“enhancing airline passenger protections” · 2012. 3. 21. · battle of perception, a deeper...

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Copyright © 2010 Jonathon Nield

“Enhancing Airline Passenger Protections”

Jonathon Robert Nield

Graduate Program of Aviation Management & Human Factors

Arizona State University

Introduction

The seemingly insurmountable challenges presented to the airline industry by the

Deregulation Act of 1974 have caused the demise of hundreds of US airlines over the

past thirty years, and to this day, it continues to relentlessly beat the financials of the

entire industry. The giants of the golden age of the airlines, including PanAm, TWA,

Eastern, Braniff, People Express and so many more are now just a footnote in the

tumultuous history of the airlines. A few of the legacy carriers have survived, but they

are lagging behind the sustained profitability low cost carriers (LCC) such as Southwest,

JetBlue, and Allegiant that have enjoyed financial success in their relatively short, post

deregulation histories. The building financial pressures have some visible factors,

such as rising fuel costs contributing to 23.8% in Q3 2009 of costs to the industry and

labor which contributed 24.9% to costs in the same period. Although the significance of

these threats should not be dismissed, a new threat is rearing its head in recent months

that will bring about new hurdles and costs to overcome. As the public's perception of

the airlines continues to deteriorate, the federal government has taken an interest in

providing consumer protections in this highly visible industry. On November 15, 2007,

the Department of Transportation issued an Advance Notice of Proposed Rule Making

(ANPRM) in Docket DOT-OST-2007-22 titled "Enhancing Airlines Passenger

Protections." This new rule is part of the Federal Aviation Administration's Air

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Transportation Modernization and Safety Improvement Act. Although this new rule is

meant to improve the passengers' experiences and turn around the industry's downhill

battle of perception, a deeper analysis shows the rule may be counterproductive in its

very purpose.

Summary

ANPRM Enhancing Airline Passenger Protections was drafted to address the

following perceived issues by the Department of Transportation (DOT):

1. Tarmac delays and the communication of contingency plans if incidents of delay

occur,

2. Poor response of air carriers in dealing with consumer problems and complaints,

3. Chronically delayed flights that are deceptive and unfair in violation of 49 U.S.C.

41712,

4. Need for flight delay information on carriers' websites,

5. Lack of customer service plans and/or compliance thereof.

Background

The "Enhancing Airline Passenger Protections" rule was proposed in response to

multiple instances in which airlines were arguably acting grossly outside the parameters

of consumer interest and prompted regulators to define the parameters airline should

operate in terms of consumer interests. Some of the more notable events include the

Virgin America Flight 404 that was delayed on the tarmac for sixteen hours and the

multiple JetBlue flights that were delayed on the tarmac at JFK for over ten hours on

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February 14, 2007. According to the ANPRM, passengers were also being increasingly

"harmed" by a growing number of "less extreme flight delays." The DOT recognized that

some of the factors of a tarmac delay are out of the control of the airlines, such as

weather, Air Traffic Control congestion, and operations constraints. The DOT states that

under their authority and responsibility of 49 U.S.C. 41712 as well as 49 U.S.C.

40101(a)(4), 40101(a)(9), and 41702, the DOT needs to protect consumers from unfair

and deceptive practices which lays the foundation for the "Enhancing Airline Passenger

Protections" rule.

Process

After the release of the ANPRM on Enhancing Airline Passenger Protections, the

DOT received approximately 200 comments in response. Thirteen of these were from

members of the industry while the rest came from consumers, consumer associations,

and two US senators. On December 8, 2008, the DOT issued the Notice of Proposed

Rulemaking (NPRM) which was slimmed down to include the following topics:

1. Contingency plans for lengthy tarmac delays,

2. Carriers' response to consumer problems,

3. Chronically delayed flights,

4. Reporting flight delay information,

5. Customer service plans.

The DOT received 21 comments on the NPRM, of which ten were from the industry

while the rest were from consumers and consumer organizations. Three consumer

advocacy organizations commented on the NPRM which were Flyersrights.org, the

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Aviation Consumer Action Project (ACAP), and the Federation of State Public Interest

Research Groups (U.S. PIRG). The industry commentators were US Airways,

ExpressJet, Dallas-Fort Worth International Airport, the City of Atlanta Department of

Aviation, National Business Travel Association (NBTA), the Air Transport Association of

