Some Amtrak trains got stuck in snow banks and hundreds of passengers ended up stranded for around 14 hours in miserable conditions. Here’s a quote from one passenger: “The conditions are cold; we’re wearing coats. And my husband is a diabetic. He hasn’t had any food all day,” Laurette Mosley told ABC News. “The bathrooms are flooded. The sinks are full with water and the toilets are flooded.”
A horrible situation for those passengers affected and surely a very difficult situation for Amtrak. But did the US Department of Transportation or Congress launch an investigation into this incident with the same thoroughness—and deal out equal penalties—that it would undoubtedly apply to an airline that left its customers for 14 hours without food, heat or bathrooms for 14 hours? The answer, of course, is no. When it comes to emergency situations, bad weather and even volcanic ash clouds, regulatory authorities seem to have two standards—for the ground transportation industry, it’s an accepted hazard; for airlines, it’s a case of they should have been better prepared, so fine ’em and make new rules.
A “patchwork quilt” of passenger rights regulations enacted by governments worldwide are adding “cost and complexity” to airline operations and getting “in the way” of good customer service, IATA DG and CEO Tony Tyler said last year.
Speaking at the Latin American and Caribbean Air Transport Association (ALTA) Airline Leaders Forum in Cancun, Tyler said governments “possibly without realizing it” are “weakening the integrity of the air transport system by introducing a patchwork quilt of different and sometimes conflicting passenger rights regulations. At least 60 governments have introduced such rules, including 11 in Latin America.”
A major problem with these regulations is “there is no consistency across jurisdictions,” Tyler said. This confuses passengers and forces an airline to “manage a multiplicity of requirements over its international operations.”
Tyler similarly noted at the 38th ICAO Assembly in September that member states “recognized that the glut of passenger rights regimes is not creating value. States agreed there is a need for high-level, non-prescriptive principles that are consistent with international agreements and that strike a balance between protecting passengers and maintaining industry competitiveness.”
Tyler said governments should “recognize that airlines want to get their passengers to their destinations with their bags, on time, all the time” and that carriers “operate in a highly competitive industry in which customers can and do vote with their pocketbooks,” creating financial incentives for airlines to be consumer friendly.
He encouraged governments to “conduct a rigorous cost-benefit analysis before” imposing new passenger protection regulations and to adhere to existing global standards.
During a working session at the IATA AGM in Cape Town last year, airline representatives unanimously endorsed a set of core principles for governments to consider when adopting passengers rights regulation.
IATA formed the principles in response to what it says was “a proliferation of uncoordinated and extra-territorial passenger rights legislation that is the cause of confusion among passengers.”
The guidelines include a call for clear, unambiguous consumer regulations that allow airlines to differentiate themselves through customer services above a common standard. They say that compensation should be proportional and regulation should ensure passengers have access to information concerning their rights, fares, taxes and fees prior to purchasing a ticket, as well as the operator of the flight. Airlines should be exonerated from liability for safety-related delays and cancellations, and in the case of denied boarding or cancellations, passengers should be entitled to rerouting, refunds or compensation when circumstances are within the airline’s control.
“What’s needed is a Hippocratic Oath for regulators. The first principle would be to do no harm,” Tyler said. “We want regulators to understand that travelers are our customers. And we want customers to have the best possible experience because our business depends on customers coming back.”
So far, however, this has not slowed the onslaught of new rules and regulations. And while previously this was predominantly a European, and North and South American phenomenon, it has started to be mirrored in other regions. According to IATA data, by the end of 2013, at least 53 countries had created formal regimes for airline passengers.
“A lot of countries are getting into the business of defining many aspects of an airline’s relationship with its customers,” IATA general counsel Jeffrey Shane told media at a briefing in December.
Predominant among that activity has been the European Parliament, which in February voted in proposals from the European Commission to strengthen passenger rights. Delayed or stranded passengers are more likely to win compensation under the draft law approved by Members of the European Parliament (MEPs).
European airlines had been watching the run-up to the vote carefully, concerned that severe levels of compensation would be imposed on circumstances over which they had little control.
Among the draft revised rules voted on by MEPs, airlines would be required to have contact persons at the airport to inform passengers about their rights and complaint procedures, assistance, reimbursement and re-routing of flights. When flights are delayed, information on rescheduled flights must be made available no later than 30 minutes after the planned departure time. Passengers with a return ticket could not be prevented from boarding the return journey even if they did not take the outward one. Hand-luggage allowances would be increased to include a coat, handbag and one bag of airport shopping.
Carriers that fail to reply to a complaint within two months would be deemed to have accepted the passenger’s claims. Those citing “extraordinary circumstances,” in which they need not pay compensation, would have to give the passenger a full written explanation. Such circumstances would include bird strikes, political unrest and unforeseen labor disputes.
National authorities would be given sufficient powers to punish air carriers that infringe passenger rights.
