WASHINGTON, D.C. — A new federal regulation that tightens eligibility for airline compensation will take effect on Dec. 1, potentially reshaping how travelers across the United States claim refunds for delayed or canceled flights.

The rule, issued by the Department of Transportation, lowers the threshold for compensation from flights delayed more than two hours to those delayed over three hours on routes longer than 2,000 miles. Airlines must now offer a minimum cash payment of $600, up from the previous $400 floor, while capping total liability at $1.2 billion annually across the industry.

“The intent is to balance consumer protection with the financial realities airlines face,” said DOT spokesperson Lisa Hernandez. “We believe the revised thresholds will reduce frivolous claims while still safeguarding passengers on long‑haul journeys.” The agency also requires carriers to disclose compensation terms on booking pages within 24 hours of purchase.

Investors have already reacted. Shares of major carriers fell an average of 1.4 % on the news, and analysts at Morgan Stanley project a potential earnings hit of $85 million for the sector in 2025. The rule aligns U.S. standards with the European Union’s 2019 regulation, which has been credited with a 12 % reduction in disputed claims in that market.

Consumer advocates warn that the higher cash floor may not offset the longer delay requirement for many domestic flights under 1,500 miles. “Passengers on short routes could find it harder to qualify for any payout,” said Aviation Consumer Group director Mark Liu. The rule, however, does not affect existing EU‑U.S. code‑share agreements, leaving transatlantic travelers subject to the older, more generous framework.

Key Takeaways

• The new rule applies to flights delayed over three hours on routes exceeding 2,000 miles.
• Cash compensation minimum rises to $600, with an industry‑wide liability cap of $1.2 billion per year.
• Initial market response shows a modest dip in airline stocks, reflecting investor caution.

Travelers should review airline policies before booking and consider travel insurance for shorter routes, as the revised thresholds could limit eligibility for compensation on many domestic flights.