Travelers wait in a long line to check on their baggage from their cancelled flights at Chicago Midway International Airport in Chicago, Illinois, U.S., December 27, 2022. REUTERS/Kamil Krzaczynski/File Photo

By David Shepardson

WASHINGTON (Reuters) -President Donald Trump's administration said on Thursday it would drop a plan by his predecessor to require airlines to pay passengers cash compensation when U.S. flight disruptions are caused by carriers, in a setback for aviation consumer advocates.

In December, the U.S. Department of Transportation under then-President Joe Biden sought public comment on the rulemaking process about whether airlines should be required to pay $200 to $300 for domestic delays of at least three hours and up to $775 for longer delays. U.S. airlines sharply criticized the proposal first made by Biden in May 2023.

The White House said in a document posted on Thursday that the Transportation Department plans to withdraw the notice "consistent with department and administration priorities."

Airlines in the U.S. must refund passengers for canceled flights, but are not required to compensate customers for delays. The European Union, Canada, Brazil and Britain all have airline delay compensation rules.

Airlines for America, a trade group representing American Airlines, Delta Air Lines, United Airlines and others, praised the actions and said Biden's cash compensation plan would have raised ticket prices.

"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," the group said.

But former Biden economic adviser Bharat Ramamurti said the rule "would not only have put real cash back in your hands for badly delayed or canceled flights, but would have resulted in far fewer delayed and canceled flights in the first place."

Major U.S. carriers in 2022 committed to paying for meals, hotel stays, and other expenses when they cause significant flight disruptions.

The Transportation Department also disclosed on Thursday that it is considering rescinding regulations issued under Biden in April 2024 that required airlines and ticket agents to disclose service fees alongside airfares to help consumers avoid unnecessary or unexpected fees. The requirement was put on hold by the court pending an industry legal challenge.

The department is also planning to reduce regulatory burdens on airlines and ticket agents by writing new rules detailing the definition of a flight cancellation that entitles consumers to ticket refunds, as well as revisiting rules on ticket pricing and advertising.

A spokesperson for Transportation Secretary Sean Duffy said the department "will faithfully implement all aviation consumer protection requirements mandated by Congress" but added that some rules proposed or adopted under Biden "went beyond what Congress has required by statute, and we intend to reconsider those extra-statutory requirements."

The Trump administration has taken other steps to reverse Biden's airline consumer efforts.

In May, the Justice Department dropped a lawsuit against Southwest Airlines filed by the Biden administration in its final days that accused the carrier of illegally operating chronically delayed flights.

(Reporting by David Shepardson; Editing by David Gregorio and Jamie Freed)