According to Luxembourg lawmaker Georges Bach, the MEP heading the parliamentary transport committee considering air passenger rights, “only 2% of passengers actually get compensation after filing a complaint against an airline.
“I believe that the text we have voted today strikes a reasonable balance between the airlines and passenger rights. We improved consumer protection … while recognizing the flexibility that this industry requires,” he said.
The Association of European Airlines (AEA) had urged the European Parliament to “take a realistic approach on air passenger rights,” saying new rules should be realistic, particularly on the issues of delay compensation “trigger points,” extraordinary circumstances and multi-sector flights.
AEA acknowledged that passenger rights legislation formulated 10 years ago was in need of revision because the current rules “have demonstrably failed to adequately address situations of extreme service disruption, such as the 2010 ash cloud, the Japanese nuclear disaster the following year and numerous political upheavals and extreme weather events.” It pointed out that, although such cases were “clearly outside the airlines’ control,” carriers could face “a virtually unlimited liability to look after stranded passengers.”
AEA said the EC’s rules strike “a broad balance between safeguarding customers’ interests and recognizing the realities of providing a scheduled service in a complex environment.” It therefore urged the European Parliament to endorse the Commission’s proposal and to “carefully weigh the impact of their decisions on airlines and passengers alike,” and pursue “an effective, workable and balanced legislative package.”
But European carriers still have concerns that they can be held accountable for cancellations and/or delays caused by extraordinary circumstances such as volcano eruptions. European airspace has been almost entirely shutdown by regulators in recent years because of concerns about ash from Icelandic volcano eruptions, leaving airlines to carry the heavy costs of delays and cancellations.
Asian carrier concerns
And non-European carriers are concerned about synchronizing these rules with those of their own countries. In Asia, there are also worries that these rules can “creep” into rules made by the governments of their regions.
Association of Asia Pacific Airlines (AAPA) DG Andrew Herdman told ATW last year, “Consumer rights is a big issue because the Asian carriers fly to Europe and the US, where these passenger rights regulations are proliferating. It’s very damaging to the industry because we are now at a point where it’s extremely difficult to know whether you are compliant. It’s very difficult to write the standard operating procedure if you are an international airline.”
Herdman pointed out that not all countries believe aviation-specific consumer regulation is necessary. “Australia and Singapore looked at aviation and said they did not see the need for aviation-specific consumer protection legislation—they have strong consumer legislation in place and don’t see the need to legislate for aviation. In Singapore, when they had the proliferation of LCCs a few years ago, they were getting a lot of complaints and they looked at it and decided that people could work it out so long as they understood that if you buy a ticket with a low-cost carrier, it will be a different experience than if you buy a ticket with Singapore Airlines. So they said they would let the market decide,” he said.
“We’re in a bad spot because the [US] DOT is stepping up its enforcement actions and it’s not just the fines, but it’s about the reputational damage caused to the industry because it implies that the industry needs disciplining. You can’t ignore this and you can’t collude as an industry because of antitrust, so it needs to be a partnership with the regulators and a discussion about what is reasonable.”
Good, Bad and Awful
“Reasonable” is what IATA’s Shane seeks in how airlines are regulated. Shane’s view is there are some good rules out there, some not so good, and some that are “actually contrary to the public interest.”
In the “good regulation” basket, he puts rules concerning safety, economic fitness and addressing market failure. In the “bad regulation” basket are ownership restrictions, market access restrictions and overly prescriptive passenger protection.
“The airline industry is like no other when it comes to government micromanagement,” he said.
Shane points to some examples of this interference where it does not benefit the airline or the passenger. In a freak winter storm that hit the US Northeast in October 2011, huge amounts of snow and ice paralyzed the area and caused New York’s JFK and Newark airports to be closed. Aircraft from Europe heading to the New York area were caught up in this unexpected situation. In particular, Jet Airways Flight 228 from Brussels with 217 people on board was diverted to Bradley Field Hartford Airport together with 27 other aircraft.
“Despite some heroic flying and Jet’s success in eventually getting the passengers safely to their destination that same day, DOT launched an investigation into whether the airline should be penalized because it kept it passengers on board for more than four hours. The inquiry went on for a couple of months and cost the airline a lot of time and money. Why?” Shane asks.
Shane says that the DOT’s tarmac delay rule—in which domestic airlines can be penalized if they exceed a three-hour limit and international carriers have a four-hour limit—is “the poster child for what’s wrong with much of what passes for consumer protection regulation today.” Like so many rules, he says, “regulators feel good about it,” but it does not result in any compensation to passengers because the fine, which can be as high as $27,000 per passenger, goes to the government. And the unintended consequence of this rule is that flight cancellations have increased markedly because airlines cannot risk the cost of potential delays.
“If passengers could vote between a four-hour delay and a cancelled flight, what would they do? I suspect they would vote to fly,” Shane said.
Alan Dron and Anne Paylor contributed to this article