Market Failure The Problem
Radnor, PA, August 23, 2009--Business Travel Coalition (BTC) today issued the following statement regarding Minneapolis-bound flights Sun Country 242 and Delta 1140 which experienced extended ground delays at JFK Friday for 5-1/2 and 4 hours respectively.
BTC is in the throes of a travel and airline industry-wide survey and analysis regarding extended ground delays and the potential efficacy of proposed Senate legislation(S.1451) that would allow passengers to disembark after 3 hours into a ground delay, should a captain decide it is reasonable and safe to do so. While BTC is not yet complete with its due diligence, and will not publish its survey results, analysis and position on S.1451 until September, there are several observations that can be made now in the context of the recent Rochester, MN and NYC ground delays.
- Uneven Progress. After 10 years of Congressional pressure on airlines as well as highly unfavorable press reports of nightmarish delays and conditions for passengers, the response by the airline industry has been uneven, as confirmed in U.S. DOT Inspector General reports to Congress. While some airlines have taken limited positive steps on behalf of their customers, at the industry-level the airlines appear either unwilling or unable to fix this extended ground delay problem.
- Market Failure. A vast and apparently growing majority of travel and airline industry professionals, based upon BTC survey and interview results to date, has concluded that in this case, i.e. more than 10 years after the infamous Detroit Metro snowstorm debacle, there is an evident market failure that can only be addressed by government intervention. Congressional legislation appears to be the preferred option over proposed U.S. DOT rules in light of airlines’ history of legally challenging DOT regulations they are not in support of.
- Nature of Problem. To focus the debate on root causes, such as bad weather or antiquated ATC technology, is to avoid discussing the real problem which is how airlines respond to irregular operations. Likewise, to blame mishaps on the poor judgment of individual airline employees, as was done in the Rochester, MN case, is to miss the larger, structural leadership failure at the individual airline and industry levels. If airline CEOs were as focused and committed, for example, as they were after 9/11 in securing from Congress, in just days, $5 billion in direct payments and $10 billion in federal loan guarantees, the problem would have been solved many years ago.
- Scope of Problem. According to DOT’s Bureau of Transportation Statistics, for the 8 months ending May 31, 2009, 578 flights experienced extended tarmac delays of 3 hours or more. Passenger advocates are not arguing that there ought to be or even could be a solution that would have addressed all 578 situations for passengers. Rather, they are calling for a solution that effectively addresses all but the most unworkable operational or safety-related delay scenarios. As such, to conjure up extreme examples of where proposed solutions would not work is seen by many observers as dishonest analysis.
- Unintended Consequences. To say there would be unintended consequences from a Congressional law is akin to asserting that rocks fall. There are always benefits and drawbacks from any public policy decision, some anticipated, and some not. The question is whether the problem is worth solving at a governmental level, and on balance, if the solution would likely generate public policy benefits sufficient to effectively solve the problem. Currently, the airline industry policy of denying there is a serious passenger health and safety problem is generating its own expanding set of serious unintended consequences, including those associated with the welfare of passengers.
- Statistical Insignificance. Airline industry spokespersons characterize the aforementioned 578 flight delays of 3 or more hours as statistically insignificant even though tens of thousands of passengers were impacted. The argument that extended ground delays are statistically insignificant is lost on the daughter who had her eighty-five year old father parked in a hot metal tube for five hours in August; this is first and foremost a health and safety issue. The deadly February 12 crash near Buffalo, NY was also statistically insignificant, but we rightfully investigated, held hearings and will no doubt tirelessly endeavor to learn important lessons and improve upon crash statistics. Passengers and their advocates expect that a high level of determination should also be brought to bear on the growing health and safety problem of extended ground delays. (June’s statistics are expected to be eye-popping negative.)
- Solution. As one former major airline board member
recently told BTC, “Beyond
3 hours, the airlines need to fix the problem, and if they are forced to
do so, they will.” Implicit in this statement is that if airlines are
given sufficient time before implementation of passenger rights
legislation, e.g., 6 months, they will likely identify the key operational
barriers and work to emplace policies and processes to overcome them
before implementation.What’s more,
according to DOT's 116-page impact analysis of proposed passenger
protections (Sept. 2008), airlines stand to benefit from new efficiencies generated
by the process-redesign required to solve for the extended ground delay
It would appear that unstoppable momentum is building behind passenger rights legislation. The airline industry has a closing window-of-opportunity to cast aside its unproductive strategy and image as the industry of “NO” and constructively engage the proponents of passenger rights legislation. The Air Transport Association and its member airlines have been invited to participate in a September 22 Passenger Rights Stakeholder Hearing in Washington, DC (http://stakeholderhearing.eventbrite.com). It would be prudent for the airlines to join the discussion.