U.S. Scraps Biden Plan for Airline Delay Compensation

Under President Donald Trump, the person after whom the Palm Beach Airport might be renamed, the U.S. Department of Transportation (DOT), has officially scrapped a Biden-era proposal that would have compelled airlines to provide cash compensation to passengers for airline-caused delays and cancellations. The Transportation Department said it is withdrawing the rule because it represents “unnecessary regulatory burdens” and does not reflect the current priorities of the administration.

The plan, initially floated in late 2024, would have required carriers like Delta Air Lines (DL) and United Airlines (UA) to pay up to $775 for flight disruptions. The proposed regulation also called for airlines to rebook affected customers on alternative flights—potentially even across different carriers—and to cover costs such as meals, overnight lodging, and ground transport when disruptions were the airline’s fault.

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What Biden’s Compensation Rule Entailed

Under the withdrawn proposal, the DOT had sought to institute a tiered cash compensation regime:

• $200–$300 for three-to-six-hour delays
• $375–$525 for six-to-nine-hour delays
• $750–$775 for delays of nine hours or more

In addition, airlines would have been required to cover rebooking on the next available flight, regardless of whether it was on the same airline, and to pay for meals, overnight lodging, and transfer transport if passengers were stranded. The following table gives us an idea:

Category	Passenger Entitlement	Details
Canceled or significantly changed flights	Refund if passenger does not accept alternative transportation or travel credits	“Significant change” includes: departure/arrival times >3 hours domestically or >6 hours internationally different airport departure/arrival, increased number of connections, downgrade to lower class, connections at different airports flights less accessible for passengers with disabilities
Significantly delayed baggage return	Refund of checked bag fee	Domestic: bag not delivered within 12 hours of flight arrival International: bag not delivered within 15–30 hours depending on flight length
Extra services not provided	Refund for extra service fee	Applies to services such as: Wi-Fi Seat selection Inflight entertainment if airline fails to provide them

The proposal differentiated obligations for smaller carriers, potentially reducing burdens on regional or low-capacity airlines.

Under the Biden-Harris Administration and Secretary Pete Buttigieg, the United States Department of Transport saw historic exapansion of passenger rights. These included the biggest fines against airlines for failing consumers and returning more money to passengers in refunds and reimbursements than ever before in USDOT’s history.

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It was under Biden that the United States conducted its first-ever comprehensive review of airline privacy practices and its initial review of airline loyalty programs, and under his Presidentship, the U.S. flight cancellations reached a record low of under 1.2%, marking the lowest rate in more than a decade despite record air travel levels. Some of the other improvements included:

• Since President Biden took office, the DOT has facilitated the return of over $3 billion in refunds and reimbursements to airline passengers, including more than $600 million for those impacted by the Southwest Airlines holiday meltdown in 2022.

• Under Secretary Buttigieg, the DOT has imposed over $164 million in penalties for consumer protection violations, compared with less than $71 million issued by the DOT collectively between 1996 and 2020.

• The DOT has partnered with a bipartisan group of state attorneys general to expedite the review of consumer complaints, enforce airline accountability, and safeguard passenger rights.

Under the flight compensation rule included the following:

Requirement	Description
Automatic refunds	Airlines must process refunds automatically, without requiring passengers to make a request or complete additional steps.
Timely processing	Refunds must be issued within 7 business days for credit card payments and within 20 calendar days for other forms of payment.
Refund method	Refunds must be returned in the original form of payment, such as cash, credit card, or airline miles. Vouchers or travel credits can only be offered if the passenger explicitly accepts them.
Full refund	Airlines must refund the full ticket price, less any portion of transportation already used. Refunds must also include all applicable government taxes, fees, and airline-imposed charges, even if they are non-refundable to the airline.

Reaction to Trump Scraping Biden’s Compensation Rule from Airlines and Industry

The USDOT revealed its plans to do away with Biden’s proposal in September. Last month, a group of 18 Democratic senators pleaded the current administration (under Trump) to not to drop the plan proposed by Biden, with a letter signed by Democratic Senators Maria Cantwell, Richard Blumenthal, and Ed Markey quoted in a report published in Reuters as having said:

“This is a common-sense proposal: when an airline’s mistake imposes unanticipated costs on families, the airline should try to remedy the situation by providing accommodation to consumers and helping cover their costs,”

However, on Friday, it was decided that the plans proposed by the Biden government would put “unnecessary regulatory burdens” in explaining why it would not go forward. The decision was welcomed by major U.S. airlines. Airlines for America (A4A), a trade group representing carriers including Delta, United, and American, applauded the DOT decision, and was quoted in The Washington Post as having said:

“We are encouraged by this Department of Transportation reviewing unnecessary and burdensome regulations that exceed its authority and don’t solve issues important to our customers”

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A4A also added that it looked forward to working with the USDOT on “implementing President Trump’s deregulatory agenda.”

However, Pete Buttigieg took to X to express his disappointment:

“Our billionaire President put an airline lobbyist in charge of the Department of Transportation. So no, this is not a surprise”

According to The Washington Post, Buttigieg was referring to the present secretary Secretary Sean P. Duffy, under whom the USDOT has seen the biggest government shutdown that affected thousands of flights over the US– so much so that major carriers distributed free meals for the ATCs stationed across various places:

“referring to Transportation Secretary Sean P. Duffy, who according to disclosure filings had represented the Partnership for Open and Fair Skies, a coalition of U.S. airlines, as part of his time working for the lobbying firm BGR Group.”

There are fears that this is not the only aviation rule put forth during the Biden era that might be rescinded:

• A directive that “required airlines and ticket sellers to display service fees alongside ticket prices so customers could avoid hidden costs”, on which was proposed in April 2024, is on hold due to a court challenge, reported Financial Express.
• In May 2025, a lawsuit against Southwest Airlines (drafted in the Biden era), which accused the most popular budget carrier of the US of operating chronically delayed flights, was dropped by the Department of Justice

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Reactions For/Against Trump Ditching the Biden-era Proposal on Airline Compensation

It doesn’t come as a surprise that carriers in the United States had been fiercely opposing Biden’s plans. Spirit Airlines, another budget carrier of the US, one which had (for the second time) filed for Chapter 11 bankruptcy protection stated that had had Biden’s plans gone through, the operating costs for airlines would have increased, and so would have the passenger fares (The following was quoted in NBCNewYork):

“There is no free lunch….If every time a flight has to be cancelled due to, say, an aircraft maintenance issue, airlines were required to pay each affected passenger $300 plus hotel and meals, there would be a perverse incentive to cancel flights preemptively at any hint of trouble.”

Transportation Secretary Sean Duffy’s office defended the decision, saying the DOT wants to “allow airlines to compete on the services and compensation that they provide to passengers rather than imposing new minimum requirements.”

Nevertheless, the airline stocks remain below the market open, reported Al-Jazeera, but “were trending upwards in midday trading“.

• JetBlue is tumbling 3.6 percent for the day.

• Delta is down 1.3 percent.

• American Airlines is down 1.2 percent from the opening bell.

• United Airlines is down 1 percent.

• Southwest is down 0.2 percent

How does Compensation Work in Europe?

Air Travelers in the United States were hoping that the Biden’s proposed compensation plans would go through- after all, in many countries across Europe flight compensation due to delays already exist. The following table gives us a comparison of the compensation rules in the EU vs the United Kingdom.