Continental: We’ll Cancel Before We Pay Fine

More and more airlines are saying they’ll cancel flights instead of paying the DOT’s new tarmac delay fines, meaning the only ones who will suffer under the new restrictions are the passengers.

Continental CEO Jeff Smisek made a bold but unsurprising proclamation today: His airline will opt to cancel flights rather than pay the Department of Transportation’s (DOT) tarmac delay fine, which takes effect April 29. According to the Associated Press (AP), Smisek said passengers on delayed flights may “really want to go to L.A. or Mumbai, but the government by God says, ‘We’re going to fine you $27,500.’ Here’s what we’re going to do: We’re going to cancel the flight.”

Speaking to an investor conference, Smisek said that delays longer than three hours are rare, and the $27,500-per-passenger penalty will only hurt customers because airlines will be more inclined to cancel flights. This is a standard talking point from airline execs and opponents of the DOT’s new rules, but it’s also probably true. The airlines have zero incentive to push a flight up to or beyond the three-hour mark, so it makes sense to cancel the flight altogether and blame the DOT or our outdated air traffic control system (which, incidentally, Smisek did).

But don’t tell that to the DOT. Transportation Department spokesman Bill Mosley told the AP, “Carriers have it within their power to schedule their flights more realistically, to have spare aircraft and crews available to avoid cancellations.” He also suggested customers can gravitate toward airlines that adapt to the new rules and minimize cancellations and delays.

Clearly there is a standoff brewing between the DOT and the airline industry. In one corner we have the DOT, which is trying to eradicate the rare but undeniably awful experience of excessively long tarmac delays. In the other corner, the airlines, which are pretty much using their customers as human shields against the DOT’s attacks, saying, “Come after us and the consumer gets it!” The DOT says consumers will punish airlines that cancel flights by taking their business elsewhere, but the carriers all seem to be hopping into the same boat.

So, for now, it’s apparent only the passengers will suffer, a fact that hardly seems to concern either side. The DOT likely has our best interests at heart, but imposed a harsh set of rules complete with a loophole big enough for airlines to pass all the inconvenience on to you and me. If there are any plans to close that loophole, or restructure the rules to make them tougher to circumvent, I haven’t heard it. And sure, the airlines will lose a bit of money on cancelled flights, but much of that can be recovered in rebookings, and regardless won’t come close the $27,500 they’d lose per passenger by violating the DOT’s rules.

In the long term, maybe the DOT’s penalties will force positive change on the industry. Maybe. But in the near term, things look about as grim as a departures board full of cancelled flights.