U.S. Markets open in 5 hrs 24 mins

White House seeks to answer complaints of aggrieved air travelers

(Adds quote from consumer advocacy group)

WASHINGTON, Oct 18 (Reuters) - The White House announced efforts on Tuesday to improve air travel for Americans by requiring airlines to refund baggage handling fees if luggage is "substantially delayed" and requiring online travel agents to provide neutral search results.

The effort in the waning days of President Barack Obama's administration is aimed at responding to complaints from consumers that range from delayed or damaged baggage and wheelchairs to pricey add-ons like payments for seat assignments.

"The actions we're announcing today will help consumers know how airlines are performing, will make sure that consumers don't have to pay for services they don't receive and will help consumers find the best flight options for them," Jason Furman, chairman of the White House Council of Economic Advisers told reporters.

As part of that effort, the Transportation Department issued an advanced notice of proposed rulemaking which would require airlines to refund baggage fees if luggage is "substantially delayed." The department did not define a substantial delay.

The news comes at a time when top U.S. airlines are having their profit margins squeezed from higher wages and a glut of flights abroad, pushing them to adopt new strategies to raise revenue. It was not immediately clear how the rules would affect their financial results.

The Transportation Department also released new final rules that would require airlines and online ticket agents to ensure that their search results are neutral.

"We are trying to assure that ... a ticket agent doesn't rank flights of an individual airline higher or lower in search results because of incentive payments or any other business reason," a Transportation Department official told reporters.

The new final rules would also require big U.S. airlines to report how often they lose or damage wheelchairs. They also changed the methodology for counting mishandled bags to compare lost, stolen, damaged or delayed bags against the total number of bags handled to make it more accurate, the White House said.

Further, the department is also considering requiring airlines to disclose all fees to ticket agents to eliminate surprise charges.

Charlie Leocha, chairman of consumer advocacy group Travelers United, said he supported the Democratic administration initiative and said that he hoped that Hillary Clinton, also a Democrat, would press on with the rule-making if she is elected president on Nov. 8.

"I just have to hope that she would be a good steward of consumer needs and that she doesn't let corporate interests get in the way," he added.

Erik Hansen, senior director of domestic policy for the U.S. Travel Association, said his group supported efforts to improve data about on-time performance and other quality metrics but would not yet weigh in on other Transportation Department proposals.

The four largest U.S. airlines, American Airlines Group Inc , Delta Air Lines Inc, United Continental Holdings Inc and Southwest Airlines Co did not return requests for comment.

(Reporting by Diane Bartz and David Shepardson in Washington and Jeffrey Dastin in New York; Editing by Joseph White and Lisa Shumaker)