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The U.S. Department of Transportation (DoT) has announced proposed rulemaking that would require U.S. airlines to compensate passengers when the airline causes a flight delay or flight cancellation. If enacted, it could be the U.S. answer to the European Union's EC 261-2004 regulation that provides compensation ranging from EUR 250-600 per person depending on the flight distance and number of hours delayed.
The rule, which still needs to be proposed, opened for public comment (typically for 60 days) and finalized, aims to address:
- Compensation for passengers when there is a controllable airline cancellation or significant delay;
- A meal or meal voucher, overnight accommodations, ground transportation to and from the hotel, and rebooking for controllable delays or cancellations;
- Timely customer service during and after periods of widespread flight irregularities; and
- Definition of a controllable cancellation or delay.
In its announcement, the DoT notes that an impetus for the new rule is to better protect passengers that suffer from “controllable delays and cancellations” that is currently the case. Currently only Alaska Airlines' Customer Care plan provides frequent flyer miles (at least 2000 Mileage Plan miles) in the event of a flight delay of 3 hours or more (or the passenger can alternatively choose a discount code worth $50 towards a future Alaska flight, valid 1 year from date of issue) and the only other airline to provide compensation for a delayed or cancelled flight is JetBlue, which offers $50-$250 in travel vouchers depending on the length of delay, whether it takes place after boarding, and if a cancellation, when the cancellation announcement is made (see JetBlue's Cancellation and Delays Compensation Plan).
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The Upshot
Some have suggested that having defined compensation rules will encourage unsafe departures, but we disagree: pilots are unlikely to agree to depart if there's a mechanical issue. The airline, not the pilot personally, is on the hook for these compensation payments, and if we look at EC 261-2004, it hasn't resulted in a spate of European airline accidents or poor safety records. And while airlines may well have to raise fares somewhat to take into account compensation levels, as long as there's enough competition on routes, there will be the same pressure to offer competitive fares.
Nor does this rule take anything away from the point that more air traffic controllers are needed, as is greater investment in some airports' infrastructure. These needs are not mutually exclusive, and providing greater consumer protections for delays that are within airlines' control doesn't mean that we shouldn't make more investments into areas that are not within airlines' control, such as more training, recruitment, and retention of air traffic controllers.
We'd welcome a U.S. equivalent to EC 261-2004, to provide greater motivation to airlines to get passengers to their destination as close as possible to the originally scheduled time, since currently airlines' Conditions of Carriage only establish an obligation to get a passenger from point A to point B…sometime. Or to refund the ticket. There's no penalty to the airline if it cancels your flight and gets you on another flight next week. With cash compensation there would be a financial disincentive (over and above ticket refunds) to over-schedule flights and cancel some of the less profitable ones. While compensation amounts for any individual passenger may not be much, in aggregate they can be a powerful way of focusing every level of the organization on the importance of customer satisfaction, with the customer's time as something of value.
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