MONTREAL -- Air Canada (TSX:AC.B) says it's willing to pay compensation of up to $800 to passengers who are bumped from overbooked domestic flights.

In documents filed Friday to the Canadian Transportation Agency, the airline proposed that passengers who are delayed from domestic flights for six hours or more be eligible for 200 per cent of the one-way airfare-- up to a maximum of $800.

It also proposed that those delayed between one to six hours be eligible for 100 per cent of the one-way airfare, ---- up to a maximum of $400 ---- while it would pay between $100 to $150 to those delayed for less than an hour.

The compensation could either be in cash or travel vouchers.

The proposals were submitted in response to a federal ruling last month that said Air Canada's existing practice of giving $100 cash or a $200 travel voucher to bumped passengers is unreasonable.

The agency will consider the airline's proposals and decide if they are satisfactory.

Last month, the agency had ruled that the airline should explain why it shouldn't be forced to adopt a compensation model from the U.S.

American airlines pay passengers twice the airfare up to a maximum of US$650 for delays of one to two hours and four times the fare to a maximum of US$1,300 are paid for delays exceeding two hours.