Air Canada will have to compensate bumped passengers in cash for as much as $800, depending on the length of the delay, under new rules the Canadian Transportation Agency has handed down.


New rules that come into effect on Sept. 18, require that passengers be compensated $200, $400 or $800 per passenger depending on whether the delay is less than two hours, between two and six hours, or more than six hours.


The compensation structure only applies to passengers who do not volunteer to get bumped from a flight.


The CTA also imposed strict conditions on the carrier offering travel vouchers instead of cash, including a one-to-three exchange rate — for example, $1 in cash is equal to $3 in travel vouchers. Passengers can now insist on receiving cash as compensation for being bumped from a flight.


In May, CTA upheld a complaint from Halifax mathematician and air passenger rights advocate Gabor Lukacs, ruling that the current compensation of $100 for bumping passengers is unreasonably low.


Lukacs started investigating compensation in 2011 after discovering his flight was overbooked.


The agency gave Air Canada 30 days to come up with an explanation as to why it should not restructure its compensation scale.


CTA’s decision concluded that the airline failed to provide evidence that implementing a new compensation scheme for bumped passengers would be a financial burden to the company.


Lukacs said that the decision is an important first step to bring Canada in line with the rest of the Western world. Both the U.S. and the European Union have bumped boarding compensation schemes, which require airlines to pay substantial compensation to passengers who are delayed due to an oversold flight.


In the U.S. for example, the compensation is as much as $680 of the airfare for delays less than two hours, and as much as $1,360 for delays over two hours. In the European Union, the compensation ranges from $175 to $835, depending on the length of the flight and the delay caused to passengers.