassle-free as possible for travelers around the world.

Elliott Advocacy is underwritten by Allianz Travel Insurance

The Allianz Travel Insurance company has built its reputation on partnering with agents all around the world to provide comprehensive travel insurance for their clients. Contact Allianz Travel Insurance for a comprehensive list of coverage.

Elliott Advocacy is underwritten by Chubb

Chubb is the world’s largest publicly traded property and casualty insurance company, and recognized as the premier provider of insurance for successful individuals and families in the U.S. and selected international markets, offering coverage for high-value automobile, homeowners, recreational marine/aviation, valuables and umbrella liability coverage. As an underwriting company, Chubb assesses, assumes and manages risk with insight and discipline, and combines the precision of craftsmanship with decades of experience to conceive, craft and deliver the best insurance coverage and services to individuals, families and business of all size.

Elliott Advocacy is underwritten by Fareportal

Fareportal’s portfolio of brands, which include  CheapOair and  OneTravel, are dedicated to helping customers enjoy their trip. Whether you want to call, click, or use one of our travel apps, one thing is clear: We make it easy to take it easy.

Elliott Advocacy is underwritten by Insuremyrentalcar.com

An independent provider of low cost CDW/LDW insurance for use with rental cars. Up to $100,000 cover with no deductible. Policies available on a per day, per trip or per year basis. Also works with overseas rentals. Try  Insuremyrentalcar.comnow.

Elliott Advocacy is underwritten by Mediacom Communications

The nation’s fifth-largest cable operator, serving the smaller cities and towns in the Midwest and Southern regions of the United States. We are a high-performance broadband, entertainment, and communications company that brings the power of modern technology and quality customer experience to life inside the connected home by combining ultra-fast gigabit speeds with personalized local and over-the-top entertainment choices that fit your lifestyle. Details at  Mediacomcable.com.

Elliott Advocacy is underwritten by Arch RoamRight

Arch RoamRight is one of the fastest growing, most-highly rated travel insurance companies in the United States. Travel advisors love working with us, and travelers feel protected with our trip cancellation and travel medical insurance coverage. We also make it easy to file a claim online with our fast, paperless claims website. Learn more about RoamRight travel insurance.

Elliott Advocacy is underwritten by Virtuoso

The leading global network for luxury and experiential travel. This invitation-only organization comprises over 1,000 travel agency locations with 17,500 advisors in over 45 countries, and holds preferred relationships with 1,700 of the world’s finest travel companies. Virtuoso advisors collaborate with their clients to create personalized itineraries featuring exclusive perks, while also providing advice, access, advocacy, and accountability. For more information, visit  Virtuoso.com.

Elliott Advocacy is underwritten by VisitorsCoverage

As a company that is constantly striving to simplify travel insurance, VisitorsCoverage, is on a mission to help travelers make the better decisions about purchasing travel insurance, quickly. VisitorsCoverage has helped millions of travelers globally to buy the suitable travel insurance and explore the world with confidence. Get insurance for your next trip at  VisitorsCoverage. Lowest Price Guaranteed.

Elliott Advocacy is underwritten by MedjetAssist

Medjet is the premier global air-medical transport, travel security and crisis response membership program for travelers. With a MedjetAssist membership, if you become hospitalized more than 150 miles from home, we will get you from that unfamiliar hospital all the way home to the hospital you trust. All you ever pay is your membership fee. MedjetHorizon members add 24/7 personal security and crisis response benefits. Elliott.org readers enjoy discounted rates. Travel safer with  MedjetAssist.

Elliott Advocacy is underwritten by Southwest Airlines

The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth.

Elliott Advocacy is underwritten by TravelInsurance.com

TravelInsurance.com makes it fast and easy to compare and buy travel insurance online from top rated providers. Our unbiased comparison engine allows travelers to read reviews, compare pricing and benefits and buy the right policy with a price guarantee, every time. Compare and buy travel insurance now at  TravelInsurance.com.

Elliott Advocacy is underwritten by Squaremouth

Squaremouth helps travelers easily and instantly compare travel insurance policies from all major providers. Only companies that meet the strict requirements of Squaremouth’s Zero Complaint Guarantee are available on the website. Compare policies on  Squaremouth.com to save over 70 percent on your next purchase.

Elliott Advocacy is underwritten by Travel Leaders Group

Travel Leaders Group is transforming travel through its progressive approach toward each unique travel experience. Travel Leaders Group assists millions of travelers through its leisure, business and network travel operations under a variety of diversified divisions and brands including All Aboard Travel, Andrew Harper Travel, Colletts Travel, Corporate Travel Services, CruCon Cruise Outlet, Cruise Specialists, Nexion, Protravel International, SinglesCruise.com, Travel Leaders Corporate, Travel Leaders Network and Tzell Travel Group, and its merger with ALTOUR. With more than 7,000 agency locations and 52,000 travel advisors, Travel Leaders Group ranks as one of the industry’s largest retail travel agency companies.

Elliott Advocacy is underwritten by Travelers United

If you’ve been mistreated by the airlines, Travelers United is your voice in Washington. Join the #1 travel advocacy organization working with Congress to improve and protect travelers. Plus, get $400 of annual benefits you can use for travel for only $29/year. Add your voice to ours. Make travel better.  Join today.

Send this to a friend