Airline Regulation Gone Wrong

Let me ask you this, would you rather be delayed for a flight or have the flight cancelled? I've had both and I can tell you delays are much preferable, but under new airline regulations airlines will be forced to cancel more flights rather than risk huge fines for delays:

Passengers may soon be seeing more cancellations on airport departure boards.

Several airlines, including Fort Worth-based American and Houston-based Continental, say they will cancel flights rather than risk paying stiff penalties for delaying passengers on the runway.

Continental's CEO told investors Tuesday that the airline will opt to cancel flights rather than chance being fined.

Aviation consultant Denny Kelly expects other airlines to follow suit.

“I think all of them will cancel flights,” he said. “They'll do it partially because they think they are going to punish passengers, and if they punish them, someone will get this legislation removed.”

Under new federal guidelines that take effect next month, airlines can be fined up to $27,500 per passenger if a plane is stuck on the tarmac for longer than three hours.

“How can they say there is nothing wrong with having someone sit on a seat and run out of water and everything and sit on there for three, four, five hours? That's ridiculous,” Kelly said.

With the new fines, a delayed MD-80 could cost American Airlines close to $4 million, and a fine for a full 757 could cost more than $5 million.

“It's unavoidable that more flights will be canceled to avoid fines,” said American Airlines spokesman Steve Schlachter. “It's one of the unintended consequences of a bill that has no flexibility.”

This is typical of how government works. They think they can pile new taxes, fees or fines on business and the business will just pay them. They seem to forget that businesses are not in operation for the purpose of funding government, and that businesses will adapt to changes to try and minimize the impact on their bottom line. As is usually the case, the consumers of their products will be the ones paying the price.

And I'm just going to go out on a limb and guess that the "fix" for this regulation will be new fines for cancellations and not a change in how delays are handled. That, in turn, will probably result in fewer flights and more expensive airline seats for everybody.