CHARLOTTE, N.C. ( TheStreet) -- Today is a wonderful day in our financially-challenged country, because today we started to solve our problems with a dramatic step: more regulations for airlines. The airline industry is perhaps the most taxed and most regulated industry in our country, and so it seems our government is addicted to adding fines and regulations -- because it can.
On a personal note, could we please fine the hospital for the next time I wait more than four hours in an emergency room? The new rules from the Transportation Department, intended to benefit consumers, include higher compensation for passengers who are bumped from flights, new fines for international carriers that await departure for more than four hours, refunds of bag fees for bags that are lost and requirements that airlines must post ancillary fees on their Web sites. Specifically, passengers who are involuntarily bumped can claim $650 to $1,300 from an airline, depending on how long they wait. These amounts had been capped at $400 to $800. Typically, airlines compensate passengers who voluntarily give up their seats, so theoretically the amount of voluntary compensation may rise. International carriers awaiting departure more than four hours will face fines if they do not let passengers off after four hours, with various exceptions. The fines could reach $27,500. This moves regulations on international carriers closer to those on domestic carriers, which pay fines after three hours. So far, the impact on domestic carriers has been not only to reduce the number of tarmac delays, but also to increase the number of stranded passengers because airlines are less willing to take a chance that a flight might get stuck awaiting takeoff on a bad weather day. Speaking of tarmac delay fines, at US Airways ( LCC) media day in April, CEO Doug Parker said the fines will obviously cause cancellations that might not have occurred, but added that as an industry, "we got ourselves into this mess." Said Parker, "This has been going on for awhile and we've been warned that we needed to get it fixed so shame on us. If you don't fix it you'll get legislation. The legislation is not going to be perfect and there will be unintended consequences, but we just have to deal with it.
"More than likely, it'll be preemptive -- we'll start canceling flights: $27,500 per passenger is a little more than each passenger pays," he said. "We're going to have airplanes never depart that should depart and that's unfortunate. But again, we did it to ourselves." Perhaps the most famous incident of a flight that sat for too long involved a case in December 2006, when a series of thunderstorms disrupted operations at the Dallas hub of American ( AMR). The airline was forced to divert aircraft, including one occupied by California realtor Kate Hanni. Her plane was sent to Austin, Texas, where it sat for around nine hours before passengers could deplane. This enraged Hanni, who subsequently emerged as a spokesperson for angry passengers. She has stayed in that job and is frequently quoted in the media, which has chosen to view her as a knowledgeable source of information about the airline industry. Following the incident, American expressed regrets, promised changes, offered travel vouchers to 4,600 passengers (including $500 vouchers to Hanni, her husband and their two children) and assumed the public would recognize its good intentions. JetBlue ( JBLU - Get Report), which had an operational meltdown due to a 2007 ice storm at New York's Kennedy Airport, has taken the lead in avoiding overbooking (an often necessary event because passengers don't always show up) and compensating customers. "JetBlue does not overbook its flights and we're also the first and only airline with a customer bill of rights, which maps out when and to what extent we compensate customers due to controllable events," said spokeswoman Allison Steinberg. Mike Miller, spokesman for the American Aviation Institute, a commercial aviation think tank, said government doesn't collect fees or typically impose fines on hotels, buses, trains or cruise lines. "Why do consumers of air travel need more rules than consumers of other forms of travel?" Miller asked. -- Written by Ted Reed in Charlotte, N.C. >To contact the writer of this article, click here:
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