America (ATA), the Regional Airline Association (RAA), the American Society of Travel

Agents (ASTA), the Interactive Travel Services Association (ITSA) and the Airports

Council International, North America (ACI-NA). These organizations were then engaged

to provide commentary on each individual topic below for consideration in the final rule:

1. Review and approval of contingency plans for lengthy tarmac delays

2. Reporting of tarmac delay data

3. Standards for customer service plans

4. Notification to passengers of flight status changes

5. Inflation adjustment for denied boarding compensation

6. Alternative transportation for passengers on canceled flights

7. Opt-out provisions where certain services are pre-selected for consumers at

additional costs

8. Contract of carriage venue designation provisions

9. Baggage fees disclosure

10. Full fare advertising

11. Responses to complaints about charter service

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General Responses

The general consensus of the consumer driven organizations stated that the

DOT was not proposing regulation that would go far enough to protect passengers'

rights and that additional measures would be needed. The carriers and their

associations maintained that the proposals were "unnecessary and unduly

burdensome." The ATA stated that changes would be best made by addressing the air

traffic control capacity and weather related issues. The airport authorities supported the

idea of a contingency plan to be coordinated with the medium and large hub airports.

Travel agent associations gave support to the proposed rule, but were concerned with

being mandated to implement changes without funding on issues for which they are not

responsible.

N.B. 49 U.S.C. 41712-Unfair and Deceptive Practices and Unfair Methods of

Competition

It is necessary to understand where the DOT is deriving its authority to pass the

NPRM Enhancing Airline Passenger Protections. 49 U.S.C. 41712 is the regulation that

gives the DOT authority to implement the NPRM Enhancing Airline Passenger

Protections.

(a) In General- On the initiative of the Secretary of Transportation or the

complaint of an air carrier, foreign air carrier, or ticket agent, and if the

Secretary considers it is in the public interest, the Secretary may

investigate and decide whether an air carrier, foreign air carrier, or ticket

agent has been or is engaged in an unfair or deceptive practice or an

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unfair method of competition in air transportation or the sale of air

transportation. If the Secretary, after notice and an opportunity for a

hearing, finds that an air carrier, foreign air carrier, or ticket agent is

engaged in an unfair or deceptive practice or unfair method of competition,

the Secretary shall order the air carrier, foreign air carrier, or ticket agent

to stop the practice or method.

(b) E-Ticket Expiration Notice.— It shall be an unfair or deceptive practice

under subsection (a) for any air carrier, foreign air carrier, or ticket agent

utilizing electronically transmitted tickets for air transportation to fail to

notify the purchaser of such a ticket of its expiration date, if any.

Tarmac Delay Contingency Plans- Covered Entities

The Tarmac Delay Contingency Plans will apply to any certificated or commuter

U.S. air carrier operating any aircraft with a passenger capacity of thirty or more.

Regional airlines will not be excluded from this rule as they carry one out of every five

passengers domestically. Over 14% of passengers travel on aircraft with a capacity

between thirty and sixty seats and according to the DOT and not including this segment

into the rule would leave a large percentage of consumers unprotected. In regards to

international flights, the DOT will permit airlines to establish their own tarmac delay limit

that may vary according to the situation. However, it will be required of the airline to

have that limit published in contingency plans. It is important to note that this rule

applies to all flights on any aircraft size of a carrier if the company operates even a

single aircraft with a capacity of thirty or greater including chartered services.

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Tarmac Delay Contingency Plans- Content of the Contingency Plan

The DOT adopted a final rule stating the contingency plan must include:

1. Aircraft will not be permitted to sit on the tarmac for more than three hours unless

the pilot-in-command determines there is a safety-related or security-related

impediment to deplaning passengers or Air Traffic Control advises that returning to the

gate would significantly disrupt airport operations

2. For international flights departing from or arriving to an U.S. airport, the aircraft

will not be permitted to remain on the tarmac for more than a set number of hours as

determined by the carrier in its plan

3. An air carrier will provide adequate food and water no later than two hours after

the aircraft leaves the gate or touches down unless the pilot-in-command deems the

situation unsafe or unsecured

4. Operable lavatories and adequate medical attention will be available if needed

for the duration of the aircraft on the tarmac

5. Sufficient resources will be made available to implement the contingency plan,

6. The plan must be coordinated at all medium and large hub airports that the

carrier serves as well as diversion airports

Tarmac Delay Contingency Plans- Incorporation of Contingency Plan into

Contract of Carriage

The DOT decided that it will not be required of air carriers to include the

contingency plan into the contract of carriage. However the DOT will require the

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contract of carriage to be posted on the carrier's website. If the carrier chooses not to

include the contingency plan in the contract of carriage, it must also be posted on the

website in a manner that is easy to access.

