New US Department of Transportation airline consumer rules raise doubts


As of 23-Aug-2011, new rules promulgated by the US Department of Transportation (DoT) that are designed to protect passenger interests and increase transparency have come into effect. The new rules stem in part from the consumer backlash generated by a number of very high-profile (and poorly managed) tarmac delays earlier in the decade.

The new rules also reflect increased consumer frustration over the plethora of fees and charges that airlines have imposed and the inability of consumers to determine the total trip cost which can often be much higher than the air fares displayed.

See related report: US DoT issues new passenger protection rules, punts on ancillary fee disclosure

Backlash has origins in business travel market

Corporate travel providers have been especially vocal, citing the difficulty of establishing travel budgets in the face of significant costs involved above and beyond the published fare.

As might be expected, the carriers have fought many of these measures, noting that they all involve additional cost and complexity and that many of the irregularities are due to circumstances beyond their control.

Nonetheless, new rules have been crafted and mandate increased accountability by the carriers.

True reform or a growing disadvantage?

But there remains a question as to whether or not the rules enhance or diminish overall performance and the customer experience. Some have cited an increased number of cancellations since the implementation of the current tarmac delay rule, believing that airlines now cancel flights more readily in the face of huge fines imposed for violations. Others find no such cause and effect.

The new rules impose the following:

  • Fines of up to USD27,500 per passenger for US and foreign carriers operating international flights that incur a tarmac delay of 4 or more hours.
  • Increased compensation for denied boarding, raising the maximum compensation, based on ticket price, from USD400 to USD650 for arrival delays exceeding the limit.
  • For extended arrival delays, compensation, again as a multiple of ticket value, rise from USD800 to USD1300.
  • Prominent display of all ancillary charges and fees, including bag charges, meal costs and cancellation fees.

More rules to follow

Implementation of an additional set of requirements was delayed until 24-Jan-2012 when airlines will also be required to:

  • Notify passengers at the gate, via phone and websites of cancellations and delays exceeding 30 minutes.
  • Allow cancellation of reservations without penalty within 24 hours, provided the travel is at least one week away.
  • Include all taxes and fees in advertised fares.
  • Not raise a fare after purchase unless the increase is due to government mandated tax or fee changes. Travelers will be able to accept the increase or opt out with no penalty.

Just recently, rules were imposed that mandate a refund of baggage charges if the bag is lost or fails to arrive with the passenger.

Airlines disagree

The new rules have been generally well received by consumers and travel professionals but the airlines, responding through the Air Transport Association’s spokesperson, Steve Lott, contend that, “Market forces, not additional regulations, are already providing customer benefits.”

In tightening the regulatory noose, it is clear that not all parties agree with that statement and have pushed for the implementation to correct measures that the industry has failed to address.

It now remains to be seen whether or not the mandates will actually improve the situation or if carriers will seek new methods of circumvention. With the summer travel season winding down, the first real test will come in November as the holiday travel peaks again test and strain the system.

See related report: DoT fee rule fails to address transparency for consumers

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