A year and a half ago President Biden announced new rules coming to require airlines to pay cash compensation for flight delays and cancellations. Think of it as the U.S.’s answer to Europe’s ‘EU261’ compensation.
Politico noticed that – while we still haven’t seen a proposed rule! – the executive branch Office of Information and Regulatory Affairs at OMB has cleared it. The rule is now expected to be released as a Notice of Proposed Rulemaking early in 2025. And since OIRA review happened over just two weeks, it may now be on a fast track.
Note though that,
- If Vice President Harris is not elected, a Trump administration might reverse plans for such a rule at DOT.
- A Notice of Proposed Rulemaking doesn’t always translate into a final rule in any case.
- And final rules can look very different than the proposed rule, after adjusting for comments received (and lobbying).
United Airlines CEO Scott Kirby says this compensation creates a bad incentives for airlines to be cautious and take delays or cancel flights for safety – so compensation compromises safety. While that’s the obvious incentive created, this hasn’t happened in the EU but airlines there often ignore the rule.
The administration, for their part, says this is simply an incentive for airlines to operate on time. (Delays are highly costly to begin with, of course, so they are already well-incentivized.)
This new rule would represent a significant shift in power to consumers and a huge expense to airlines. It would also give unions, especially pilot unions and mechanics unions, tremendous power – because their members exercise discretion that can delay flights for small details, which could cost tens of thousands of dollars per flight in many cases if this comes to fruition.
Another concern is higher airfares. One way to think of this is the government requiring consumers to buy ‘delay insurance’ with every ticket. Right now consumers travel without this coverage, and it does not come free. Under the rule, it would be required.
If this goes to a final rule, it will ultimately likely be decided in litigation.
- I do not believe that the Department of Transportation can do this by regulation without authorization by Congress, purely based on promoting ‘safe and efficient’ air travel or protecting consumers from ‘unfair and deceptive’ practices.
- Indeed, the Biden administration sent legislation to Congress to require it. Why seek the authority if they already have it?
- The 5th Circuit Court of Appeals has ruled that a planned DOT regulation on fee disclosure exceeds the agency’s authority.
Of course, an administration that seeks to reduce the delays experienced by passengers, which is an issue that will only grow in the future as passenger numbers and flights rise, would focus on the actual throughput of the system: more gates, runways and taxiways at congested airports; more air traffic controllers; better technology (and management) for the air traffic control system.
This would be another stake in the heart of the ULCCs that would find it impossible in passing this cost off in higher fares. For the legacies if they cancel for example your AA MIA/PHL flight but can route you MIA/CLT/PHL but get you it later then I assume the passenger still wouldn’t be due compensation. The ULCC wouldn’t have this kind of flexibility.
Similar rules in the E.U. have worked out splendidly and despite much bellyaching, ULCC’s and full service airlines don’t seem to have suffered much as a result. I think we desperately need similar rules here.
@Gary – well the 5th circuit’s jurisprudence is somewhere to the right of Genghis Khan. In any case to say the rule exceeds the FAA’s authority is really just telling lawmakers and the public that we need to start writing laws like Napoleonic code. Be careful what you wish for.
No one is forcing consumers to buy “delay insurance.” They can buy travel insurance that covers problems caused by delays on the open market (which i do without question these days).
So far the airlines are doing pretty doggone well vis a vis profits. Additionally, European airlines also turn a nice profit despite have these SAME rules (and have had for years).
Having been bumped off a San Francisco – Paris nonstop with ZERO compensation and a total loss of the ticket price, I’m ready to take on the “big boys” – aka: The four major US carriers.
Clearly would be blocked by the courts. Forget the 5th Circuit, SCOTUS ruled in the previous session and significantly limited administrative rules in the absence of specific instruction from Congress. I would expect this to be blocked almost immediately. Of course this is just Joe and Mayor Pete pandering as normal
Just what kind of leftist statement is this? —If Vice President Harris is not elected, a Trump administration might reverse plans for such a rule at DOT. — Just what is YOUR basis for this asinine and uncalled for statement?
I don’t think monetary comp is needed but DOT needs to implement stronger customer service rules. All airlines need dedicated hotlines for delay (they could probably share offshore call center resources) and provide more flexibility on re-booking other carriers. Text & web service just does not cut it.
In addition the airlines need to provide better options when flights are cancelled. A refund doesn’t cut it when the current fares are 2-5x higher. The airlines need to offer re-booking at the same price and creative routings when necessary.
@AC is right. The reactionary 5th Circuit and reactionary Supreme Court would never allow such a consumer-friendly rule to survive. Both courts have made clear that precedent, decency, and public welfare simply do not in any way enter into their considerations.
The passengers pay for delays already, it is just that many pay nothing but some others pay a lot. Part of the problem is the lack of transparency by the airlines where they lie about what is going on and interfere with passengers making alternate plans. Additionally, buying an airline ticket does not always follow a typical contract where the consideration does not always rent a seat and simply gets added to the airline’s bottom line.
@David R Miller – huh? The Trump administration MIGHT have a different policy choice than a Harris administration. Then again it might not!
The election comment was awkwardly worded, but clearly this issue go in different directions depending on who wins in 8 days. Not sure why that provoked such a hostile reaction from @David R Miller.
When Gary says we’re being forced to buy “delay insurance,” I took it to mean ticket prices would creep up to account for the cost of the payouts. So everyone pays for it as part of the fare.
I have the resources to effectively self-insure against all but the worst issues for most trips. I assume I’m going to eat a night or two of hotel costs once every couple of years because I can’t get out the day I planned. To me that is more cost effective than adding $50-100 per airline ticket.
For major trips where delays can lead to cascading costs (like missing a day or two of a cruise or package), I buy insurance. Not everyone can afford the self-insure model, however. I have some friends who save every penny for a once-a-year gathering, and if they are stranded overnight, they are sleeping at the airport.
My concern here is always unintended consequences. There are likely to be many to any set of new policies impacting air travel.
However, these pushes for more regulation always stem from years of incidents where the response was terrible and many consumers were stuck on planes on the tarmac, stuck at gates with no hotels or meals, etc, etc, etc. I wish I had faith that the companies would solve it without intervention, but we’ve been waiting a long time.
I agree with the conclusion – if only we would invest in fixing the worst constraints on the system. More controllers, fixing ‘closely spaced parallel runways [looking at you SFO]’, etc.
Congress just needs to remove the exception that prevents consumers from suing airlines.
When is a law not a law? When a corrupt administration instead calls it a “rule”. That pesky, unnecessary legislative branch. Ahh, democracy.
Would the Government be responsible for delay payments when they can’t hire enough ATC staff to push the expected volume of flights through the northeast?
The public will pay for delays one way or another. It’s merely a question of who pays, and whether the payment is denominated in money or time.