Trump Administration Withdraws Biden Airline Delay Compensation Plan — A Rule That Was Never Going To Happen

The Trump administration announced today that it is withdrawing the Biden administration’s plan to require cash compensation from airlines for flight delays. They signaled in September that they were planning to do this. And literally no one was surprised.

This rule was never going to happen. It was probably not going to happen even if Biden had been re-elected. The Biden administration waited until after he had lost re-election to seek comment on how a rule ought to be drafted.

• They never even issued a Notice of Proposed Rulemaking, to begin the comment period and consideration of whether to impose a rule.
  
• Even a year and a half after the President had announced plans for a rule they had not done it. All they issued was an ‘Advance’ notice of proposed rulemaking; a public announcement that they wanted to draft a rule and could anyone tell them what it ought to look like?
  
• And the administration likely believed they didn’t have the authority to implement anyway, which is why they sent legislation to Congress to authorize it.

This was supposed to be an ‘EU261’-style rule requiring payments for delays. But it was even more than that – potentially requiring airlines to interline with each other (a significant expense for low cost carriers), and standards of care (like hotel) during significant weather events.

United Airlines CEO Scott Kirby argued 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 rule would have represented a significant shift in power to consumers and a huge expense to airlines. It would have given pilot and mechanics unions tremendous power – because their members exercise discretion that can delay flights for small details, which could have cost tens of thousands of dollars per flight.

Another concern was 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 have been required.

Of course, the way you actually reduce delays experienced by passengers is to alleviate bottlenecks: more gates, runways and taxiways at congested airports; more air traffic controllers; better technology (and management) for the air traffic control system.