President Biden Announcing That Airlines Will Have To Pay Out Cash When They Delay Or Cancel Flights

According to a White House official, President Biden and Transportation Secretary Buttigieg plan to introduce new airline regulations along the lines of Europe’s EU261 compensation rules that require payment to passengers for flight cancellations that are within the carrier’s control as well as in the event of significant delays.

The rulemaking would seek to require airlines to:

  1. provide compensation, not just refunds and expenses (like hotels and meals)
  2. make meal or meal vouchers, hotel room nights and ground transportation to and from the hotel mandatory for overnight delays
  3. provide timely customer service during and after widespread flight disruptions

The Department of Transportation dashboard showing what airlines have committed to for controllable delays and cancellations is going to be updated to “make clear that virtually no airlines offer compensation on top of refunds or amenities.”

The White House plans to argue that this will make air travel better because “one study found that [similar rules in Europe have] led to decreased flight delays in the EU.”

How Much Does The Administration Care About Actually Reducing Delays?

The Department of Transportation, glass houses and all, doesn’t take accountability for air traffic control delays. They can’t staff New York TRACON to 60%, and airlines are cutting back flights to mitigate delays that would be caused by the Administration. And there’s little being done to add runways and taxiways at major airports, or increase the throughput of congested airspace

There is no serious effort to reform FAA air traffic control, and no compensation when delays are the result of their failures.

Taking these things seriously would make air travel better – it would support more passengers and more flights and actually reduce delays.

Reasons For Concern Over Changing Delay Incentives

In the U.S. the ‘deal’ has been that airlines make best efforts to get customers where they’re going. Not doing so is costly to their operation, and they don’t make money. Usually that works pretty well.

Changing this deal – to where customers are owed more than a refund – could also lead to both fewer delays you do want and more delays that you don’t:

  • It’s also a concern that airlines would see much higher costs from delaying a flight. Sometimes you want them to be extra careful. You don’t want to discourage airlines from taking those delays. Europe’s experience though cuts against this concern.

  • This could hand additional power to pilot unions who can slow down an airline and delay flights by working to rule, writing up non-critical items. Mechanic unions can slow down repairs and paperwork as well. In both cases the airline would bear significant cost and you’d see more delays.

This Isn’t Happening Right Away – If It Happens

Last summer the Department of Transportation proposed rules for when airlines have to provide refunds not just for cancellations but also when a customer doesn’t fly during the pandemic, or when the airline changes the aircraft operating their flight. Then in September they published a rulemaking on fee disclosure that’s a bit more of a mess, handing power to major airlines against online travel agencies and to shut down consumer sites they don’t want to work with.

These rules have not been finalized. The DOT first has to consider, amend and respond publicly to comments on their rules. It’s unclear when consumer compensation rules would be either – in fact it might require a Biden second term to see them through to publication, so view this as part of a re-election strategy targeting middle class frustrations.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. EU261 is terrific as are so many things in the EU like single-payer healthcare, public education, multilingualism, public transportation, high-density pedestrian-first cities, high-speed rail, and I could go on! We in the United States need to be copying the EU as much as we can.

    We should also be supporting all Democrat efforts to win reelection as it has become patently obvious that the Republican agenda is to smother the country in white supremacy, gun violence, and flagrant disregard for marginalized or even non marginalized demographics such as pregnant women!

  2. I’m curious what exactly is the legislative authorization for such a rule? DoT can’t just invent laws out of thin air.

    I have a better proposal, though: Remove Pete and replace him with someone who has actual transportation experience. And then nominate someone with actual aviation experience to head the FAA. And actually staff our ATC facilities across the country. And quit using important administrative and safety-critical roles as political patronage (and that applies regardless of which party is in the White House.)

  3. I live in Europe. EU261 has some issues, but works pretty well in general. I don’t see that the concerns mentioned in the article are valid in real life. I wish the US would do more for consumer protection in general.

  4. As @vbscript noted this would be challenged in court and SCOTUS would likely rule it exceeds the Dept of Transportation authority so this is all politics and theater.

    BTW if such a rule was implemented expect an increase in airfares. Every airline would reserve the anticipated financial hit based on historical information. That amount would then be built into their overall cost model and reflected I. Their prices. I realize people get frustrated but there is no free lunch.

  5. As if air fares aren’t already high enough, this will push them higher. Whenever you increase costs, then rates will need to correspondingly rise. But basic economics is not a strong position in this administration.

