Costs to Airlines
Costs to Passengers
Costs from Lost Demand
Total Direct Cost
Impact on GDP
Monday, November 19, 2012
Airline Passengers Rights—What is needed now
By Paul Hudson, Executive Director, Aviation Consumer Action Project (ACAP)
& Kate Hanni, Director, FlyersRights.org (aka Coalition for an Airline Passengers Bill of Rights (CAPBOR)) 6/6/12
Stranding & Flight Delays
For many decades by far the largest number of consumer complaints to the DOT has involved flight delays. Starting in 1980, each decade has seen air travel times increase and excessive flight delays become more prevalent.
The airlines generally blame air traffic control and weather, but this rings hollow when the particulars are examined. At times up to one third of flights are now delayed, and the figure is always over 10%.
Prior to the enactment of the Airline Deregulation Act of 1978 (ADA), air travel times decreased in each decade and reliability improved. Airlines were regulated by the Civil Aeronautics Board (CAB) which approved flight schedules, air fares, conditions and standards of service. The Federal Aviation Administration (FAA) controlled the number of flights at major airports which prevented congestion and operated the air traffic control system directly. Also, aircraft were placed in service each decade that were faster, more reliable, flight crews were better paid, and had arguably higher standards of training and experience. Finally, airport capacity increases and additions in the 1950s through the 1960s kept up with increased air traffic.
Since 1978, there has been no net increase in major US airports, so the skies around major cities such as New York and Chicago, whose need for an additional airport have been blocked by entrenched special interests, have become more and more congested. Deregulated airlines have discontinued the use of wide bodied jets carrying up to 500 passengers in favor of more frequent flights with narrow bodied airliners and regional jets carrying 20 to 140 passengers, thereby negating the principal strategy for increasing airport capacity. Airport authorities enjoy
exemptions from most antitrust law and lack any significant representation of airline passenger consumer interests, so that they are permitted to and regularly do engage in anticompetitive behavior that drives up air travel costs and increases air travel delays and passenger inconvenience. (1)
Regulations requiring minimum reserve capacity of equipment and flight crews have been allowed to lapse. So have rules that allowed passengers on a significantly delayed or canceled flight to use their ticket on another airline’s flight at no additional cost (known as Rule 240 or reciprocity rule), and as have regulations requiring other airlines to honor a bankrupt airlines tickets.
Flight delays since 1980 of over one hour have increased dramatically. This situation not only inconveniences, stresses and results in hardship for airline passengers, but also burdens airlines and the economy. The US economy depends on safe, convenient, relatively low cost air travel as the primary means of long distance transportation. (2)
Tarmac Delays and Confinements
In 2007, it was discovered and proven by CAPBOR and ACAP that stranding and involuntary confinement on the tarmac was far more prevalent than previously thought based on a few publicized incidents. It was admitted in June 2007 by the DOT Bureau of Transportation Statistics (BTS) that airlines were not reporting and BTS was not requiring them to report most long on ground delays, delays for diverted flights, cancelled flights and multiple gate return flights were “lost in space” not reported for time on the tarmac. New regulations were adopted and the first report for October 2008 showed over 50 flights (which would imply 120,000 passengers per year) were delayed on the ground over 3 hours though some analysts believe even those statistics greatly underreported these delays.
There was a strong financial incentive that the flight crews had to pull away from the gate (and not go back) even if they knew the flight is not taking off for a long time, if at all. Nearly all airlines only pay flight attendants & pilots their full wages from the time that the cabin door closes, and some pay nothing for time spent with the
aircraft at the terminal gate.
