In the United States, we’re currently seeing airlines pressure the Trump administration to eliminate regulations, and instead, allow airlines to self-police.
The Trump administration has revealed it won’t move forward with the Biden administration’s proposal to introduce cash compensation for delayed flights, among other things. But we could now even see a reversal of some of the progress that has been made with consumer protections for airline passengers in recent years.
The topic of consumer protections seems to have become oddly partisan. I understand of course that conservatives are conceptually in favor of small government and the free market, though most consumers don’t enjoy getting screwed. In this post, I’d like to address the argument I see in favor of eliminating regulations for airlines, which I strongly disagree with…
In this post:
Airline contracts of carriage are totally one-sided
The airline industry is closely regulated when it comes to safety, as it should be. That’s something we can all agree on. What people seem to disagree on is to what extent airlines should be regulated beyond that.
Airline lobbying groups claim that the airline industry needs “re-deregulation,” suggesting that the consumer protections we saw added under the Biden administration harm consumers, and that eliminating these would “unleash American prosperity and the new ‘golden age’ of air travel in America.”
The argument is that the airline industry is “singled out for regulatory oversight,” and that we should let the free market decide on consumer protections, given the “longstanding and proven commitment to customer service” the airline industry has shown (lol?). The airline industry was deregulated decades ago, so economic issues should be returned to the marketplace… right?
Let’s talk about that for a minute. Why should airlines have a higher level of regulation than other businesses when it comes to consumer protections? Well, just try reading an airline contract of carriage. When you book an airline ticket, you’re being promised very little:
- The airline makes absolutely no guarantee as to when you’ll get to your destination, but rather just states that it will get you to your destination on the next available flight, though often only on its own metal or on select partners
- Worst case scenario, if the airline can’t get you there, they’ll offer you a refund
What’s interesting is that when we argue that the free market should decide these things, we make it sound like airlines actually differentiate themselves. Sure, they might differ on seat back TVs and cookies, but they basically collude in terms of promising the absolute minimum required when it comes to getting you to your destination.
Across the board, airline contracts of carriage essentially state that “yeah, we’ll do our best* to get you there, and if we can’t get you there, you’ll get your money back.” And keep in mind that airlines doing their “best” to get you somewhere isn’t actually a promise of them doing their best.
Instead, it’s an economic issue. Airlines could often get you to a destination faster if they booked you on an interline partner rather than on their own metal, but they typically don’t want to do that, because it’ll cost them more money. The economic incentives just don’t align with what the right thing to do is.
Why airlines need more oversight than other businesses
The reason I think airlines need more oversight is because they essentially all agree to sell a product without actually promising much.
Say you take a week off of work in the peak of summer, and you plan to travel from New York to Athens. Say your flight gets canceled due to a problem within the carrier’s control, but the airline tells you the next available flight is in four days. The airline then tells you that you can either rebook on that flight in four days, or the airline can refund you.
The problem with refunding a ticket like this is how complex airline pricing is. Day of departure, a roundtrip ticket from New York to Athens in the peak of summer on another airline would likely cost you an absolute fortune. It’s different than going to a restaurant, ordering food, and being told it’s not available, where you can just go to another restaurant and get something at a comparable price.
But let’s say that an airline could get you to the destination on an interline partner, but they just have a policy of not rebooking people on those flights. Do you think that’s a fair policy?
You might say “well, just book a ticket on a quality airline.” People argue that Delta is the most premium airline in the United States, but remember when the airline had its CrowdStrike meltdown? Many people couldn’t get rebooked for well over a week (if they could even get through to anyone at the airline), yet Delta only agreed to reimburse tickets on other airlines after the DOT threatened to investigate the carrier’s handling of its meltdown.
To me, this shouldn’t at all be a partisan issues. Republicans and Democrats both fly. Republicans and Democrats are both annoyed when their flights are delayed. Republicans and Democrats both think airlines should do everything in their power to help you when things go wrong. Republicans and Democrats both know that airlines often don’t do everything in their power to help you when things go wrong.
