A new bill, introduced by federal transport minister Marc Garneau, will set out a national standard for how passengers are treated by airlines operating in and out of Canada.
Garneau said the details related to passenger rights were still being developed but that there must be compensation in cases of travellers being bumped from flights.
"I am convinced the carriers will take note of these new measures protecting passengers rights, and will know if they don’t change some of their practices there will be repercussions," he said.
Garneau added that carriers would not be able to involuntarily remove from flights people who have a legitimate right to travel, BBC News reports.
"That is a critical factor. If somebody has bought a ticket for a particular flight that person cannot be removed from that flight. This is non-negotiable."
The proposed rules would set minimum compensation standards for overbooked flights and lost or damaged luggage, and set out how airlines must treat passengers when a flight is delayed or cancelled in situation within the airline’s control or during events like bad weather.
The new rules are expected to be in place by 2018.
Garneau announced plans for the rights bill last year, but reignited plans following footage of doctor David Dao being dragged off from a United Airlines flight in April.
The Canadian Transportation Agency (CTA) will establish the details such as levels of compensation and the rules around bumping over the next few months, BBC News reports.
The CTA receives an average of about 50 complaints a year from passengers saying they were denied boarding.