ACAP, Flyers Rights (fka Coalition for a Passengers Bill of Rights (CAPBOR)), Public Citizen, Consumers Union, US PIRGs, New York and several other state governments, the Business Travel Coalition and even some former airline executives
all supported a 3 hour rule to give passengers the opportunity to deplane if a flight is delayed more than 2-3 hours and to require that water, food, and sanitary facilities
The DOT in 2009 took major steps to reduce delays caused by congestion by enacting regulations that discouraged over scheduling of flight times. By enacting a version of Truth in Scheduling that ACAP had long advocated, there has been a major reduction in chronically delayed flights and virtually elimination of deceptively scheduled flights. Airlines had previously had a financial incentive to schedule take offs and landings at the most popular times at major airports far in excess of airport capacity and then blame delays on air traffic control or weather. Now they must disclose on time statistics for their flights to the public, explain to the DOT chronically late flights and eliminate deceptively scheduled flights.
Increases in flight cancellations predicted by the airlines if the 3 hour rule was enacted did not materialize, but the flight delays did decline and lengthy tarmac confinements were drastically reduced.
ACAP has long advocated providing compensation for passengers for excessive flight delays.
While the airlines will not admit it, cancellations for financial reasons are common and amount to breach of contract or fraud. If a flight has so few passengers that the airline wants to cancel it, it should do so at least two hours before, so that passengers do not come to the airport unnecessarily, and provide passengers with alternate transportation within an hour of the canceled flight time plus a ticket refund.
Otherwise, the airlines should provide passengers with compensation that is equivalent to normal breach of contract compensation or at least equivalent to bumping, perhaps capped at several thousand dollars. In case of any dispute, it
should be presumed that a flight was canceled for economic reasons if there was no ground hold by air traffic control and the flight was was less than 30% booked.
There is presently no meaningful compensation provided to passengers for excessive flight delays. Any action brought in state or small claims courts gets transferred to federal courts based on airline claims of federal preemption, where the cost of litigation far exceeds any potential recovery.
Most recently some airlines are redrafting their contract of carriage contracts with passengers to broaden the definition of force majeure to include things beyond weather such as maintenance or labor shortage caused delays, things that are traditionally defined as within the airline control and subject to passenger compensation.
And while passengers have flight delay compensation rights under the Montreal Convention of 1999 for international flights of up to $7,000 (see attached article at Appendix A) and also for EU travel for several times the airfare cost, there is no requirement by DOT that passengers be informed of their delay compensation rights, which are generally ignored or denied by the airlines.
Passengers who are stranded by airline delays and cancellations
overnight away from their home city should receive ground transportation and over night accommodations. Airlines use to provide this a matter of course,
but now many do not or do so only for certain favored passengers. This has led to chronic choke point airports like O'Hare in Chicago being dubbed "Camp O'Hare" with
over 50,000 passengers per year being stranded and cots being set up in the baggage claim areas after midnight during the last high air traffic years (1998-
New York City is now the number one national choke point and efforts by the federal government such as re-doing air traffic approach and take off patterns and opening up some military air space areas during holiday periods have had limited effect. Other measures such as auctioning off slots have often been blocked in court by the airlines and airport authorities.
Airlines offer “insurance” for flight or trip cancellation that is deceptive in that such policies fail to cover the overwhelming number of situations, and the coverage excludes inconvenience or consequential damages. For example, a passenger
whose vacation or business trip is ruined cannot claim for that loss, and generally cannot cancel his/her trip except in situations of serious illness or death. FlyersRights.org has received complaints on their toll free hotline of next of kin
providing a death certificate and airlines still not providing a refund.
As a first step, the DOT should require that the premiums for such insurance cannot be excessive as that is normally defined by state insurance regulations and that the exclusions and claims limitations must be clearly disclosed to passengers.
Also anyone who offers such insurance should be required to disclose to the DOT BTS the amount of premiums collected, number of policies issued and the claims
paid on an annual basis.
Lost and Mishandled Baggage complaints represent the second largest category of airline passenger complaints to the DOT.
The existing regulations have been in effect for many years but they have been administered solely by the airlines which make receiving compensation difficult and often impossible.
Over 40,000 checked bags per year are never returned to passengers, as they do not have tags that identify the passenger owner. Instead of looking inside the bags for identifying information or posting a description as a normal lost-and-found operation would do, most airlines treat the bags as abandoned property and auctioned them
off with the proceeds going to the airline that lost or mishandled the baggage in the first place.
