IATA Criticises | US Proposed Passenger CompensationRule

GENEVA: The Director General of IATA, Willie Walsh, claimed that “the added layer of
expense this regulation will impose will not create a new incentive, but will likely have an
impact on ticket prices.”

The International Air Transport Association (IATA) criticised the decision by the US
Department of Transportation (DOT) and the Biden Administration to raise the cost of
air travel by making it mandatory for airlines to provide financial compensation to
travellers for flight delays and cancellations, in addition to their current care offerings.
According to the announcement on 09 May, the rule will be issued later this year.

DOT’s Cancellation and Delay Scoreboard shows that the 10 largest US carriers
already offer meals or cash vouchers to customers during extended delays, while nine
of them also offer complimentary hotel accommodations for passengers affected by an
overnight cancellation.

“Airlines work hard to get their passengers to their destinations on time and do their best
to minimise the impacts of any delays. Airlines already have financial incentives to get
their passengers to their destination as planned. Managing delays and cancellations is
very costly for airlines. And passengers can take their loyalty to other carriers if they are
not satisfied with service levels. The added layer of expense that this regulation will
impose will not create a new incentive, but it will have to be recouped –which is likely to
have an impact on ticket prices,” said Willie Walsh, IATA’s Director General.

Additionally, the regulation could raise unrealistic expectations among travellers that are
unlikely to be met. Most situations would not be covered by this regulation as weather is
responsible for the bulk of air travel delays and flight cancellations. Air traffic controller
shortages played a role in last year’s delays and are also an issue in 2023, as the
Federal Aviation Administration has acknowledged with its request that airlines reduce
their flight schedules to the New York metropolitan area. Runway closures and
equipment failures also contribute to delays and cancellations. Additionally, supply
chain issues in the aircraft manufacturing and support sectors have resulted in aircraft
delivery delays and parts shortages over which airlines have little or no control but
which impact reliability.

While the DOT carefully notes that airlines will only be responsible for compensating
passengers for delays and cancellations for which the airline is deemed responsible,
severe weather and other issues can have knock-on effects for days or even weeks
later, at which point it can be difficult to impossible to isolate a single causal factor.



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