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Compensation rule in US will hike ticket costs, not fix delays: IATA, ET TravelWorld


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<p>Representative image</p>
Representative image

The International Air Transport Association (IATA) has voiced its disapproval of the recent decision made by the US Department of Transportation and the Biden administration that mandates airlines to offer financial compensation to passengers for flight delays and cancellations. This, said IATA, would increase the cost of air travel, in addition to the current care offerings that the airlines offer to their customers.

According to yesterday’s announcement, the new rule will be issued later this year.

Willie Walsh, Director General of IATA, stated that airlines make significant efforts to minimise delays and get their passengers to their destinations on time. They already have financial incentives to ensure timely service and cancellations and delays are costly for airlines. In this context, the new regulation will not create an additional incentive for airlines but would add an extra layer of expense that is likely to increase ticket prices, which would not solve the issue of delays and cancellations. Additionally, passengers may switch to other airlines if they are not satisfied with service levels, he added.

The Biden administration is drafting these new regulations that would mandate airlines to compensate passengers for significant delays or cancellations caused by the carriers. This is part of the administration’s efforts to improve consumer protection and curb airline misconduct. US Transportation Secretary Pete Buttigieg in a statement said that the passengers should not be responsible for the costs when airlines are at fault for flight disruptions.

On the other hand, the DOT’s Cancellation and Delay Scoreboard showed that the top 10 US airlines already provide meals or cash vouchers during long delays, and nine of them offer free hotel stays to customers affected by overnight cancellations. IATA is concerned that this new regulation may create unattainable expectations among travellers since most cases of delays and cancellations are caused by weather, which is beyond the airlines’ control.

Go First cancellations to impact travel agents, policy improvement needed: TAAI

Marking the first major collapse since Jet Airways’ downfall, Go First’s bankruptcy filing has already started to shake up the Indian aviation industry. The sudden suspension of operations has also put the travel industry in a precarious position and travel agents fear adverse impacts, TAAI’s President said. Weak policies, governance will impact the opening of new airports and make the aviation fragile, she stated.

IATA attributes last year’s delays and those in 2023 to air traffic controller shortages. The FAA has requested airlines to reduce flight schedules to the New York metropolitan area due to this issue. Furthermore, runway closures, equipment failures, aircraft delivery delays, and parts shortages in the supply chain also impact reliability and cause delays and cancellations.Although the DOT made it clear that airlines would be held accountable for compensating passengers only in cases where the airline is found to be at fault, situations such as extreme weather conditions and other factors can trigger consequences that can last for days or even weeks, making it challenging to identify a specific cause.

In addition, punitive regulations like the proposed new passenger compensation rule have been shown to have no effect on flight delays and cancellations. The European Commission’s 2020 assessment of the European Union’s passenger rights regulation, EU261, revealed the opposite to be true.

The report found that cancellations increased by nearly double from 67,000 in 2011 to 131,700 in 2018 and flight delays rose from 60,762 to 109,396. Although the share of airline-related delays decreased, this was attributed to an increase in delays categorised as extraordinary circumstances, such as air traffic control delays.

According to Walsh, aviation is a collaborative activity that involves numerous partners, and each one plays a crucial role in ensuring the seamless functioning of the air transport system.

Rather than focusing on airlines, as this proposal does, the Biden Administration should aim to secure adequate funding for the FAA, have a fully staffed controller workforce, and finish the long-delayed FAA NextGen air traffic control modernisation program, Walsh suggested.

  • Published On May 10, 2023 at 10:30 AM IST

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