WASHINGTON, May 7 (Reuters) -

U.S. House and Senate negotiators have agreed to revise language in an aviation reform bill to ensure quick refunds for airline passengers whose flights are canceled and who are not seeking alternative flights.

On April 24, the U.S. Transportation Department finalized new rules that will later this year require automatic cash refunds for canceled flights when passengers choose not to take a new flight. A bipartisan proposal in Congress released last week said passengers must request the refunds. This raised concerns the law could undercut USDOT rule that would ensure people who bought non-refundable tickets got reimbursed for canceled flights.

Instead, refunds would be automatic in many instances under revised language seen by Reuters. But the automatic refunds would not apply if passengers rebooked and accepted a new flight.

U.S. senators hope the revised bill will win approval before a Friday deadline to reauthorize the Federal Aviation Administration for five years.

An aide to Senate Commerce Committee chair Maria Cantwell said the new language "reaffirms a passenger’s right to a refund in law, provides additional clarity for consumers, while maintaining strong bipartisan support needed for the legislation."

An spokesperson for Senator Ted Cruz, the panel's top Republican, said he and Cantwell had agreed to add a "clarifying point affirming the right of consumers to get a refund if that is their preference."

Senators Elizabeth Warren and Josh Hawley had proposed an amendment to make the refunds automatic and "crack down on burdensome corporate processes put in place to maximize airlines’ profits." The new provision is similar to what Warren and Hawley had sought in their amendment.

Neither the rule nor the legislation mandates compensation for delays -- as is required for some lengthy waits in the European Union. President Joe Biden said last May that the Transportation Department would propose new rules requiring airlines to compensate passengers with cash for significant controllable flight delays or cancellations.

The nearly 1,100-page $105 billion bill would also boost air traffic controller staffing and hike funding to avert runway close-call incidents. But it does not include a House-passed provision to raise the airline pilot retirement age to 67 from 65.

The bill prohibits airlines from charging fees for families to sit together, adds five daily roundtrip flights at busy Washington National Airport and requires airlines to accept vouchers and credits for at least five years.

The bill also requires airplanes to be equipped with 25-hour cockpit recording devices, directs the FAA to deploy advanced airport surface technology to help prevent collisions and requires USDOT to post a dashboard on minimum size by airline. (Reporting by David Shepardson, Editing by Franklin Paul and David Gregorio)