The airlines handling of lost baggage claims is scandalous with the overwhelming majority of claims being rejected and lost baggage sold after 90 days with no attempt to identify or return baggage without passenger identification on the exterior. (3)
Nearly all states use the Uniform Abandoned Property Act to deal with property that has been checked with a third party and then not returned to its owner. (At common law, unclaimed property escheated to the state.) This statute provides for the holder of the property to make attempts to locate the owner and if that is not successful to sell the property and turn over the proceeds to a state run abandoned property fund which holds the proceeds in trust in perpetuity for the true owner who may recover the proceeds upon filing a proper claim.
Airlines are not included in such state laws, but there should analogous federal regulation to require airlines to develop a computerized data base that will match airline passenger lost baggage with descriptions of contents and exterior by passengers. Any proceeds of lost baggage sold should be paid to a fund that is used for consumer protection services and/or measures to improve baggage handling.
At present, airlines have a financial incentive not to return lost luggage, due to low caps on claims, especially for international flights, and the difficulty passengers have in providing claim details that the airlines require to honor claims.
Airlines unlike the US Postal Service or private common carriers like UPS or Federal Express generally do not offer passengers insurance for valuable property that they take possession of (and increasingly charge extra fees for) and instead contrary to the common law of bailment disclaim all liability, even for negligence, and the DOT by regulation has supported this policy.
Finally, theft by airline, TSA and other baggage handlers is a known problem, one that is often covered up by thieves who rip identifying tags off bags that they have looted. Foreign airports provide airline passengers with plastic sealants for their luggage to deter thieves and damage, but US security regulations require that TSA have free and easy access to inspect the interior of checked baggage, negating such deterrent measures.
The DOT should produce a consumer report that “unbundles” mishandled baggage and reports lost, damaged and stolen items separately by airline, and a report on the claims made vs claims paid.
Other Consumer Complaints against Airlines involve Reservations, Ticketing and Boarding #3, Customer Service #4, Frequent Flyer programs #5, Refunds #6, Disabilities #7, Oversales (aka Bumping) #8, Fare #9, Ads #10, Discrimination #11, and Animals #12. See Consumer Air Travel Reports, RITA/DOT web site.
Frequent Flyer programs have become an integral part of air transportation services used by air travelers for vacation travel. They are also a source of revenue for airlines which sell miles to credit card, car rental, hotel and other businesses that seek to provide customers with a low cost inducement to buy customer loyalty. The US Supreme Court has ruled that states may not regulate these programs as they do other consumer contracts, and the DOT or Congress has not yet done so. For accounting purposes frequent flyer miles represent a potential liability for the
airlines. Airlines, however, take the position that these are not binding contractual obligations but merely marketing programs that can be altered or eliminated at will. As miles accumulate on the books of an airline, there is an enormous incentive for the airline to devalue them by program changes.
Most consumers however view frequent flyer programs as an important benefit, with the miles they accumulate for future travel being an obligation of the airline and an asset of theirs.
Studies show that there are radical differences in airline frequent flyer programs, with some airlines allowing as little as 5% of miles to be redeemed for travel and others nearly 100%. At the very least, airlines should be required to disclose the percentage of miles that they are redeeming, the number of seats available for frequent flyer tickets on the most popular destinations and routes, as well as other key statistics to provide transparency and way for the public to evaluate such programs.
Also, there should be requirement that airlines provide notice to their frequent flyer members of material changes in their programs at least six months in advance, so consumers can plan ahead and make travel redemption decisions and decide whether they wish to continue to favor that airline with their travel business.
Over sales or bumping involves the practice of airlines of selling more tickets for a flight than they have seats available in order to account for no shows, then either denying passengers with reservations a seat or else seeking volunteers to deplane and take a later flight with an inducement such a ticket voucher for another flight.