Tarmac Delay Contingency Plans- Retention of Records

The DOT will require carriers to retain records for two years of delays that trigger

the contingency plan or lasts longer than three hours, for two years. The content of the

records must contain the length of the delay, specific cause of the delay, steps taken to

minimize the hardships to the passengers, whether the flight ultimately took off or

returned to the gate, and an explanation for the delay if lasting longer than three hours.

This also includes an explanation why the aircraft did not return to the gate by the three

hour mark.

Tarmac Delay Contingency Plans- Analysis

The tarmac delay rule within the NPRM Enhancing Airline Passenger Protection

has received more public attention than any other aspect of the rule. It’s hard to refute

the fact that something needs to be done to address some of the inhumane conditions

passengers are subjected to during lengthy tarmac delays but this legislation simply will

not work. Dr. Amy Cohn, an associate professor of industrial and operations

engineering at the University of Michigan wrote an insightful article for Forbes Magazine

explaining why this rule is not going to help consumers in most cases. She explains, "If

your flight is delayed, say, because of an ongoing thunderstorm, the ruling won't apply

to you. It's not safe for the ground crews needed to guide the plane back to the gate to

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stand on the tarmac as human lightning rods, so you have to keep waiting. How about if

you are delayed because of a snowstorm? Quite likely, there will be no available gate

for you to return to, as they are all occupied by other aircraft that couldn't take off. So

again, the rule won't apply. Remember the international flight that was diverted to a non-

international airport? No help for those passengers either because it's not within the

airline's jurisdiction to establish customs and passport control."

Another scenario that would challenge the feasibility of this rule would involve the

following. Mike and his family of four are flying out from JFK to Orlando International

today. After sitting on the tarmac for two hours due to the congestion on the runways,

the airline makes the decision to bring his flight back to the gate in order to avoid the

$27,500 fine per passenger. That is understandable considering Mike’s plane with 250

passengers would cost his favorite airline up to $6.8 million in fines. Mike is unaware

that the crew on his flight has now met their maximum number of hours on duty they are

allowed to fly. Another crew will not be available for several hours so the flight is

cancelled. Its Memorial Day weekend and Mike’s flight of 250 people scramble to fill the

few remaining seats on the next flights out. By the time Mike gets his family to the ticket

counter, the next available flight for his family is five days from today since load factors

were already pushing 85%. Mike and his wife already took work of for the next three

days so they have no choice but to cancel their long planned vacation and get a refund.

This legislation is intended to be a patch to fix the problem. But unfortunately this

patch doesn’t even help fix the problem, it just gives the appearance to everyone who

sees it that the problem has been fixed. At a stakeholders meeting in DC regarding the

proposed new rules, one of the speakers was Robert Crandall, former CEO of American

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Airlines stated that “airlines need some form of legislation to force them to act on these

extended tarmac delays.” However he also noted that this was not going to be simply

fixed by forcing the airlines to comply with new rules. The problem facing the airlines

and the root cause of the tarmac delays that Amy Cohn had mentioned is a systematic

problem that is prevalent in the very infrastructure and mentality of the aviation industry.

The entire process of the air traffic management, safety management systems, slot

allocation, and resource management needs to be turned upside down and rebuilt to

address the changing industry. The 20th century saw the large jetliners carrying more

passengers less frequently. The 21st century is shaping into a much different traffic

pattern as low cost carriers (LCC) and even the legacies are more frequently relying on

smaller aircraft such as Boeing 737s and Airbus A320s flying more frequent flights to

build a more efficient fleet and network. Without addressing these changes in the

system and coming up with new innovations to address these systematic problems,

mandating airlines to not be delayed more than three hours is almost comedic. U

Unfortunately Barbara Boxer of California displayed the source of the core

problem facing the industry when she responded to Crandall’s call to get a handle on

New York airport congestion with, “We need to get this law passed. Then we can deal

with capping NY air traffic.” (ConsumerTraveler, 2009)

Opponents to the “Enhancing Airline Passenger Protection” rule argue that

market forces push the airlines to regulate themselves and have shown multiple

examples of success stories without legislation such as Dallas-Fort Worth International

Airport where they already have a contingency plan in place for tarmac delays.

