The passenger bill of rights is part of a package of transportation law amendments that also expand the limit on airline foreign ownership from 25 to 49 percent, and require railways to install voice and video recorders on locomotives.
"We heard recent news reports about shoddy treatment of air passengers," Transportation Minister Marc Garneau told a press conference.
"Such incidents will not be tolerated in Canada," he said. "When Canadians buy an airline ticket they expect the airline to keep its part of the deal."
Airlines would also have to pay for long delays on tarmacs, seat children near a parent at no extra charge and develop new standards for transporting musical instruments.
The latter was in response to travelling musicians complaining on social media about broken guitars and other instruments during flights.
Last month a man at the center of a worldwide uproar was left bloodied after being pulled from his seat by security guards and dragged off a United Airlines flight in Chicago to make room for airline crew.
If passed by Canada's parliament, the legislation would come into force in 2018.
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