Why You Shouldn’t Cheer the DOT for Increasing Lost Luggage and Denied Boarding Compensation

The Department of Transportation has increased compensation limits for involuntary denied board and lost luggage.

Airlines that lose, damage or delay luggage will be liable for reimbursing the passenger who owns it for up to $3,500, an increase from the current limit of $3,400, according to the Transportation Department.

…The department is also increasing the penalties incurred when airlines deny boarding to passengers because a flight is overbooked and the airline is not able to find people willing to give up seats.

Many of these passengers who are involuntarily denied boarding would be eligible for between $675 and $1,350 in compensation for the inconvenience.

This is being misunderstood in the media as ‘Flying Got Better’ and as a purposeful attempt by DOT at ‘greater accountability’. (HT: Mark P.)

The penalty increases came for good reason. In 2013, 1.8 million passengers filed mishandled baggage claims, and 57,000 passengers weren’t able to board due to overbooked flights.

Both penalty increases will be effective in about three months. Here’s to smoother skies ahead!

Here’s what you’re entitled to in the event of an involuntary denied boarding, which is when you have a ticket and reservation for a flight but the airline doesn’t give you a seat on the flight. It’s what they’re required to pay after offering compensation to passengers to voluntarily give up a seat, and there are no more takers.

  • Nothing if you are offered transportation to your first connecting city (or final destination in the event of a non-stop) scheduled for within an hour of your original booking.

  • Double your fare if you’re rescheduled to arrive within 1-2 hours of original schedule.

  • Four times your fare if you aren’t given transportation scheduled to arrive at either your first connection or final destination within 2 hours of schedule.

Free tickets are eligible for this compensation (based on the lowest applicable fare in your class of service). And there are maximum amounts the compensation can be set in law.

The formula of double or quadruple, and thresholds of one and two hours, have not changed.

The maximum amount of involuntary denied boarding compensation is set in law at 14 CFR 250.5.

And what’s changed is the maximum double amount ($650 to $675) and quadruple amount ($1300 to $1350).

The law contains a provision requiring the Department of Transportation to review the maximum compensation amount every two years, and the law also sets the formula that shall be used.

(1) Current Denied Boarding Compensation limit in section 250.5(a)(2) multiplied by (a/b) rounded to the nearest $25 where:
a = July CPI-U of year of current adjustment
b = the CPI-U figure in August, 2011 when the inflation adjustment provision was added to Part 250.
(2) The Denied Boarding Compensation limit in § 250.5(a)(3) shall be twice the revised limit for § 250.5(a)(2).

So all that DOT did here is follow the law as-written. It did not take any discretionary action whatsoever on behalf of airline consumers.

Instead, DOT has made inflation-adjustments as they’re required to do by law. They haven’t ‘made flying better’ and they aren’t ‘holding airlines more accountable’ and indeed even the extra $1 million the baggage compensation changes are estimated to cost airlines aren’t increased real costs, they’re holding inflation-adjusted costs steady.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. What about when the flight is delayed. You don’t get bumped but the entire flight is delayed because the plane did not arrive or has malfunction or bad weather. Any ideas what then? Are the compensation same for free tickets then too? I have been delayed few hours and got a $5 meal voucher. Wondering if airline were breaking the law expecting no one will call them up on it. Need to be aware in future.


  2. n –

    Your flight gets delayed a couple hours due to bad weather and you feel as if the airline is breaking the law and you deserve compensation?


  3. Lopere I have three scenarios in my post. Appreciate you taking on the other two as well not just the bad weather.

    Sheesh indeed

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