On April 29, an intensely controversial Department of Transportation (DOT) rule goes into effect, after a 120-day notice, requiring U.S. airlines to provide passengers an opportunity to deplane after three hours of an extended tarmac delay. The rule impacts most commercial aircraft, providing it is safe and operationally feasible to do so. But the DOT’s move welcomed by consumers has faced sharp criticism from airlines and the threat of flight cancellations.
Earlier this year, Business Travel Coalition (BTC) cautioned DOT that a 120-day implementation period was entirely inadequate. Likewise, BTC encouraged airlines to finally step up and seriously address passenger problems. Nothing has happened, according to the BTC, chaired by Kevin Mitchell, who offered this detailed analysis of the controversial rule and the airlines reaction.
“In watching CNBC and reading of reports from analysts’ conferences this week one could be excused if one had the distinct impression that a large-scale and preemptive airline industry public relations strategy was being rolled out ahead of a potentially troublesome spring and summer travel season where finger-pointing could abound," Mitchell said. "Airlines are pre-blaming DOT for coming travel disruptions resulting from flight-cancellation decisions in the face of potential $27,500 per-passenger fines for extended tarmac delays, especially in the New York City market. Airlines, however, cannot say they were not warned.
“Airlines were cautioned in multiple Congressional testimonies beginning in 1999 that if they did not address passenger concerns someone would endeavor to do so for them, and the outcome may not be desirable," Mitchell continued. "So to cry foul now rings hollow. The crux of the problem is not weather-related irregular operations, they happen. Rather, it is how airlines respond to them that matters. Airlines’ unpreparedness, and some say unwillingness, to take care of passenger needs during extended tarmac delays has been well documented beginning with the Detroit snowstorm debacle in January 1999.
“Airlines are now using a once-in-a-generation combination of Northeast winter snow storms in February to suggest the 38,000 cancellations, passenger inconveniences and millions of dollars of lost revenues were attributable to the yet-to-be implemented DOT three-hour tarmac rule; and that February is prologue for customer service meltdowns to come, courtesy of your DOT," Mitchell stated. "Importantly, even if the new DOT rule had been in effect during the February storms, it is exceedingly unlikely it would have applied as pilots have to decide it is safe to deplane passengers and air traffic controllers have to determine if such decisions would disrupt airport operations. Both criteria would no doubt been in play under such sever conditions.
“What’s more, it is unlikely the new rule will cause the kind of sky-will-fall cancellation scenarios being promulgated by airlines in the news media," Mitchell continued. "Proactive, advance cancellations are in fact needed at overscheduled airports, and communications-technologies such as text messaging are facilitating improved customer service before and during irregular operations. To the extent material and unacceptable spikes in cancellation levels do occur, it will not have been because of the new tarmac rule, it will instead have been because the underlying problem of over scheduling had not been effectively addressed.
“To be fair to airlines, DOT was over-zealous in its proposed maximum fine of $27,500 per-passenger, per plane for an airline that keeps passengers on board longer than three hours without taking off," Mitchell said. "To convey as DOT has that $27,500 is just for extreme delay cases, which will be subjectively determined by staff at DOT, is problematic. To provide just 120 days for airlines to plan an extensive re-engineering of their system-wide schedule planning and operations was unfortunate, and likewise, to do so at JFK with runway construction scheduled through June, that will impact half of the airport’s departures, was regrettable."
As they consider how to respond to the new DOT tarmac rule, airlines essentially have three options, accoring to BTC.
1. Business As Usual. Airlines could take their chances with DOT fines that could total in the millions of dollars per aircraft and endeavor to manage through the coming busy travel season against a system with fewer seats and aircraft to respond to and recover from irregular operations. Complicating matters for this option will be runway construction at JFK that overlays the spring and early summer increase in air travel.