Ironically, at the same meeting in Washington D.C. where Boxer and Crandall were

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toting the need for increased regulation, David Carroll who wrote and recorded the viral

YouTube video “United Breaks Guitars” spoke and performed as a subtle hint that the

marketplace does in fact regulate the airlines especially in this age of technology and

free communication.

Response to Consumer Problems- Designated Advocates for Passengers'

Interests

The DOT requires carriers to designate an employee to monitor the operations of

flights and compliance with the consumer protections in place. The designated

employee shall have input into the decisions made in the best interest of the

passengers. The decision of how to best monitor the performance and compliance of

the flights will be left to each carrier.

Response to Consumer Problems- Informing Consumers How To Complain

The DOT requires airlines to make the email address, web-form, and mailing

address available to all passengers to communicate complaints to each air carrier. This

information must be made available on the carrier's website, e-ticket confirmations, and

upon request at all ticket counters and boarding gates.

Response to Consumer Problems- Response to Consumer Complaints

The DOT requires that any covered carrier under the NPRM will be required to

acknowledge a complaint within thirty days and provide a passenger with a substantive

response that resolves the complaint within sixty days.

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Response to Consumer Problems- Analysis

This section of the NPRM seems to be a relevant and agreeable component of

the legislation but also redundant. First of all, most major airlines already have similar

policies in place. This rule is making official what is already being practiced in the

industry. Second, there is no enforcement mechanism in this rule and therefore is a

waste of effort and resources.

Chronically Delayed Flights as Violation of 49 U.S.C. 41712- Covered Entities

The DOT will consider the NPRM applicable to any carrier that accounts for at

least one percent of domestic scheduled passenger service. These airlines will be

required to file a monthly "On-Time Flight Performance Report" with the DOT's Bureau

of Transportation statistics. The burden of the costs to smaller airlines would not be in

the best interest of consumers since airlines who account for less than one percent of

the total domestic scheduled passenger service are not currently required to collect and

report on-time performance data. This rule does not apply to carriers that only transport

cargo and mail.

Chronically Delayed Flights as Violation of 49 U.S.C. 41712- Definition

A flight is defined as chronically delayed if it is operated at least ten times per

month and arrives more than thirty minutes late or cancelled more than fifty percent of

that period. For the purpose of this rule, a flight is deemed delayed if it is more than

thirty minutes late which is a deviation from the DOT threshold of a late flight at fifteen

minutes. The DOT's justification of this deviation is the difference in disruption a fifteen

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minute delay may cause to a passenger versus a thirty minute delay. In the latter

instance, a passenger may miss a connecting flight or suffer consequences from other

prearranged travel plans. The final rule states a flight that is chronically delayed for

more than four consecutive months is an unfair or deceptive practice as defined by 49

U.S.C. 41712. The DOT justification for this rule is to ensure that airlines do not create

unrealistic schedules and also promote a higher level of consumer confidence in the

industry. The parameters of this rule were defined around historical data to prevent a

large number of cancellations. The DOT expresses concern of causing mass

cancellations in its response stating, "If a significantly larger number of flights are

defined and identified as chronically delayed flights then carrier may choose to cancel

these flights rather than operate them." The DOT then continues to justify that the rule

will "nevertheless not lead to a large number of flight cancellations as we have found,

based on calendar year 2008 data provided by BTS that the vast majority of the

chronically delayed flights as defined in this rule were not chronically delayed for four or

more consecutive months."

Chronically Delayed Flights as Violation of 49 U.S.C. 41712- Analysis

The issue with punitive action against air carriers for chronically delayed flights is that in

most cases, those flights are delays due to external factors outside the control of management.

For example, flights leaving San Francisco during certain times of the year are going to be

chronically delayed due to low ceilings. Flights out of JFK are often delayed due to the air space

and airport congestion. The possibility of this rule being a tool to redirect liability away from the

FAA and DOT seems to be more likely in light of the increased scrutiny and lack of progress of

the NEXTGEN program. Charging an air carrier of deceptive and unfair practices because a

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flight is chronically delayed without the means of remarking the cause of delay for the purpose

of the consumer’s decision making also seems to be in conflict with the FAA and DOT’s interest

in improving the public perception of the industry.

