The Trump administration has officially abandoned a plan put forth during the final weeks of Joe Biden’s presidency, which aimed to require airlines to compensate passengers stranded due to flight cancellations or significant delays. On September 25, 2025, they released their decision to cancel the project. It dovetails nicely with the administration’s overarching agenda to roll back federal regulations that they deem burdensome.
The original proposed rule, announced in December 2022, would have brought U.S. airline policies more in line with protections for consumers offered in Europe. It would get airlines to pay cash compensation to stranded passengers. Furthermore, they would reimburse for lodging and meal costs when cancellations or delays are due to airline failures. In particular, compensation would have begun at a minimum of $200 for cancellations or delays attributable to mechanical issues or computer failures. In instances of delays of nine or more hours, compensation would have been up to $775.
The Trump administration justified its decision to scrap the plan as being “consistent with Department and administration priorities,” stating that the proposed rule could impose undue financial burdens on airlines. The Transportation Department highlighted concerns that such requirements could lead airlines to cancel flights preemptively at the slightest indication of potential issues.
“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.” – Spirit Airlines
Spirit Airlines earlier this month became the second airline this year to file for Chapter 11 bankruptcy protection. This further demonstrates just how tenuous the position of many airlines is at the moment. The airline’s concerns The low-cost carrier is most afraid of the new compensation rule greatly raising the airline’s operating costs. As such, traveler fares would increase due to added ticket costs.
Airlines for America, a trade group representing all the nation’s largest passenger U.S. airlines, applauded the administration’s decision.
“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,” – Airlines for America
The proposed rule would have required airlines to pay each affected passenger at least $300 in compensation. This compensation should be offered for cancellations or schedule changes made by the airline. Specifically, it aimed to provide protections to passengers during travel disruptions that are the fault of carriers.
As the airline industry continues to navigate post-pandemic recovery, the Trump administration’s latest move reflects an ongoing tension between regulatory oversight and operational flexibility within the sector.