    As you mention, why not first fix the things truly under your control, such as the staffing at air traffic control.

  6. and yet if you look at sites like flightaware, US airlines have better on time performance than their European peers.

    And there are abundant stories of how long it takes airlines to reimburse passengers with EU261 compensation
    Despite their massive cancellations in December, Southwest processed the vast majority of refunds and compensation far faster than any European airline.
    And I endured a hellish recent weekend of lengthy delays and cancellations on both American and Spirit and Spirit has already processed a refund for their part of my disrupted flights but American has yet to do so

    You can’t legislate good customer service. Some airlines get it and will go above and beyond while others will drag out doing even the bare minimum that is required.

  7. Clown lawless Biden … Clueless to what the Governments role is. How about protecting Tax payers by protecting our Southern border States. This guy is as crooked and demented as you can get.

  8. This is obviously a solution in search of a problem. The proposed rule is only supposed to apply to controllable cancellations and delays. What’s “controllable”?

    Obviously, a socialist-minded regulatory state could say just about everything is controllable. Like don’t have your pilots mad at you during contract negotiations. But under a normal definition, there are few airline cancellations and major delays due to controllable problems in the USA. By far, the biggest problem is weather. I’d bet that’s now more than 90% of cancellations and material delays. On a decent weather day, most US airlines now have a zero cancellation rate, which you can see on flightaware. I would love to see the US gov’t run their operations (like the Post Office) with the efficiency of the US airlines — and that’s even before noting how complex these airline operations are.

  9. As an example, my last cancelled US airline flight was in very early 2021 when my AA flight was cancelled a few hours before departure because a couple of their NYC flight attendants tested positive for Covid and they didn’t have replacement crew available. Is that “controllable”?

    BTW, AA rerouted me from a small Wyoming airport to my destination (I was delayed by many hours) and gave me $200 in flight credit for my troubles. I thought that was reasonable, especially since I didn’t think this delay was really “controllable.” I’ve had similar experiences on Delta. I really don’t think air travellers need more protections from the airlines, except perhaps from the ultra low cost carriers like Frontier and Spirit who obviously do much less. There the question is whether travellers know what they’re getting into for the very low airfares.

  10. Check out how Canadian airlines skirt the Passenger Bill of Rights for Transportation:
    they claim that events (whether crew scheduling, mechanical failure, etc) jeopardize the safety of the flight, thus delaying or canceling flights. THIS scheme allows them to avoid paying compensation, hotels, and meals. The Canadian government is nowhere to be found.

  11. Yep, this is a bad idea, and unnecessary.

    Thankfully it has little chance of being actually implemented.

  12. Nail in the coffin for Spirit, JetBlue and Alligent, they are the worst. This will make more planes and pilots available for the Big 4 plus 2 (AK and HA).

  13. Biden also announced that he is not a crook and the million$ he and his family got from Russian and Ukrainian businesses were for the “services” of his crackhead kid. Oh, and the southern border is secure, too.

    If you believe anything he is told to say, my uncle, Sam Brooklyn, has a bridge for sale – cheap!

  14. Some airlines sell travel insurance during checkout, but it’s a footnote at the end. Both sides could benefit if the airlines did a better job presenting and selling this add-on more like a seat upgrade.

  15. A comment on ATC staffing. They don’t accept applicants that are OVER AGE 30!

  16. The US is a corrupt third world country, this will not pass – lawmakers don’t work for voters, but for the lobbyists who grease their palms. And airlines are big spenders on Capitol Hill. Just wait for the Republicans reaction: Protecting consumers? No way! Just earn a billion and buy yourself a jet, that’s the American way! And don’t forget to pack a totally legal AR-15 semi-autimatic assault rifle so you can shoot whomever gets in your way (a third world mainstay).

  17. @AC you’re wrong, there would be no increase in prices, rather a decrease in airline earnings. Airlines are very sophisticated and charge whatever the market is willing to pay–not sure if you noticed just how airline travel inflation is several times the inflation of anything else because of this.

  18. I don’t want compensation; I want a timely flight with courteous service. Open up more gates to traditional capitalistic competition, and let me move my booking to more timely and courteous airline (such as QR.)

    I know: instead of deregulation, we get reregulation.

  19. Assuming that the total amount of compensation is less than 1 percent of revenue, airfares will not increase significantly. This is political statement with minimal financial effects.

