IATA Criticizes Proposed Airline Compensation Rule, Warns of Increased Costs for Travelers

The International Air Transport Association (IATA) has voiced its criticism regarding the decision made by the Department of Transportation (DOT) and the Biden Administration to enforce a new regulation requiring airlines to provide financial compensation, in addition to refunds, for “controllable” flight delays and cancellations.

Under the proposed law, airlines would be obligated to offer compensation for delays or cancellations caused by airline-related factors. This would include providing meals or meal vouchers and ensuring prompt customer service during and after significant disruptions in flight operations. The definition of a delay or cancellation, according to the law, would be waiting for three hours or more beyond the scheduled departure time.

Given the anticipated resistance from the airline industry, IATA’s critique comes as no surprise. In a statement, the organization expressed its concern that the mandate would ultimately lead to increased costs of air travel for consumers.

“When an airline causes a flight cancellation or delay, passengers should not foot the bill,” U.S. Transportation Secretary Pete Buttigieg said. “This rule would, for the first time in U.S. history, propose to require airlines to compensate passengers and cover expenses such as meals, hotels, and rebooking in cases where the airline has caused a cancellation or significant delay.”

“Airlines work hard to get their passengers to their destinations on time and do their best to minimize the impacts of any delays. Airlines already have financial incentives to get their passengers to their destination as planned,” Willie Walsh, IATA’s Director General, said in the statement. “Managing delays and cancellations is very costly for airlines. And passengers can take their loyalty to other carriers if they are not satisfied with service levels. The added layer of expense that this regulation will impose will not create a new incentive, but it will have to be recouped –which is likely to have an impact on ticket prices.”

In addition, IATA has highlighted that the new regulation may give rise to unrealistic expectations among travelers that are unlikely to be fulfilled. The association has pointed out that the majority of flight delays and cancellations are caused by weather conditions, which fall outside the scope of the proposed regulation. As a result, many situations that commonly result in disruptions to air travel would not be covered by the new rules.