Delay Data on Carriers' Web Sites- Covered Entities/Scope

Certificated carriers account for at least one percent of domestic scheduled

passenger revenues are already mandated to track and report on-time performance to

the DOT and release such information to consumers upon request. The DOT will now

also require that delay data for every flight to be posted on the carrier's website if that

carrier is a covered entity as defined above. The DOT will not mandate travel agencies

to post the data on their websites due to the substantial costs of implementing such

measures outweighing the benefit to consumers.

Delay Data on Carriers' Web Sites- Disclosure of Flight Delay Information on Web

Site

The DOT requires the

following on-time

performance information

to be posted on each

covered carrier's website:

1. Percentage of

arrivals that were

on time- Within

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fifteen minutes of scheduled arrival time

2. Percentage of arrivals that were more than thirty minutes late

3. Percentage of flight cancellations if five percent or more of the flight's operations

were cancelled in the month covered

4. Flights that are late more than thirty minutes, over fifty percent of the time need

to be highlighted

5. Carriers must show above data on the initial listings page of the website or by a

hyper-link on the page of initial listings

6. All carriers must load delay data into the internal reservations system for the

previous month between the 20th and 23rd day of the current month

Carrier's Adherence to Customer Service Plans- Covered Entities

All U.S. carriers operating scheduled passenger service using aircraft with a

capacity for thirty or more passengers will be required to adopt a customer service plan,

publish it on the carrier's website, and audit themselves for compliance on an annual

basis.

Carrier's Adherence to Customer Service

Plans- Content of Customer Service

Plans

The DOT will require the covered

carriers to address the same elements as

the ATA's Customer First Initiative:

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1. Offering the lowest fare available

2. Notifying consumers of known delays, cancellations, and diversions

3. Delivering baggage on time

4. Allowing reservation to be held or cancelled without penalty for a defined amount

of time

5. Providing prompt ticket refunds

6. Properly accommodating disabled and special needs passengers, including

during tarmac delays

7. Meeting customer's essential needs during lengthy on-board delays

8. Handling "bumped" passengers in the case of over sales with fairness and

consistency

9. Disclosing travel itinerary, cancellation policies, frequent flyer rules, and aircraft

configuration

10. Ensuring good customer service from code share partners

11. Improving responsiveness to customer complaints

This rule will not apply to regional carriers who provide aircraft via code share

agreements as only an airline that sells air transportation to individual customers will be

required and capable of providing good customer service.

The DOT is requiring carriers to include the services a carrier provides to mitigate

passenger inconveniences resulting from cancellations and missed connections in their

customer service plans. The carriers will also be required to include a process for

handling overbooked flights fairly and consistently.

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Carrier's Adherence to Customer Service Plans- Incorporation of Customer

Service Plan into Contract of Carriage

The DOT will not mandate the incorporation of the Customer Service Plans into

the Contract of Carriage. However, it strongly recommends carriers to do so voluntarily

as it will help in maintain compliance as well as other incentives. The DOT does require

all carriers to post its entire contract of carriage on its website in a manner that is easily

accessible to consumers. Any carrier who chooses not to include their customer service

plan in the contract of carriage will be required to post the customer service plan online

as well in easily accessible form. According to the DOT, the purpose of this requirement

is to ensure that consumers can easily review the airlines obligations and time frame of

the contract. This will allow consumers to be better informed about their rights and the

carrier's responsibilities.

Carrier's Adherence to Customer Service Plans-Audit of Customer Service Plans

The DOT will require a carrier to audit its own adherence to the customer service

plan on a yearly basis and make the results of the audit available to the DOT for two

years after the audit is completed. The DOT believes that requiring carriers to audit their

own plans internally on a yearly basis will influence carriers to comply with their

commitments.

