Bumped fliers could see higher compensation

By Dan Reed, USA TODAY
UPDATE: DOT proposes airlines pay bumped passengers up to $1,300

The compensation for getting bumped from your airline seat could be going up soon.

Transportation Secretary Ray LaHood plans to announce today a proposed "inflation adjustment" for passengers who are bumped off flights, along with other proposals aimed at protecting airline consumers.

Currently, most bumped passengers who reach their destination less than two hours later than originally planned get $400 in cash. Those who are delayed longer get $800.

The Transportation Department wouldn't discuss details of LaHood's proposals pending his announcement. But over the years, some travel consumer advocates have suggested that the compensation limits be pushed to $800 and $1,200, respectively. After inflation, that's roughly equal to the $200 and $400 compensation levels set in 1978, when the government first began regulating the practice of "overbooking."

Thirty years ago, when most airline tickets were fully refundable, no-shows were a big problem for airlines. Today, however, a majority of tickets are deeply discounted and are non-refundable, so the problem of no-shows is greatly diminished.

Still, a small percentage of travelers — mostly business people whose higher-priced tickets are fully refundable — don't show up for their flights. As a result, most airlines continue to sell a few more tickets for a flight than there are seats on a plane.

Airlines use computer programs to predict how many no-shows there'll be for a given flight. And they've gotten good at it. Last year, there were only 13 passengers bumped out of every 10,000 domestic passenger boardings. Historically, that number had been more than 20 per 10,000.

"It's getting to be a smaller and smaller problem all the time, thanks to the more sophisticated revenue-management systems," says Bill Swelbar, research engineer at MIT's International Center for Air Transportation.

Still, 762,422 passengers were bumped from domestic flights in 2009. Of that number, 69,234 involuntarily gave up their seats, according to the Transportation Department's Bureau of Transportation Statistics. Statistically, those are very small numbers. But for passengers who are bumped involuntarily, the experience often means great disruption to personal or professional lives.

And it's getting harder to get seats on later flights. In response to the recession, high oil prices and $60 billion in losses since 2000, airlines have trimmed the seats they make available on domestic routes by about 10.5% from 2008