DOT PROPOSES UPDATE TO DENIED BOARDING COMPENSATION RULES
April 8, 2019
On March 28, 2019, the Department of Transportation published a Notice of Proposed Rulemaking (NPRM), Modernizing Payment of Denied Boarding Compensation, which would allow airlines to use electronic payment methods that are equivalent to cash to distribute involuntary denied boarding compensation (DBC). Interested parties can comment on the proposed rules through May 28, 2019. If you have questions about this rule or would like help preparing a comment, please let us know.
DOT’s DBC rules require “prompt, adequate, and effective” compensation to be distributed by cash or check immediately at the airport or by mail when a passenger is bumped. DOT is updating its rules in response to observations that modern payment technologies, such as prepaid cards or electronic funds transfers (e.g., PayPal), could make distribution of DBC more efficient. The NPRM focuses on ensuring fully cash or check-equivalent compensation. Since certain prepaid cards are valid for less than 90 days (the validity period of a check), while others involve ancillary usage fees (e.g., ATM withdrawal or activation fees), DOT seeks comments about how airlines can best configure electronic systems to ensure that DBC payments account for such issues.
The proposed rule would also allow airlines to provide their mandatory written denied boarding disclosure by electronic means with a passenger’s consent, in lieu of a paper copy. This eliminates the need for stacks of denied boarding pamphlets to be on hand at the gate, and reprinted each time DBC limits are adjusted for inflation. The rule does not change the substance of this disclosure, nor the existing calculations for DBC, and a passenger can still request a printed disclosure if they wish.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
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