New compensation rules for delayed flights arrive Sunday. Here's what you need to know

On Dec. 15, new federal rules mandating compensation for delayed and cancelled flights will arrive in Canada.

However, not every flight will be covered and it will be up to passengers to collect their cash. Here's what you need to know before boarding your next flight, starting Sunday.

The rules for delayed and cancelled flight compensation are part of Canada's new air passenger regulations which cover flights to, from or within Canada on all airlines — not just Canadian carriers.

The first phase of the regulations took effect on July 15 and provide for up to $2,400 in compensation for passengers bumped from overbooked flights and up to $2,100 for lost or damaged baggage.

Come Dec. 15, the second phase of the regulations will take effect. They include rules that large airlines — such as Air Canada, WestJet, Air Transat and Sunwing — must pay between $400 and $1,000 for applicable flights when passengers are delayed by three hours or more in reaching their final destination.

The mandated amount for smaller airlines, such as Swoop and Flair, will range from $125 to $500.

According to the regulations, airlines don't have to pay compensation for flights that are delayed or cancelled due to uncontrollable factors such as bad weather, or mechanical problems discovered outside of routine maintenance checks.

European Union regulations for flight delays cover most mechanical issues and some critics have expressed concern that Canada's more limited rules will mean that many passengers will get nothing for their delayed flight.

Canadian Automobile Association (CAA) spokesperson Ian Jack said the Canadian rules aren't perfect.

"This is not a gold-plated package," said Jack whose organization took part in the consultation process for the new regulations.

But he cautions that widening the scope for compensation to include unexpected mechanical problems could encourage some airlines to fly even when there's an issue, to avoid paying big bucks to passengers.

"There is a balancing act there between passenger rights and safety that has to be maintained."

'There are loopholes'

Jack said his big worry is if airlines try to fudge the reason for flight delays to avoid paying compensation.

"There are loopholes in there that airlines could take advantage of," he said. "There's a clear financial incentive on the face of it for a carrier to classify a problem as being weather related, or mechanically related, because then they can save themselves potentially thousands of dollars for one flight."

To combat this, Jack said the Canadian Transportation Agency (CTA) must monitor the situation closely to make sure airlines play by the rules.

"They need to take this seriously. They need to put resources behind that and they need to really do their job."

The CTA told CBC News that it's on top of the situation. The agency said airlines are expected to document reasons for each flight delay and cancellation, and, starting Dec. 15, they must report information about flight disruptions to Transport Canada.

The agency also said that if a passenger files a complaint with the agency about a delayed flight, the airline would have to demonstrate why the flight in question didn't qualify for compensation.

Airlines caught violating the new regulations face up to $25,000 in fines per violation, the CTA said.

How to collect your cash

If your flight is delayed, it will be up to you to contact your airline and file a claim for compensation.

However, airlines are responsible for informing passengers about their rights. The regulations mandate that airlines must post passenger rights information on their website, passengers' itineraries, and on notices displayed in key places at Canadian airports.

Since August, the CTA has fined five Canadian and U.S. airlines more than $57,000 total for failing to properly display the required notices at various airports.

When airlines delay or cancel flights, they must also provide passengers with key information including the reason for the disruption and their entitlement to compensation.

Passengers have one year to file a claim following their flight delay. The airline then has 30 days to issue a cash payment or explain why it believes compensation isn't warranted.

What about the cost?

While mandatory compensation sounds like a good plan to passengers, concerns have been raised that it could force airlines to hike airfares to make up for lost revenue.

Toronto-based aviation lawyer Ehsan Monfared said passengers will ultimately pay the price for the new compensation rules.

"Since airlines generally only have one revenue source, that being the traveling public, as their costs are raised due to these regulations, all passengers generally will bear this burden," he said in an email.

However, Jack with the CAA said this theory remains unproven. Both the European Union and the U.S. have had federal air passenger regulations in place for years and, so far, they haven't caused airfares to skyrocket, he said.

"We see no evidence from other jurisdictions that airfares go up as a result of this."

Jack also said that paying compensation for delayed flights is something airlines should expect as the cost of doing business.