2. System-Wide Reengineering. At the New York City-area airports, for example, the three-hour rule will be unworkable without serious reengineering efforts including reducing schedules, deploying larger aircraft, moving demand to non-peak periods, shifting flights to secondary airports and radically adjusting policies, processes and practices. Given that New York airports are directly or indirectly responsible for 75 percent of delays across the entire U.S. system, fundamental changes in New York will necessarily impact airlines’ schedules throughout U.S. domestic and international systems. Essentially, airlines will have to take a total systems-view as they reconfigure the approach to their business. However, providing airlines only 120 days to implement the three-hour rule effectively forecloses on this option for the coming busy travel season.
3. Ad Hoc Depeaking. Airlines know they are overscheduled, especially at New York City airports, but they do not have the time, and perhaps not the will, to rationalize their schedules and operations. Proactively canceling lots of flights ahead of severe weather systems will be a proxy for rationalizing their schedules allowing maximum peak scheduling during normal weather operations and reduced scheduling during severe weather situations.
“So, when the airlines go on CNBC and say the new DOT rule will cause many more cancellations with attendant disruption for the travel plans of passengers that is the truth," Mitchell said. "However, what they leave out is that the proximate cause of many cancellations may be the 3-hour rule and threat of heavy fines, but the fundamental cause, that remains effectively unaddressed, is that they have way overscheduled at these airports.
“DOT will respond that airlines have scheduling options to allow them to avoid the $27,500 per passenger fines," Mitchell continued. "Of course, they will be right too. But DOT will leave out that instead of providing airlines with nine to 12 months to reengineer exceptionally complex domestic and international systems, they provided only four months. They will also likely sidestep accountability for knowing the probable passenger problems that will emerge when this tarmac rule is combined with JFK runway construction and tight and unforgiving industry seat and aircraft capacity constraints.
“How will market and political forces likely respond to these potential problems?" Mitchell asked. "Well airlines and DOT will blame each other; that’s already well underway. Airlines and their representatives will point to the unintended consequences that they warned consumer groups and major travel industry associations of that embraced Congressional legislation and the 3-hour rule this past summer.
“Because proactively canceling flights ahead of adverse weather systems is an imperfect and inefficient proxy for true reform, many more passengers will likely have been disrupted than would have been necessary," Mitchell continued. "Add in new complexities from airline unbundling and customer service problems can be greatly exacerbated. A passenger who prepaid for a variety of ancillary services, and who suddenly has to fly on another carrier, will be stuck endeavoring, and probably unsuccessfully so, to secure refunds.
“Airlines and DOT will equally share in the blame," Mitchell said. "Airlines will be blamed for dismissing their customers’ and Congress’ concerns for over a decade. DOT will be blamed for being asleep at the passenger-protections switch during the same timeframe, and presently for not helping to enable a thoughtful reengineering of airlines scheduling and operations. As a result, where dissatisfied customers have choices to support airlines that manage through these difficulties in a more passenger-sensitive manner, they will move their business. However, political pressure will likely overtake a relatively slow-moving market response with members of Congress advocating legislative solutions to what they perceive as flawed DOT policy and continued obstructionist responses from airlines. Of course, the risk here is additional bad decisions that passengers will ultimately pay the price for.
“There is still time to avoid these problems," Mitchell concluded. "Airlines need to abandon their preemptive blame-game, public relations strategy. DOT needs to use the consumer goodwill and prestige they have acquired through Secretary LaHood’s leadership on this and other passenger-protection issues and guarantee the rule’s ultimate success by extending the planning and implementation timeframe. No matter the implementation timeframe, a drawdown in schedules at New York City-area airports is exceedingly difficult for airlines to accomplish unilaterally due to competitive and legal reasons. The Port Authority of New York & New Jersey (PANYNJ) should take a leadership role, with support from the governors of New Jersey and New York as well as the mayor of New York City. PANYNJ needs to make the case for DOT-administered and U.S. Department of Justice-monitored meetings among airlines to adjust schedules. The alternative could be chaos and further erosion of business travel and tourism.”