It is vital that governments, regulators and the flying public understand the balance between protecting consumer rights and protecting sustainable air services. Appropriate regulations, globally coordinated, can give passengers confidence while ensuring the freedom to fly.
Rather than regulations “defending” passengers, they should be framed as a partnership between consumers and the industry, to encourage competition, innovation, consumer confidence and enhanced air connectivity.
Airlines are part of an interdependent aviation system which has to work like clockwork to get passengers to their destinations safely and on time.
But any approach to address delays should involve everyone in the picture – airlines, airports, air traffic management, governments and passengers themselves – so that, together, we can improve on-time performance, and when delays do happen, ensure that passengers are properly cared for.
Regulation that requires airlines alone to pay compensation or provide care and assistance as a result of delays does not address the fundamental problem of why delays occur. It ignores that market forces at play that will compel airlines to offer solutions in order to keep their customers. And it may cause airlines to cancel flights instead – an even more unpleasant experience for passengers.
Most delays are beyond the control of airlines. They happen because of a variety of reasons – like weather, overtaxed infrastructure and crowded airspace. That’s why we think partnership and planning – amongst airports, airlines, ANSPs and governments - is the best way to take care of passengers when delays happen, and reduce delays themselves.
JetBlue: Reducing Delays
Airlines understand that delayed and mishandled bags are annoying for travelers. That is why they're making the most of technology that allows them to contact their passengers to let them know about disruptions ahead of time, keep customers updated, and, when possible, offer an alternative solutionBags
Airlines are highly incentivized - without a regulatory requirement - to partner and invest in new solutions that make sure passengers and their bags arrive together. More information on our baggage program.
On many international journeys, it is difficult to know what rules apply. Over 60 countries have their own consumer protection regulations - and they aren’t coordinated with each other. In fact, on one itinerary as many as three different passenger rights regimes may be in effect. Passengers and airlines should be clear on what entitlements apply in any given situation.
Not only is the current situation confusing, it's also expensive: IATA estimates that the potential liability to airlines posed by the expansion of such regulation could mean higher fares or less choice for consumers.
Governments: let's work together to make it simpler
Governments can address this problem by working together on a more coordinated approach. At the 69th IATA AGM in June 2013, IATA members unanimously agreed to a resolution on baseline passenger rights (pdf). It strikes a balance between sustainable air transport and reasonable consumer protection.
The 2013 ICAO Assembly agreed on the need for greater convergence in this area, directing ICAO to work on developing policy guidance.
IATA and its member airlines are seeking to promote a coordinated approach to global passenger rights regimes based on the industry principles, and are strong supporters of the ICAO work on this issue. Because both airlines and passengers should know what to expect when things go wrong.
Ticket restrictions allow airlines to keep prices low while preserving choice and connectivity for cost-sensitive travelers. Find out more:
Regulation that requires airlines to refund tickets regardless of applicable fare conditions and allowing passengers to freely cancel tickets, can actually make travelling more expensive and stressful for travelers.
Why is this an issue?
Several governments have enacted or are considering a provision called the “right of repentance” as part of consumer protection laws. This right allows passengers to cancel any ticket and obtain a full refund, within a certain period of time after purchase. In the US, customers can hold reservations for up to 24 hours without penalty; in Colombia, passengers can get a full refund up to five days after buying a ticket.
What does this mean for the consumer?
Introducing the "right of repentence" in consumer protection laws can actually do more harm than good for the passenger, it can lead to the following:
- More overbooking: A repentance right takes seats off the market during the refund period, blocking it from sale to other customers and risking that the seat may not be sold again. This creates more uncertainty in the market for airlines, as to the amount of money they will actually generate from specific flights. Airlines may therefore tend to overbook more in order to hedge against this uncertainty, resulting in a higher numbers of passengers denied boarding.
