(Adds details of the rules)

May 24 (Reuters) - All airlines flying in and out of Canada will be required to compensate travelers for incidents like denied boarding or lost luggage, starting on July 15, Transport Minister Marc Garneau said at Pearson International Airport outside Toronto on Friday.

The passenger bill of rights, first announced two years ago, will be phased in, with more complex requirements related to flight delays and cancellations to come into force on Dec. 15, Garneau said, following complaints from airlines that they would have difficulty meeting the July deadline.

Airlines have come under increased scrutiny from regulators and the public for incidents such as lost luggage and overbooking, after a 2017 video of a passenger being dragged off a United Airlines flight in Chicago went viral, generating public outrage.

Canada is the latest jurisdiction to beef up its airline passenger compensation rules. The European Union enacted compensation legislation in 2004 and the United States expanded protections in 2017 after the United incident.

“Today marks a milestone for air travel in Canada,” added Scott Streiner, chief executive of the Canadian Transportation Agency (CTA), which prepared the final rules this year.

The new rules would provide compensation of up to C$2,400 ($1,785) for bumping a passenger for reasons within their control and a payment of up to C$2,100 ($1,561) and refund of any baggage fees for lost or damaged luggage, the CTA said.

Airlines would also have to provide compensation of up to C$1,000 ($744) for flight delays and cancellations within an airline’s control that are not safety-related.

Exceptions to the rules for airlines include bad weather, massive air traffic failure, strikes by unions or events like a terrorist threat at the airport, Garneau said.

Massimo Bergamini, chief executive of the National Airlines Council of Canada, said he was “encouraged by the spirit of these changes,” including the phasing-in of the rules, but said he would need to check the regulations more closely.

The new rules come as Canada’s largest carriers are wrestling with the March global grounding of Boeing’s 737 MAX following two crashes involving the model.

Air Canada, the country’s largest carrier which operated 24 MAX aircraft before the grounding, said in February it expected the new passengers’ bill could eat into the company’s profits in 2019. (Reporting by Allison Lampert in Montreal; editing by Steve Scherer and Phil Berlowitz)