A move to protect Canadian travellers could deter airlines from passing through the country, according to an international group.

Earlier this week, Transport Canada announced the launch of Phase 1 of a passengers' "bill of rights," a series of regulations that demands airlines compensate passengers for bumped flights and lost luggage. 

It's a move many passengers celebrated. The rules now state that airlines have to pay up to $2,400 for bumping passengers, and as much as $2,100 for lost or damaged bags.

But the International Air Transport Association says these regulations could have a negative impact on the economy.

The IATA says airlines have a small profit margin, which ranges from a loss of US$5 to a profit of about $15 per fare. The majority of ticket prices, it says, go to fuel, salaries, taxes and fees.

"So with Canada already at the high end of these taxes and fees, you can better understand why additional costs just cannot be absorbed by the airlines," a spokesperson said in an email to CTV News Vancouver.

She did not say exactly who would absorb the additional costs, but added, "these extra costs might deter these non-Canadian airlines from flying through/to Canada."

The bill of rights applies to all airlines that travel through, into or from Canada. If airlines decide they don't want to pay, it would mean fewer international flights from and to Canada, the IATA said, which would impact Canadians' ability to travel and could hurt the economy.

"This is stretching the extraterritoriality reach of the Canadian government," the association said.

"As an example, if a flight leaves Tel Aviv, transfers in Munich, for final destination Toronto, there are 3 countries involved in that route. How do the airlines or passengers know where to start figuring out where their rights objection should be filed?"

Canada is just one of the countries that major international airlines fly through, it said.

Multiple airlines have joined a filing before the federal court system over the bill. The IATA acknowledged that problems do happen, but said, "The few unfortunate incidents tend to get the most attention in social media so the perception might be that the occurrence of these is higher than it is."

With files from CTV News Vancouver's Bhinder Sajan