Carrier's Adherence to Customer Service Plans-Analysis

This section of the NPRM could have become a national controversy for many

reasons. The section that the most attention should be drawn to is the Incorporation of

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Customer Service Plan Into Contract of Carriage. If the DOT accepted these clauses

into the rule, airlines would be legally bound to provide the services stated in their

commitment to the passengers. Although it is in the best interest of the airlines to follow

through with their customer service plans, certain circumstances beyond the control of

the carrier may arise facilitating a need to deviate from the customer service plan for the

benefit of the majority. If the customer service plan has been included into the contract

of carriage, and a carrier finds itself in a situation as described above, they could be

sued for breach of contract. In fact, the Air Transport Associate goes as far as to say,

“The ATA challenges the DOT’s legal authority to do this in the aftermath of

deregulation. ATA argues that the department may not substitute a different

enforcement process other than the one Congress intended and states that such an

imposition would subject carriers to the vagaries of law in the fifty states.” The DOT

responds, “The Department disagrees with the arguments of the ATA and other carrier

commenters that we lack the authority to require incorporation of contingency plans in

contract of carriage and that such incorporation would subject carriers to the risk of

inconsistent standards among various jurisdictions. However, the Department has

decided that it will not require such incorporation at this time.” Where is the DOT’s

evidence that substantiates their disagreement?

Effective Date of Rule

The DOT believes the carriers should have enough time to implement the

proposed changes and 120 days after the rule is published in the Federal Register is a

sufficient amount of time.

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Analysis of the Effects of the NPRM on Regional Carriers

One segment of the airline industry that did not receive extensive consideration

for exemption was the regional carriers. It could be argued that regional carriers have

the most to lose from this new rule as they will still be held to the standards all other

airlines are held to but without the autonomy and ability to quickly make decisions

regarding carrier operations. The Regional Airline Association made the following

arguments against the inclusion of regional carriers into the new rule:

1. Over 90 percent of passengers flying on regional aircraft travel on flights that are

ticketed and handled by mainline carriers who schedule the flights, and that most

carriers have no direct interaction with the consumers.

2. Requiring a regional carrier to have their own plan would increase the conflicts

and inconsistencies that could arise as it is not clear if the regional carrier’s own

contingency plan would supersede the contracts of the carriers who marketed

and sold the ticket to the consumer.

3. Regional carriers have limited control over operational decisions and the rule

would impose unfair burdens to regional carriers.

4. Providing food and water on a regional carrier is impracticable because most

regional carriers do not have catering facilities as well as many of the airports

they serve.

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5. Regional carriers should not be required to incorporate a contingency plan into

their contract of carriage because most regional passengers are subjected to the

ticketing carrier’s contract of carriage.

6. Regional airlines are not able to designate personnel with responsibility for

influencing delay decisions since that is not a function of a regional carrier.

7. Regional airlines lack the ability to engage in the behavior the DOT is seeking to

prevent since regional airlines fly schedules established by major airlines.

Of all these seemingly valid arguments against the inclusion of regional carriers in

this rule, only one exception was made regarding the customer service plan. This

could have widespread financial implications on not only the regional carriers

themselves, but also the major carriers who rely on the low cost services of the

regional carriers. In order to comply with the DOT’s new law, regional carriers will be

incurring significantly higher costs and those will need to be passed on to the direct

and codeshare passengers. This will indirectly result in an increase in fares across

the entire air transportation system.

Conclusion

The DOT has stated their intentions to further refine the “Enhancing Airline

Passenger Protections” rules as consumer feedback becomes more available. Although

the purpose of this NPRM was too address an important deficiency in the airline

industry, it is the opinion of this author and many others that this “patchwork” approach

to the problem is only going to further complicate and propagate the problem. It is the

hope of many that the legislative powers recognize the need for a systematic approach

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to the problem and identify the true cause of tarmac delays and consumer resentment in

the aviation industry, complacency of precedent.

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Works Cited

Leocha, Charlie. “Tarmac Delay Activists Meeting in Washington Face Legistlative

Complexities.” Consumer Travel (2009): May 1, 2010.

http://www.consumertraveler.com/today/tarmac-delay-activists-meeting-in-washington-

face-legislative-complexities/

Cohn, Amy. “Still Stuck on the Tarmac.” Forbes. 2009. April 23, 2010.

http://www.forbes.com/2009/08/12/passenger-bill-of-rights-congress-travel-delay-

opinions-contributors-aviation.html

“Enhancing Airline Passenger Protections.” Regulations.Gov (2009): March 2, 2010.

http://www.regulations.gov/search/Regs/home.html#documentDetail?R=0900006480a7413a

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