Originally Posted by
DrPSB
Munoz, the CEO, disingenuously stated he had been offered "$1000 compensation" which I believe was a hotel room the man did not want to be in and a voucher with United he didn't want either. There has been mention in these discussions on a cap for reimbursement but I am unclear if this cap is what is legally required as a maximum or if the airline can go higher if they so choose. It's unclear to me what the rules say about what the minimum reimbursement is, can the passenger be told they are getting twenty dollars in coupons for Chuckie Cheese and a hotel room plus rebooking, or are they mandated to give the four times fare as a minimum. The rules seem to say he should have been given a written notice that outlines his rights. The lack of clarity here was being played with by United to try and give out a $400 voucher which didn't work, nor did the $800 offer. And since the police are willing to act as enforcers instead of standing aside in a civil conflict and allow the airline and passengers to resolve the situation, United is glad to leverage the police to lowball passengers.
There are no Federal rules regarding VDB compensation, other than it has to be offered at some level before they can IDB. USDOT (not FAA, which is not responsible for consumer protections) last regulated denied boarding in 2011, in which they set revised parameters for IDB. At that point IDB was set at the lesser of $650/$1,300 or 200%/400% of the one-way fare. The passenger should get the lower or higher value depending on the length of the ultimate delay in arrival. I don't exactly recall, but I think 2 hours or less delay gets the lower step and more delay gets the higher step. The airline also has to refund any ancillary fees and inform the passenger in writing of their rights, including the right to get the compensation in cash/check. The airline is still responsible for transporting the passenger on a flight to their destination. They can propose alternative modes of transport, but the customer can say no without waiving their compensation and other rights. The regulation also set a standard for increasing the compensation every two years with CPI, so I am not sure what the actual values are today, but they should be higher than 650/1,300.
The notice of proposed rulemaking for the 2011 passenger protections rule has a nice history of oversales regulation, if you are particularly interested. In summary, it was first allowed in the 1960s when the industry was still regulated under the CAB. The CAB required a two-step process of seeking volunteers first prior to IDBs and a minimum compensation level. This framework is still place today. In 1978 the USDOT upped the compensation and then in 2008 it was adjusted again to the lesser of 200/400 of 100%/200% of the one-way fare depending on length of delay. The 2011 rule considered several options, including no cap on the max - just fixing it as a proportion of the one-way fare. The 2011 rule also established that holders of "zero-fare" tickets - frequent flyer mile tickets, voucher tickets, and air fare consolidator tickets are also entitled to compensation.