Airline Regulations: What Business Travelers Should Know

The U.S. Department of Transportation has cracked down on regulations this year, fining airlines more than two dozen times in the first six months for infraction of DOT rules designed to protect consumers. In April, the department also upped the ante on fee transparency and compensation that must be paid to involuntarily bumped passengers in overbooked flight situations. While business travelers and travel managers may not need to know every detail, they will want to stay on top of the following developments.

Misleading Advertisements – This rule regulates how taxes and surcharges must be clearly disclosed in advertisements and/or at the time of purchase, particularly online. Fuel fees have been a particular sticking point for this rule. As fuel prices continue to be a serious issue for airlines, associated surcharges promise to have a greater impact on corporate travel budgets. Continental and US Airways both got dinged by DOT this month on specific routes/offers that did not offer fee and surcharge detail.

In addition, DOT announced in April that the disclosure of all fees (meals, pillows, blankets, checked baggage) must be clearly displayed on airline websites. The department stopped short of requiring airlines to provide this information through global distribution systems, citing ongoing lawsuits and contract negotiations this year.

Tarmac Delay: Three-Hour Rule – Last April, DOT began enforcing a new regulation to dramatically reduce the occurrence of extended tarmac delays that cause travelers to be confined to their seats, without adequate access to facilities and food, for long periods of time. While no fines have actually been issued since the rule went into effect, the regulation gives DOT the ability to fine an airline nearly $25,000 per passenger for any flight that violates a three-hour time limit on the tarmac (some exceptions apply for safety reasons). Viewed as a largely positive regulation for consumers—and claimed an unmitigated success by DOT, citing only 16 three-hour delays between May 2010 and February 2011 compared to 664 the same period the year before—there does seem to be a downside.

Airlines say that they have cancelled many more flights because of the rule—and alternate statistical analysis of DOT data supports them. Should business travelers care? A three-hour delay would undercut the objectives of many business trips, so being cancelled and rebooked would likely serve a business traveler better than a long tarmac delay. Capacity cuts, however, have made it more difficult for airlines to absorb cancellations, so re-booking could be a problem.

Overbooked Flights – Aided by modern technology it seems unlikely that airlines really need to oversell their flights to ensure a full cabin. Still, it happens all the time and results in passengers getting bumped off a flight—often voluntarily in return for perks and alternate travel arrangements. In cases where passengers are bumped involuntarily, however, the DOT has proposed to double the compensation that must be paid.

Business travelers are not often at their leisure to postpone their trips—even for a few hours. And while compensation may not be worth a lost business opportunity, here's the skinny: Starting in August, a bumped passenger that is re-accommodated to arrive within 2 hours of the original booking would be entitled to $800 in cash or check. A passenger re-accommodated to arrive within 4 hours of the original flight would be entitled to $1,300. This should be paid in cash or check, and inconvenienced passengers should not automatically take an airline "credit" even if it is offered. Also, the passenger should retain the value of the ticket they have purchased.

Paying Up for Lost Baggage – Now that we all pay to check luggage when we fly, shouldn't we expect that luggage to arrive with us? DOT has ruled that the failure to provide the service that has been paid for will now require the airline to reimburse travelers for the baggage fee above and beyond the cost of paying for the lost items. The rule will go into effect in August.


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