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US Airline Delay Compensation Proposal

Last week President Biden, and U.S. Transportation Secretary Pete Buttigieg, announced plans to write some new rules that would compensate US passengers for airline travel delays or cancellations. After what we have seen from the industry over the last year or two this doesn't surprise me. As airlines continue to hit record revenue numbers their customer satisfaction numbers continue to spiral the drain. We have had technology meltdowns, staff shortages, oversold flights and delays across the board, all with no compensation. While I am excited to finally see a US airline delay compensation proposal put into place, I am pretty nervous what that would look like.

What Did Biden And Buttigieg Propose

As it usually goes in DC, the proposals are pretty much just corporate speak at this time. They are light on the details and high on the hopes. We know that they hope to have a delay compensation proposal to put forward by the end of the year. It would likely take much longer than that to put anything into place. Here is what Fox 5 Atlanta says Biden had to offer on the subject:

On Monday, the Biden administration announced it wants to require airlines to compensate travelers with cash, miles, or travel vouchers, and pay for meals, hotels, and other amenities when there is a significant delay or cancelation that is within an airlines’ control.

And here in lies my fears with all of this.

What Scares Me About This US Airline Delay Compensation Proposal

The fact that vouchers and miles were consider as options puts a bad taste in my mouth. Allowing a company to compensate you with a currency that they produce and own (miles and vouchers) leaves too much wiggle room in my opinion. Since it is their currency they have total control of the situation and can manipulate it as they see fit. Let's take a look at each in more detail.

Airline Miles

As we all know, airline miles are not created equal. If you get 25,000 Delta Skymiles vs 25,000 United Airlines miles there is a pretty wide value gap there. That doesn't seem like an equitable way to run compensation. Throw in the fact that a devaluation could be right around the corner and it gets even worse.

If they take on new liability, via delay and cancellation compensation, how long do you think it will last before they devalue their program? Quickest way to limit your exposure, and offset some new liability, is to make that item, which you control, worth less. They could play games to the point that this compensation doesn't even hurt them much. All of this means the compensation wouldn't drive innovation and better management practices, which these packages would hope to instill.

Airline Vouchers

In the same vein, the airline vouchers are their own currency and open to manipulation. Just like airline miles, not all airline vouchers are created equal. Spirit Airlines' vouchers only work for the cost of the actual flight, not taxes and fees. They come with a short expiration window and they can not be used across multiple flights. Throw in the fact that Spirit charges you $15-$25 per flight to book it online and their vouchers are pretty much worthless. What if you are flying an airline you almost never fly for a specific need? How valuable will that voucher be to you then? Does all of this sound like fair compensation?

If they go this route they need to enforce vouchers having no expiration date, like Southwest offers, and allow them to be transferrable to anyone. All in all, this is my least favorite option.

US Airline Delay Compensation Proposal

Something Is Better Than Nothing, Right?

You may be thinking, airline miles and vouchers are not great but they are better than nothing, right? Well, that depends on the law. Are they going to do half measures like Canada did? Where they allow airlines to deny compensation for mechanical failures that are within their control, but are deemed a “safety issue”. Something like a broken seatbelt etc. This differs from the laws in Europe where anything in the airline's control counts. This is why I received compensation from Lufthansa after being stranded an extra day because a mechanical issue. A mechanical issue that would have been deemed a safety hazard in Canada, and no compensation would have been given.

I think this would be worse than the current set up for two reasons. It would lead to people wasting a lot of their time trying to get compensation that would never come, since the airlines could easily maneuver the law. To go along with that, this would give them legal precedent to offer less than they do now. Currently, negative media attention and consumer pressure leads to most airlines to doing something when they are at fault. Especially when it is in a major way. If there was a law in place that they could hide behind I think they would be less likely to buckle under that pressure in the future.

US Airline Delay Compensation Proposal: ToP Thoughts

While I think this will take years to play out, if anything comes from it at all, it is something we should be a little wary about. If it is half measures it could end up making things worse instead of better. They don't need to reinvent the wheel here, and should push for laws similar to what Europe has in place. The problem we face is that lobbyists are going to lobby. It seems unlikely we are able to push something that healthy through the system. If that means we end up with a law that has no teeth, like in Canada, then I think that is only going to weaken consumer's already fragile position in this matter.

What do you think about all of this? Let me know over in the ToP Facebook Group.

My Interview With Fox News Oregon

I spoke about all of this, and best practices if your flight is delayed or cancelled, with Fox 12 Oregon if you are interested in more of my thoughts on the subject you can give it a view.


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