Bumping is regulated by DOT rules but the airlines avoided regularly telling passengers with their rights are which depending on the amount of delay can involve cash payments of several times the ticket price plus a delayed flight as well as overnight accommodations and meals. If consumers knew their rights it is likely most would not voluntarily settle for a restricted voucher. As of 2011 the airlines have to tell a “voluntary bump” what the likelihood of being bumped is, and the potential compensation they would get were they involuntarily bumped, and the same must be told to involuntary bumps. Compensation for bumping was also increased from 200-400 in 2007 to 650 and 1300.
As airlines now fill a higher proportion of their seats than ever before, over sales are increasing, however, the use of non-refundable, non-changeable or highly restricted tickets has greatly decreased the number of no shows and has allowed the airlines to profit from them.
Most recently the airlines have asked and the DOT has proposed a rule to discontinue reporting of over sales. The rule rather than being repealed should be expanded to require the percentage of oversales to be reported because there is presently no
limit and so many passengers are being bumped as they tighten capacity and it is very hard to predict whether or not passengers with reservations on increasingly full flights will get a seat.
Enforcement, Remedies and Advocacy
Finally, airline passengers need to include a way for passengers to enforce their rights in a timely and inexpensive way. Flyersrights.org has asked that complaints get a response in 24 hours and a resolution within 3 weeks. At present, weak guidelines normally require an acknowledgement within 30 days with no time limit on resolution.
The present system is totally lacking in accountability and transparency. Complaints to airlines or the US DOT are generally ignored and compensation claims rejected. The DOT Consumer Protection office does not use best practices in handling the airline passenger complaints it does receive, i.e. requiring the airline to respond by a date certain, sharing its responses and communications with the passenger, or advising the passenger of his/her rights and the DOTs action or lack thereof to the complaint. Most complaints have generally only been logged for statistical purposes.
ACAP suggests mandating a small claims arbitration process for unresolved consumer claims (which could be an online private alternate dispute resolution service that uses retired judges, consumer affairs, or experienced arbitrators) where arbitration groups or arbitrators are approved by state or local attorneys general or consumer protection agencies and/or the use of local small claims courts which now handle the vast bulk of consumer claims against businesses. For disputes involving many passengers, and millions of dollars, class actions in state or federal courts should be authorized, as well as through arbitration.
There also needs to be a provision that would require the airline to pay attorneys fees of the passenger if the resulting decision exceeds a rejected settlement offer. Now, there is no arbitration process, airlines who are sued in state courts try to get the cases dismissed on jurisdictional grounds and normally have the cases removed from local and state courts to federal district court. The expense of federal litigation and most state court litigation far exceeds any potential recovery.
Other models of federal – state consumer protection laws that have been effective include the federal Lemon Law, which resolved the legal logjams and technical defenses long used by auto companies to frustrate consumer claims of involving defective autos for non-injury claims.
Clarify Airline Deregulation Legislation to eliminate the judicially mandated exemption of airlines from state consumer protection laws that apply to virtually all other industries and the de facto exemption of airlines for passenger common law
tort suits in most federal circuits. This can be done by legislation and/or by the DOT
in its rulemaking and by formal opinions of counsel and by the Secretary.
The deregulation act was meant to prevent states from re-regulating the airlines as
to scheduling, fares, and services. However, airline attorneys have successfully used some vague and ambiguous language in that 1978 legislation to claim exemption (often called preemption) from any accountability for passenger abuse in state and federal courts (the argument being that only the DOT/FAA can regulate airlines, and
if they do not ban a practice it is permitted even if in violation of basic common law rights that have long been the province of state law). See attached
article Reasonable Regulation Trumps Laissez Faire, by Paul S. Hudson, Air & Space
Lawyer, Fall, 2010.
An Airline Passenger Emergency Hotline is sorely needed for passengers faced with stranding and other emergencies. The DOT “hotline” as currently configured is little more than a vehicle to gather complaint statistics. A caller receives a recorded message, and response time is usually over 10 days. Follow-up is spotty to non- existent. There is no known intervention that occurs on a real time basis. And the DOT reportedly has 75 persons assigned to its “airline consumer” unit. The DOT is wasteful and ineffective with taxpayer funding for this purpose.