- Non-refundable fares: The non-refundable fare is a cheaper option for consumers who are ready to commit to travel and are willing to travel under specific fare conditions. It is a type of ticket made possible by allowing airlines the certainty of being able to book the revenue, but allowing the right of repentance airlines will no –longer have that certainty, and they will no longer offer non-refundable fares in the marketplace. Fares will inevitably rise to reflect the greater challenges of revenue management airlines will be faced with. On top of that, promotional fares will stop, depriving consumers of hot deals and depriving airlines of the chance to sell excess capacity at lower prices. So initially the right to repentance looks like a good deal for customers whereas the reality may result in more overbooking, an increase in fares and less customer choice.
- Read our position paper on the right-of-repentence (pdf)
Overbooking and flight sequence
Prescriptive regulation become easier to understand if you imagine such rules applied to everyday things like shopping for fruit.
Imagine the stores had to guarantee the freshness of the fruit for 5 days after purchase, and if not, pay a fine or compensation to consumers (as airlines have to pay fines today).
Now imagine that the fine is disproportionate – e.g. USD5,000 for every avocado that spoils within 5 days. This is exactly how the US tarmac delay fines operate: they threaten airlines with USD27,500 per passenger if a flight stays on the tarmac for more than three hours.
Faced with such a liability, what is the grocery store likely to do? In many cases, probably either a) charge more for the fruit or b) stop carrying it.
Airlines are no different
When faced with the prospect of heavy delay compensation, airlines are likely to a) raise fares or b) not operate that service, depriving consumers of low-fares and choice.
When we impose liabilities on actors for events not under their control, chances are consumers will get a raw deal – because they are the ones that will have to end up paying for that extra risk.
Research has shown that consumer protection regulation can have adverse affects on the very consumers it aims to protect. For example, in the US disproportionate penalties for delays can lead to cancellations; high fines or compensation regimes can lead to higher fares to everyone else; and increasing liabilities for airlines can lead some to exit the market, reducing the choice available to consumers.
Globally coordinated smarter regulations, can give passengers confidence while ensuring the freedom to fly. Rather than regulations “defending” passengers, they should be framed as a partnership between consumers and the industry, aimed at encouraging competition, innovation, consumer confidence and enhanced air connectivity.
Listen to Beatrice Lim from the (AAPA) talk about customer choice
Choice & ancillaries
Allowing airlines the freedom to innovate and offer new choices allows customers the opportunity to make their own price/service trade-offs. See how:
EU 261 legislation
In a highly competitive sector such as air transport, the success of an airline depends on its ability to provide services that meet the expectations of its customers, both in respect of price and quality. Airlines therefore have a strong incentive to satisfy their customers fully.
EU legislation setting out compensation levels for passengers denied boarding has been in place since 1991. The current legislation, Reg. 261/2004, which came into force in 2005, substantially increased the compensation levels, extended them to flights cancelled for reasons within the control of the airline, and specified an explicit obligation of assistance for delayed passengers which includes refreshments, meals and hotel accommodation for overnight delays.
We support a revision of Reg. 261 and we support this revision of Reg. 261 where:
It clarifies, it improves application, and it gives real additional rights - Read our position paper in full (pdf)
The Interpretative Guidelines on Regulation 261/2004 published by the European Commission in 2016 which clarify the EU passenger rights regulation and support consistent application of EU 261 across Europe. The industry’s issues with EU 261, however, remain unsolved. Revisions to the regulation proposed in 2013 would help to provide a better balance between passenger rights and airline obligations. But they are being held in limbo as a result of a deadlocked dispute between Spain and the UK over Gibraltar. Press release.
Passengers given important EU guidance on compensations claims agencies
We welcome the European Commission’s guidance to air passengers on the activities of agencies that make claims for compensation in the event of delays or cancellations to flights.
The guidance makes it clear that so-called ‘claims farms’ are not effective means to seek compensation under the EU’s passenger rights regulations. The EU advises that passengers should always contact the carrier first. National enforcement bodies and alternative dispute resolution services can also help passengers in the event a compensation claim is disputed by an airline.
See European Commission's Information notice on relevant EU consumer protection, marketing and data protection law (pdf).