United Airlines says it will offer up to $10,000 (£7,800) to passengers who give up seats on overbooked flights.
The change comes as part of a review following an inquiry set up after a man was dragged screaming from a fully booked plane early this month.
Dr David Dao lost two front teeth and suffered a broken nose when he was removed from the Chicago to Louisville flight to make room for crew members.
The incident caused outrage and widespread condemnation of the airline.
Shocking footage was shared and watched by millions of people online.
The latest incident to hit United Airlines's reputation came on Wednesday when it announced an investigation into the death of a giant rabbit which was being transported on one of its planes.
The 90cm-long bunny, called Simon, was found dead in the cargo hold when the flight arrived at Chicago's O'Hare airport from London Heathrow.
Law enforcement officials dragged Dr Dao off the flight forcibly after the 69-year-old Vietnamese-American physician had refused to leave, saying he needed to go home to see his patients.
His lawyer later said that Dr Dao found the experience "more horrifying and harrowing than what he experienced when leaving Vietnam".
The ordeal led to demonstrations at Chicago's O'Hare International Airport and turned into a public relations disaster for United Airlines.
The airline offered compensation to all customers on board the flight.
In addition to the $10,000 compensation offer, the series of actions announced as part of the report into the incident includes:
- No more use of law enforcement officers to remove passengers from flights unless it is a matter of safety and security
- Seated passengers will not be asked to leave involuntarily
- Crews to be booked on flights 60 minutes before departure
- Annual training for staff to handle "the most difficult situations"
In late March, United was heavily criticised on social media after two girls were reportedly barred from flying for wearing leggings on a flight from Denver to Minneapolis.
United said the girls were travelling on a special pass, for employees and their guests, which has a dress code.