The Coalition for an Airline Passengers’ Bill of Rights (CAPBOR aka Flyersrights.org) has a hotline staffed with volunteers established over the past 18 months and has received thousands of calls. But it is overwhelmed and without funding is unlikely to survive.
Given the nature of the federal bureaucracy, it would be waste of time and money for this to continue even with some reform. Rather the DOT should be required to contract with one or two non-profit aviation consumer organizations to provide a true airline passenger hotline for about half the funds now devoted to the DOT’s
ineffective hotline. Such hotlines are frequently funded with government grants in other issue areas.
Airline Passenger Groups have received no funding from DOT for many decades while airline and airport industry groups receive indirect funding from billions of dollars of federal grants made to the industry and paid for by airline passenger ticket taxes that can be as high as 30%. A portion of the ticket tax paid by passengers needs to be used to fund the passenger groups that actually represent passengers, most of whom cannot afford paid lobbyists or even the expense of attending advisory committee meetings on safety, security and other national aviation issue areas.
An amount as low as a penny on every ticket would provide $6 to $10 million annually. This fund should be distributed largely on a formula basis with DOT oversight rather than on a discretionary grant basis, and passengers should be able to designate from a list of certified organizations which one(s) that they wish to have their consumer ticket tax sent to. This is similar to the methods used by United Way, federal and state funds for various causes such as wildlife protection, for utility consumer protection, and for promotion of certain agricultural products.
ACAP closed its Washington DC office in 2003 due to lack of funding and presently no aviation consumer group has a staffed office in Washington DC. The Airline
Passenger Association discontinued operations some years ago. The International
Airline Passenger Association with an office in Dallas has cut back its operations and is actually for profit vendor of travel services to frequent airline passengers. Others who purport to speak for airline passengers are travel agents or industry consultants or media commentators often with close business ties to the airline industry and who cannot afford to offend and usually defend the industry, while purporting to speak for airline passenger interests. The national media has also cut back on air travel reporting and several important trade publications have been discontinued. Only FlyersRights.org , ACAP and some air crash organizations specialize in aviation consumer rights and are not conflicted.
Without funding, the voice of the airline passenger will be heard weakly if at all in Washington DC, their interests largely ignored, and the industry will continue to dominate and control air transportation policy and those officials who make the decisions. The national air transportation system is likely to continue to degrade due to gridlock among industry interests, coupled with the anti-consumer attitudes of much of the airline industry and the lack of robust consumer or public interest advocacy on national air transportation issues.
Aviation Security complaints
largely against the Transportation Security Administration (TSA) at approximately
10,000 per year now nearly equal consumer complaints against airlines. The leading complaints involve rudeness by TSA personnel and property complaints. There are also widely publicized concerns of personal privacy invasions by body searches and health risks involving X-ray screening of passengers. And there is a significant problem of theft crime and potential corruption within the TSA, that must also be addressed. (4)
The Aviation Security Advisory Committee was inactive from 2007 and has only recently been reactivated. A proper advisory committee with representatives of passenger, aviation terrorist victims, public health, as well as privacy advocates should be actively used by the TSA and the Dept. of Homeland Security to advise and to have oversight of passenger complaints and meet on a quarterly basis. Previous to 2007, this committee consisted of representatives of the air travel industry, federal agencies concerned with security, several aviation consumer organizations and a terrorist victims group. No members were from academia or the makers of aviation security equipment and services.
Aviation Safety is regulated by the FAA within the Department of Transportation. The only advisory committee with a public or passenger representatives is the FAA Aviation Rulemaking Advisory Committee (ARAC) which is dominated by industry representatives. Its Occupant Safety Issue Group and Subcommittee as well as other subcommittees involving passenger safety have been inactive for over 10
years, as the FAA has instead relied on all industry Advisory Rulemaking Committees (ARCs) with no passenger representatives that it dubiously claims are exempt from the public representation requirements of the Federal Advisory Committee Act and from the Open Meetings Law.
