While the world’s airlines are demanding fewer consumer protections, the Biden administration has proposed that airlines pay cash compensations to passengers when they delay or cancel flights.
I wrote that the plan to regulate airlines by the Department of Transportation was largely political posturing and the decision by the administration to send legislation to Congress right now to require this compensation underscores this.
The Biden administration has submitted draft legislation to Congress that would mandate airlines pay cash compensation for delays of three hours or more when carriers are responsible.
The proposal sent earlier this week and seen by Reuters would require “cash compensation in an amount commensurate with the inconvenience experienced” when a delay or cancellation is due in part or in whole to an issue under the carrier’s control.
The Biden administration said they were going to mandate it on their own, via regulation, but they never released a Notice of Proposed Rulemaking. That, they said, would come before the end of 2023 – suggesting that:
- Any new rule, which requires a notice and comment period and then consideration of comments in drafting final language, likely would not happen prior to the 2024 Presidential election
- So whether or not any rule happened likely depended on the outcome of the 2024 election
This suggested that it was a political issue to run on (middle class pocketbook) rather than a policy issue. Submitting legislation to Congress to do this suggests the same thing.
- Biden administration proposed legislation, less than 18 months before the election, is dead on arrival in the House of Representatives.
- The President can say he’s pushing for legislation, without worrying that this legislation actually passes, and therefore it becomes a point on which he can distinguish his plan from the opposition party.
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. This hasn’t happened in the EU, though of course EU261 compensation is often ignored by airlines, so I’m not sure the EU experience rebuts this concern. EU compensation also hasn’t reduced delays.
Regardless, the starting gun on taking care of customers in the event of controllable delays and cancellations – compensating customers for failing to deliver the product that airlines have sold – has mass appeal, and signals a concern by the current administration for middle class concerns in a way that they think can differentiate themselves from their opponents. Precisely because this legislation won’t be acted upon, the President can paint Republicans as unwilling to protect voters from unpopular businesses.