If you ask me, seeing a reversal of the progress we’ve made with consumer protections for airline passengers would be a massive step back for everyone. I know the Trump administration is claiming that it wants to wipe out 10 regulations for every new regulation it adds. But if you’re just trying to reach a quota, you’re not really doing what’s in the best interest of consumers.
We have to be honest with ourselves regarding what airlines are promising when we book tickets. There’s no consumer choice here, airlines all promise virtually nothing in their contracts of carriage. And as consumers, we should want some level of assurance that airlines will actually make their best efforts to get us to our destinations when things go wrong, which is only possible through regulation.
Bottom line
US airlines are asking the government to reduce regulations for consumer protections, arguing that the free market should decide what consumers want.
The issue with this argument is that all airlines are basically the same when it comes to what they promise customers, which is very little. They’ll try to get you to your destination eventually, sort of, kind of. If that doesn’t work, they’ll refund you, but that’s not very useful for most types of trips, where a last minute ticket would be expensive. Maybe other people think that’s just dandy, but personally, I don’t…
Where do you stand on airlines being “re-deregulated,” and “the golden age” of air travel?
Oh no CrowdStrike is a trigger word.
But also on the Tim Dunn bingo card.
Anyone who has taken Econ 101 can tell you that you need a perfect market for deregulation to work well, and in real life there is no such thing as a perfect market. Good regulations should correct market distortions and in this case consumer protections do just that, correcting for what is essentially anti-competitive behavior by the airlines
There's some truth to that but it's an over-generalization. The unfortunate truth is there are no hard and fast rules to the relationship between policies and a good market. The market went on a tear in the early 80s when interest rates were above 10% and Reagan was threatening to deregulate everything. The world has gone nuts for US treasuries when the government has just skyrocketed the deficit and spewed out notes. I could go...
There's some truth to that but it's an over-generalization. The unfortunate truth is there are no hard and fast rules to the relationship between policies and a good market. The market went on a tear in the early 80s when interest rates were above 10% and Reagan was threatening to deregulate everything. The world has gone nuts for US treasuries when the government has just skyrocketed the deficit and spewed out notes. I could go on, but market distortions are just that. The underlying picture remains consistent and clear and nice-to-haves aren't going to rock the boat the way those in support of regulation (and I am one) think they will.
Agree 100% Ben. This is not a political issue.
In addition to consumer law, airlines will also be liable in tort. It shouldn't be that hard to argue that their refusal to carry the passenger to Athens has caused them damages equalling the difference between the refund and the last-minute price of a ticket on a competitor...unless of course airline lobbying in a jurisdiction has managed to dictate legislation that specifically makes carriers immune to such claims, just as US airlines have managed to...
In addition to consumer law, airlines will also be liable in tort. It shouldn't be that hard to argue that their refusal to carry the passenger to Athens has caused them damages equalling the difference between the refund and the last-minute price of a ticket on a competitor...unless of course airline lobbying in a jurisdiction has managed to dictate legislation that specifically makes carriers immune to such claims, just as US airlines have managed to undermine centuries' worth of contract law in legislating the error fare exemption.
An airline contract of carriage in the US doesn’t even guarantee that they will get you to your destination on a plane. It says it will get you from point A to B whenever it can’t and however it can’t. They can get you on a donkey and they will not be breaking their contract of carriage.
*whenever it can and however it can.
Republicans are such little bitches for corporations. They are advocating for the interests of huge companies and CEOs over their own. Just stunning!
You might want to look into corporate donations for the DNC and Democrat candidates up and down the ballot. Not to mention corporate cronyism in political consulting for the Dems. I suggest the cover story from the August issue of Harper's. This is a naive perspective at best.
Airlines don't really care about delivery reliable and fair transport services to customers because it's not their core business. Flying passengers is just a side gig and loss leader for their credit card marketing businesses.