The above provisions would cover the largest number of complaints of airline passengers, which are Flight Delays and Cancellations and Lost or
Mishandled Luggage. Airline Passenger Safety and Security issues may be outside purview of the DOT Consumer Protection Committee but if so should be addressed by ad hoc advisory committees appointed by the Secretary of Homeland Security and
the Secretary of Transportation with timely reporting requirements to the
Administration and the Congress.
Paul Hudson, Executive Director
Aviation Consumer Action Project (ACAP)
4411 Bee Ridge Road, #274
Sarasota, Florida 34233
Kate Hanni, Director
159 Silverado Springs Blvd. Napa, California
(1) Examples of monopolistic anti-consumer behaviors include – a) removal of car rental facilities from airports in favor of remote off-premise centers funded by additional taxes on car rentals increasing airline passenger expenses, travel time and inconvenience (the freed up space is then used for parking; parking fees represent about 60% of airport revenue and are the major source
of airport revenue growth); b) provisions in airport bond indenture agreements and gate leases that restrict airline competition and airport capacity increases at airports; c) monopolistic contracts with airport vendors and ground transportation companies; d) restricting or shutting down area airports to prevent competition with favored airports that are cash cows and patronage wells for local politicians and their supporters; e) enforcing higher air fares for local travelers to and from hub airports to subsidize through travelers.
By Ann Brody Guy, College of Natural Resources | October 18, 2010
University of California at Berkeley.
The cost of domestic flight delays puts a $32.9 billion dent into the U.S. economy, and about half that cost is borne by airline passengers, according to a new study led by researchers at the University of California, Berkeley.
The research was commissioned by the Federal Aviation Administration (FAA), and the final report was delivered to the agency today (Monday, Oct. 18).
Direct cost of air transportation delay in 2007
See http://newscenter.berkeley.edu/2010/10/18/flight_delays/http://newscenter.berkeley.edu/2010/10/18/flight_delays/ for the full text of the study.
(3) Only 6% of all baggage claims are ever paid, and normally claims are rejected the first time they are presented. Passengers are NOT given information on how to file a claim at airports or TSA Checkpoints either. The airlines claim they hold baggage for 90 days but there is no regulation requiring they do so, and they sell baggage for about $3.00 per pound to a company in Alabama called “unclaimedbaggage.com”. Airlines reject passengers requests to come find their bags in the warehouses where they claim they store them for 90 days preventing any kind of recovery on the part of passengers
(4) TSA houses a “Crime Database” that has vast information on “mishandled baggage” in airports at TSA checkpoints. Narcotic medications are being stolen at record rates as are iPADS and other electronics not covered by the airlines contract of carriage, therefore in carryon baggage. However, this data base has now been taken down from the TSA web site and is no longer available to the public. Apparently TSA does not want the public to know the extent of its crime problem.
The Aviation Consumer Action Project (ACAP) is a nonprofit corporation founded in
1971 which acts as voice for air travelers on national issues of aviation safety, security, and consumer rights. Its publications include Facts & Advice for Airline Passengers (a pocket handbook for air travelers). ACAP has been involved in rulemaking before the FAA and most particularly bumping, baggage compensation, medical kits on airliners, airline security, and air quality.
Paul Hudson is a New York attorney and has been executive director since 1997. He represents ACAP as a member of the FAA Advisory Rulemaking Committee (ARAC), Executive Committee and the Transportation Security Administration (TSA) Aviation Security Advisory Committee (ASAC) (1997-2006). ACAP has also been an active member of the ASHRAE Advisory Committee on Aviation Air Quality Standards.
ACAP intervened in a class action case on behalf of Northwest Airline passengers who were stranded in a snow storm in Detroit for many hours in 1999, the last major case involving stranded passengers; and was successful in achieving more thorough notices and robust compensation payments for several thousand passengers involved. ACAP filed amicus briefs and argued against the Air Transport Assn. position in defense of a
2007 New York anti-stranding law that was ruled invalid by the Second Circuit Court of
Appeals based on federal preemption arguments.
Posted by K at 7:30 PM