Big Bucks for Being Bumped

(April 17, 2008 - LA Times) -- Airlines were ordered Wednesday to pay passengers who are involuntarily bumped from flights as much as $800, the latest sign of a get-tough attitude toward the nation’s air carriers.

The new rule doubling the maximum compensation for bumped passengers, to take effect next month, is part of a package of measures announced by the Transportation Department to strengthen consumer protections and ease flight delays.

Ticket prices are expected to spike, again, as a result of another rule designed to ease congestion tied to the New York area’s clogged airports. Transportation officials also announced plans to add new routes out of the New York area.

The bumping rule, in the works for months, will take effect at a time when U.S. airlines are caught in a storm of bad news concerning aircraft safety, maintenance, flight cancellations and poor treatment of passengers.

Congressional hearings have probed shortcomings in the Federal Aviation Administration’s safety-oversight procedures, which followed revelations of problems with inspections of Southwest Airlines jets. A subsequent FAA audit of all major U.S. carriers resulted in American Airlines’ canceling thousands of flights last week, which in turn led to renewed calls on Capitol Hill for increased legal protections for airline passengers.

Hearings on FAA safety issues and a proposed merger of Delta Air Lines and Northwest Airlines are scheduled on Capitol Hill today.

The airline industry blames the government for many of the nation’s air-travel problems.

“The administration is looking for any way it can to mask its failures in keeping up the nation’s airport and airway infrastructure,” said Roger Cohen, president of the Regional Airline Association, which represents commuter airlines.

Still, the results may not always be what they seem — or what’s intended, said Scott Hamilton, an aviation consultant in Issaquah.

The grounding of American’s MD-80 jets for what many considered a minor maintenance problem was “ludicrous,” he said. He also predicted that the Transportation Department would “rubber stamp” the Northwest-Delta deal — a combination that some say could be bad for consumers.

The amount of money paid to passengers under the new bumping rule will be determined by the price of the ticket and the length of the delay. It will not apply to passengers who voluntarily take offers of cash and vouchers or in the case of cancellations.

The old rule applied only to planes seating at least 60 people. The new rule will increase the impact on regional airlines, which fly a large number of planes with fewer than 60 seats and often have higher bumping rates than bigger carriers.

Passengers who are bumped involuntarily will receive up to $400 if they reach their destination within two hours of their original arrival time (four hours for international destinations). If the delay is longer, the maximum compensation will increase to $800.The existing limits of $200 and $400 have been in effect since 1978. Almost 64,000 travelers were involuntarily bumped by the 18 largest U.S. carriers last year.

The specific amount of compensation is calculated by doubling a traveler’s one-way fare, up to the maximum amounts. The payment is in addition to the value of the passenger’s ticket, which the flier can use for alternate transportation or have refunded if not used.

“It’s hard to compensate for a missed family occasion or business opportunity, but this rule will ensure fliers are more fairly reimbursed for their inconvenience,” Transportation Secretary Mary Peters said.

Under the congestion-easing plan, which the department plans to make final by year’s end, carriers must auction some of their existing landing slots at New York’s LaGuardia Airport in the next five years and possibly retire others.

Officials said delays in the three New York-area airports cascade throughout the system and cause 75 percent of all delays.

The rules are expected to raise fares. “It will have the perverse effect of helping [airlines'] bottom lines, and it will lead to higher [ticket] prices,” said Bob Harrell of travel-and-aviation consulting firm Harrell Associates.

The Associated Press and Bloomberg News contributed to this report - By Martin Zimmerman

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