Passenger Legislation - Beyond the Call of Duty
Regulations in the United States and Europe could change the airline-passenger relationship
Passenger rights have always been a contentious issue. But recent events have elevated the problem to an entirely different level.
Doug Lavin, IATA Regional Vice President for North America, calls the new US Department of Transportation (DOT) consumer rights rules “the greatest reregulation since deregulation.”
Part of the new ruling is simply an extension of existing regulation. For example, it stipulates that international carriers cannot keep passengers on the tarmac for more than four hours without deplaning. The rule for domestic carriers stays at three.
There are two main reasons why this needs to be challenged. First, the issues that the three-hour rule is intended to address are best resolved by avoiding lengthy tarmac delays altogether. “This can be achieved by bringing new processes, procedures, and technologies such as NextGen online and requires the full cooperation of all stakeholders, including airlines, the Federal Aviation Administration, and airport authorities,” says Rob Land, Senior Vice President of Government Affairs at JetBlue.
Land says JetBlue returns to the gate after two hours so as to avoid three-hour rule delays, but when able, reboards customers and pushes off when the air traffic control system can accommodate the flight. “All this rule does is break up the entirety of the delay rather than minimizing the delay in the first place—as would be achieved by air traffic control modernization,” says Land.
Second, most causes of delays are beyond airline control. Poor weather conditions, strikes, congested airspace, and even volcanoes can all disrupt schedules despite airlines’ best efforts. No amount of regulation or legislation will stop a volcano from erupting. And increasing complexity in the rules will only limit airline options for dealing with a problem.
“JetBlue continues to support any measure that warrants greater transparency for customers throughout the industry,” says Land. “However, the root cause of customer compensation and complaints stems primarily from delays and thus we remain strong advocates of advancing NextGen’s implementation to lessen congestion, increase safety, and reduce delays.”
As well as the delay challenge, it is DOT’s treatment of the airline/customer relationship that has raised the bar in terms of counterproductive regulation. The DOT ruling now governs numerous aspects of the airline-passenger interaction, including how an airline presents its prices, when it provides passenger notifications, how it compensates delayed passengers, and how it responds to complaints.
This proscriptive approach will only serve to increase airline costs, which will ultimately prove to be to the traveler’s detriment. “Clearly, there will be significant IT and other costs associated with meeting the various new requirements,” says Lavin. IATA argues that the industry’s fiercely competitive markets provide more than enough incentive to treat passengers well. No airline can afford to lose customers when there is so much choice when it comes to buying the next ticket. And the advent of social media has ensured customer experiences are widely disseminated.
Lavin says the DOT regulation misses the mark on two counts. It not only failed to provide evidence of a problem with existing passenger rights protections, but did not present a cost-benefit analysis to justify government intervention in private business practises. “We are not aware of any precedent regarding a regulation on how a company must interact with its customer,” says Lavin. “Other transport modes have no similar requirements.
“The closest regulation in terms of public sector intervention is the European rule EC 261/2004, which set compensation for delays or cancellation,” he continues. “However, even that is not as intrusive as the US DOT regulation.”
European passenger rights
Among much else, a debatable interpretation of EC Regulation 261/2004 specifies that passengers who reach their destinations three hours or more after their originally scheduled arrival time be compensated as if the flight had been canceled. But the flaws in the ruling were plainly exposed by the 2010 Icelandic volcanic eruption. In April 2011, European Commission Vice-President Siim Kallas had little choice but to announce a review of the legislation.
“Looking ahead there are issues we need to revisit and for that we need a detailed analysis and a revision of the law,” says Kallas. “In particular, we cannot afford to turn a blind eye to the lessons learned from what passengers and industry suffered during the 2010 ash crisis and snow. The work will start now to effectively plug loopholes, strengthen provisions where there are gaps, and clarify issues for passengers and industry where it is clear that after six years we need to adjust and fine tune.”
Under review will be liability limits in the case of extraordinary circumstances as well as compensation thresholds, effective re-routing, and shared risks in the supply chain. “The last is a point welcomed by the carriers,” says Monique De Smet, IATA Director for Government and Industry Affairs for Europe.
“But we must be clear that they are also looking to extend the regulation,” she continues. “Also being discussed are two new points not dealt with by the current regulation; re-scheduling of flights and mishandled luggage. A proposed revision of the Regulation is due in 2012. IATA will actively follow these issues and be involved in the Commission’s work.”
The Commission is also bringing forward a review of the key concepts of passenger rights so they can be applied in a coherent fashion across all transport modes. Currently, there are significant differences (see panel).
SES and NEXTGEN
While a government does not need to regulate how airlines serve their customers, it must play its part in mitigating travel disruptions. The single European Sky and NEXTGEN must be fast-tracked.
It is estimated that the present European air traffic system causes more than 15 million minutes of delays a year, costing airlines near $1 billion. Meanwhile, NEXTGEN will reduce delays in us airspace by as much as 35%. “But without the political focus to make this a priority, the funding to keep NEXTGEN implementation on track for the next two to four years has been tied up in 18 extensions of the federal aviation administration re-authorization bill,” says Tony Tyler, IATA Director General and CEO