  20. I am not generally a fan of regulation, but there is so little respect for the customer-service provider relationship with airlines these days that maybe a little rulemaking isn’t the worst idea in the world. Perhaps even just the threat of more accountability will improve operational discipline.

  21. @ UA GS @ SFO

    Well, for those like you that live in a total California Utopia brainwashed condition, let me explain to you what your supposedly EU model is really about!
    I have lived in EU for 27 years and in CA for 15 years, so I know how this system works and I have witnessed firsthand how an absolute s…hole SF has turned to become over the years.

    1) EU261 is one of the main reasons airfares in EU are much more than in US when you compare the distances.
    So by supporting EU261 in the US you also support and want airfares to go up sharply because that is exactly what will happen if it goes through.
    If you think otherwise, please look at “Utopia” and “Brainwashing” in the dictionary, they apply to you!!

    2) The worshipping of the bullet trains as the holy grail for the future of public transportation.
    Something the proponents of bullet trains in the US (like Newson) fail to say is the cost is so high it cannot be justified ever, no matter how you look at it.
    In EU, governments spent (taxpayers money) Trillions of € (with a T) of taxpayer money to build those bullet train infrastructures over the past decades. And there are only a very limited number of cities connected; in the countryside people see trains pass but they don’t stop, bullet trains have not done anything to help infrastructure and poverty in the countryside and small cities.
    Trains are also heavily subsidized, but still expensive, meaning even with subsidies, train tickets are often more expensive than flying.

    My message has no political bias here, I am just explaining what happened in EU with the Utopia of bullet trains, so be careful not to listen to the people in US that are selling Utopia, they are not the ones that will have to pay the bill at the end!

  22. @Jake – basic economics here. Any publicly traded company works on behalf of their shareholders. There are certain revenue and profit expectations. If costs rise the company raises prices to offset that. Yes airlines are competitive but if ALL of them raise fares (as they likely would) then there is no competitive disadvantage.

    Anyone that says “prices won’t go up but profits will be less” clearly has no understanding of the capitalist system we are in or how markets work for publicly traded companies.

  23. What they should do is inact the law that when a passenger totally gets out of hand and starts a tirade at the airport or in the airplane and that airplane has to come back, that said person should have to compensate all the passengers plus the airline for damages. Also, instead of overbooking flights, airlines should sell until the last seat is not available, and for those who don’t show up on their flight forfeit their purchase. That way it protects the revenue of the airline. And yes, penalizes the passenger who shows up late or doesn’t show up at all. Then for the flight that does cancel they’ll mostly have enough seats available, then everybody will be happy!

  24. *There are such a thing called travel insurance… And there is such a thing called get to the airport 2 hours prior to departure… And there was such a thing called responsibility. Unless you can prove your failure to get to the airport on time, there’s no excuse ( I got stuck in the TSA line ) (I never heard my name called ) ( The car rental agency line was too long and the bus was late ) I can’t tell you how many times I’ve heard that story. lol

  25. If the EU is so great, who paid for the thousands delayed or stranded with the many strikes at the airports (and trains)? Did all those that had a ticket get full compensation? And who paid it? And yes, EU short flights (most are under 2 hours) are more expensive than US short flights.

  26. @R.


    Why stop at 2 hours? Airlines could start requiring 3 hours, and you would have 1 hour less (2 per round trip) to work or for leisure. And decades ago 1 hours was more than enough.

    This is all about who pays for the cost of robbing people’s time. Right now the airlines can steal time from travelers because it’s free to them. When they make cancellation/delay decision, the amount of delay on passengers does not even come into consideration in their economic model, because it’s 100% free to them; it only includes crew costs and revenue loss.

    If rearranging a schedule delaying passengers for 4 hours costs them less than rearranging it to delay passengers for 30 minutes, the decision is clear: they will delay passengers for 4 hours. Add in the fact that they would have to pay passengers for the long delay, and all of a sudden the economics change and it’s cheaper for them to only delay them for 30 minutes.

    That’s what this is all about: alignment of incentives, with airlines paying the economic costs that currently travelers have to bear.

    100% free market stuff, which requires, in economic-speak, “internalizing the cost of externalities”.

  27. @Jake I think you are correct here. The main benefit of this plan IMO is to add a cost to inconveniencing 100+ people for hours at a time, at least for carriers selling *scheduled* transportation in advance. Perhaps when there is a substantial cost to a delay, airline personnel will work toward improving their operational standards, because they have the proper cost-avoidance incentives to do so, instead of just letting passengers sit around and wait at no penalty to the airline.

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