The U.S. Chamber of Commerce is warning a proposal to require airlines to compensate stranded travelers could mean higher fares and less competition in the travel industry.
Sterling Wiggins, senior director of Transportation, Infrastructure and Supply Chain Policy at the U.S. Chamber of Commerce, said the proposal – to require airlines to provide compensation and cover expenses for stranded passengers – isn’t what it seems.
“While this proposal appears laudable at first glance, the reality is that it ignores many facts about today’s passenger airline industry and could result in higher fares and fewer choices for many American travelers,” Wiggins wrote.
The U.S. Department of Transportation announced in May it would launch a new rulemaking process to require airlines to provide compensation and cover expenses for stranded passengers.
U.S. Transportation Secretary Pete Buttigieg said at the time the “rule would, for the first time in U.S. history, propose to require airlines to compensate passengers and cover expenses such as meals, hotels, and rebooking in cases where the airline has caused a cancellation or significant delay.”
The rulemaking will address compensation for passengers when there is a controllable airline cancellation or significant delay; a meal or meal voucher, overnight accommodations, ground transportation to and from the hotel and rebooking for controllable delays or cancellations; timely customer service during and after periods of widespread flight irregularities; and it will define what constitutes a controllable cancellation or delay.
The 10 largest airlines guarantee meals and free rebooking. Nine guarantee hotel accommodations. One guarantees frequent flyer miles and two airlines guarantee travel credits or vouchers in the case of significant delays or cancellations caused by something within the airline’s control, such as a mechanical issue. No airline guarantees cash compensation when an airline issue causes the significant delay or cancellation.
The department’s planned rulemaking process would make passenger compensation and amenities mandatory.
Wiggins said that could mean higher fares for travelers.
“In addition to requiring refunds and reimbursements in the event of cancellations and delays, DOT’s proposal requires compensation above and beyond simple refund or reimbursement for travel costs,” he wrote. “These punitive damages could significantly inflate the cost of airfares during a time of already high inflation.”
Airlines for America, a lobbying group for airlines, said in May its members planned to work with the government “to ensure U.S. airspace remains the safest airspace in the world while supporting robust marketplace competition that provides transparency and vast options for consumers.”
“U.S. airlines have no incentive to delay or cancel a flight and do everything in their control to ensure flights depart and arrive on time – but safety is always the top priority,” Airlines for America said in a statement. “We have the safest air travel system in the world because we never compromise on safety.”
The group said weather is a major cause of disruptions. It said that in 2022, more than half of flight cancellations were due to extreme weather.
“Thus far in 2023, the majority of flight cancellations have been because of ATC outages and severe weather,” the group said. “Carriers have taken responsibility for challenges within their control and continue working diligently to improve operational reliability. This includes launching aggressive, successful hiring campaigns for positions across the industry and reducing schedules in response to the FAA’s staffing shortages. In 2022, carriers reduced their schedules by about 15% to alleviate pressure on the National Airspace System (NAS), and U.S. airlines are currently accommodating record demand while operating 10% fewer flights than in 2019 to reduce pressure on the system.”
President Joe Biden previously said while the airline industry is vital to the economy, taxpayers are frustrated.
“The airline industry is a key part of our economy. And they’ve been critical partners in a number of important initiatives, from requiring employees to get COVID vaccines to addressing the supply chain problems over the last couple of years,” Biden said in May. “But I know how frustrated many of you are with the service you get from your U.S. airlines, especially after you, the American taxpayer, stepped up in 2020, in the last administration, in the early days of the pandemic, to provide nearly $50 billion of assistance to keep the airline industry and its employees afloat.”
Wiggins said the airline industry is able to handle the issues without government regulation.
“In order to comply with the proposal, there is the potential that costs and other adverse impacts will be passed along to the consumer due to compliance costs the airlines will need to address. Inserting the government into the day-to-day transactions between the consumer and air traveler is only likely to increase the time it takes for the customer to receive compensation in the event of a delay, given air carriers will need to follow strict procedures to ensure they are in compliance with DOT regulations,” he wrote.
