On Monday, President Biden announced plans for a new regulation requiring airlines to pay cash compensation to passengers for controllable flight delays and cancellations – on top of refunds and expenses. And yet the stocks of major airlines were flat to up on the day.
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. And yet,
- We get word that details on the rule will ‘come this year’ rather than an actual Notice of Proposed Rulemaking
- The only concrete step being taken right away is an update to a Department of Transportation dashboard pointing out that airlines generally do not commit to providing compensation (on top of expenses for hotels, meals) during delays and cancellations that are deemed their fault.
The Administration has chosen to announce this now, even before they have a rulemaking ready. That is timed for political effect, and again they’ll have a news cycle later in the year actually releasing a proposed rule.
What the timing means is that there’s a strong likelihood we do not see this rule happen unless President Biden is re-elected because promulgation of a final rule would quite likely not occur prior to the end of the President’s first term, which comes perhaps just a year after a proposed rulemaking is published.
There still needs to be a public comment period on the as-yet released proposed rule. Then DOT will have to consider each comment, respond, and update its rule based on comments received.
This is a middle class pocket book issue which will certainly poll well, aside from the merits of the issue. And it’s better as an issue to promise to work on if re-elected than as an issue to have solved prior to re-election. In much the same way this lines up with the strategy on hotel resort fees, which is to call for congressional action rather than to take action.
In both cases, there’s at least some question as to the legality of unilateral action on the part of the President’s administration. DOT does have broad regulatory authority under its mandate for safe and efficient transportation, and to protect consumers from unfair and deceptive practices. It’s not entirely clear that long-standing aviation practice to cover costs but not provide additional compensation as a matter of law in the event of a controllable delay is itself unfair and deceptive, when the system has very much been designed to encourage delays rather than take risks.
An administration that seeks to reduce the actual delays experienced by passengers, which is an issue that will only grow in the future as passenger numbers and flights rise, should 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.