To add to Ben's hypothetical example, which I posted in an earlier thread. I was flying on AA points from ATL to Vancouver for a cruise in 2019. My flight out of ATL, in circumstances nearly identical to another AA cancellation for a Japan trip the year prior, was cancelled at 12:30AM about 8 hours before departure. AA automatically rebooked me, but due to the dearth of flights they operate out of ATL the soonest...
To add to Ben's hypothetical example, which I posted in an earlier thread. I was flying on AA points from ATL to Vancouver for a cruise in 2019. My flight out of ATL, in circumstances nearly identical to another AA cancellation for a Japan trip the year prior, was cancelled at 12:30AM about 8 hours before departure. AA automatically rebooked me, but due to the dearth of flights they operate out of ATL the soonest they could get me and my family to Vancouver was 8 hours after our originally scheduled arrival. We were hopping on a cruise ship the next day, so if I hadn't had the foresight to arrive a day early we would have missed the boat.
The airlines are not interested in providing good service. They don't care what fixed plans you might have that get screwed by their cancellations and refusal to rebook you on another airline. All that matters is their bottom line. Absent government regulation to change that cost calculation, they'll keep screwing us. They literally have no incentive not to.
and with dynamic pricing, the last segment or return leg of the flight could be worth very little. They could be refund you just a couple of dollars
For those with access to the Aussie TV show Optics, there's a great episode of the PR firm interacting with an airline client about what they really sell. I believe it is episode 3.
A clarification. I refer here to the Aussie situation comedy that premiered early this year.
You are delayed by weather going to the airport and arrive 15 minutes after boarding you are on your own: no flight, no reimbursement of your ticket, no help, nothing. YOUR FAULT. The plane is delayed 3 hours by weather on the tarmac and you miss connections, appointments, hotel bookings, etc, and the airline owns you nothing and gives you nothing. NOT THEIR FAULT. There is no industry in the United States as one-sided as commercial aviation.
Yeah, this is in my view the biggest discrepancy.
You can't have your cake and eat it too. We benefit through miles and frequency of direct flights from large cities. But then complain when things don't go our way due to incompetence and weather which only effects less than 10% of lifetime flights. I get it. If you don't like it, pony up and fly private.
Stupid analogy, as always.
So if I'm flying between small cities on a carrier with no FFP, that airline will be liable and accountable for weather?
Cake your arse.
Exactly that. Some people love to be airline apologists but they will literally not allow ANY mishap for most passengers under most ticket rules, and yet we have to feel sorry for airlines when they screw up. It's a total one way street.
"BuT rEgUlAtIoN LeAdS tO hIgHeR tIcKeT pRiCeS!! We WaNt To Be ScReWeD bY tHe 'FrEe MaRkEt!!!' WAAAAAAAHHHHH!!!!!!"
-RWNJs Everywhere
Why so mad penis?
Hmm. I'm not persuaded that this issue is unique to airlines. For example, if you buy a Kindle book, you're buying a content license, and Amazon can literally take the book away from your account, and you're not entitled to anything. Ditto Google Play, etc.
With that said, the question becomes "where is the balance"? Part of the problem is that it's really easy to put in place "protections" that sound good on paper,...
Hmm. I'm not persuaded that this issue is unique to airlines. For example, if you buy a Kindle book, you're buying a content license, and Amazon can literally take the book away from your account, and you're not entitled to anything. Ditto Google Play, etc.
With that said, the question becomes "where is the balance"? Part of the problem is that it's really easy to put in place "protections" that sound good on paper, but are prohibitively expensive or just flat out don't work.
But it does seem like delay / cancellation / downgrade compensation is reasonable. It'd be one thing if all fares were refundable until, say, a week in advance. As it is, though, passengers have to commit, and if the airline has an issue, they can just shrug and not really be penalized.
Now, with all THAT said, I've gotten extra compensation for every long delay or cancellation in the last few years, and I haven't even had to ask. (Mostly AS, and once B6.)