Holiday Air Travelers Likely to Face More Last-Minute Cancellations

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Air Travelers Likely to Face More Last-Minute CancellationsHoliday air travelers getting ready to head to the airports may want to come prepared for potentially long delays -- either on the tarmac or in the terminal.

Earlier this week, the Department of Transportation fined AMR's (AMR) American Eagle $900,000 for keeping hundreds of passengers stranded on the tarmac for more than three hours one day last May. The airline industry is likely to respond by canceling more flights in order to avoid paying large fines, says Mike Boyd, an airlines analyst and president of Boyd Group International.

There is a silver lining if you do actually board a flight and then get stuck on the tarmac for three hours or more due to the fault of the airlines: compensation for the inconvenience.

The chances of receiving a travel voucher have gone up following the American Eagle fine. "Unless it's an extraordinary situation, the compensation airlines would usually offer was zero. But now, passengers could get something," says Boyd.

What Passengers Get for Their Trouble

Airlines are under no obligation to offer compensation for flight delays, whether they're due to weather, mechanical difficulties, or failing to follow back-up plans.

That said, historically, many companies did at least cough up at least a little something for delays. Over the years, compensation for delays on the tarmac or in the terminal have varied from airline to airline, says Brandon Macsata, executive director of the Association for Airline Passenger Rights. Usually, hotel, food, and travel vouchers are given out if it's a mechanical delay that's due to the fault of the airlines, versus bad weather or something outside their control, he said.

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However, last year, the Department of Transportation instituted a new tarmac delay rule that prohibits airlines from keeping passengers cooped up on the tarmac for three hours or more without offering them the opportunity to deplane. If the airlines don't comply, they potentially face up to a $27,500-per-passenger fine.

That fine goes to the Department of Transportation and not the passenger, Boyd says.

But with the DOT's $900,000 American Eagle fine, the regulatory agency required $250,000 be applied toward passenger refunds, vouchers, and frequent flier miles to those 608 travelers who were on the 15 delayed flights last May, as well as to future passengers who have a delay of less than three hours on the tarmac, the DOT stated in its announcement. Holiday travelers, hear that? A portion of that $250,000 can be applied toward future American Eagle travelers.

It comes as no surprise that airline companies like JetBlue (JBLU), US Airways (LCC), and Delta Air Lines (DAL) wanted temporary exemptions from the DOT's tarmac delay rule when it first became effective last year, but ultimately the DOT rejected their requests.

It's Probably Better to Get Bumped

While compensation for a delayed flight is a little catch-as-catch-can, a passenger with a reservation who's bumped from a flight is a different matter.

Passengers who arrive at the boarding gate within the deadline set by the airline but are told they were bumped from the flight due to the airline's overbooking are entitled to receive compensation, according to the DOT.

Here's how it breaks out:

  • If you are bumped involuntarily and the airline arranges substitute transportation that is scheduled to get you to your final destination (including later connections) within one hour of your original scheduled arrival time, there is no compensation.
  • If the airline arranges substitute transportation that is scheduled to arrive at your destination between one and two hours after your original arrival time (between one and four hours on international flights), the airline must pay you an amount equal to 200% of your one-way fare to your final destination that day, with a $650 maximum.
  • If the substitute transportation is scheduled to get you to your destination more than two hours later (four hours internationally), or if the airline does not make any substitute travel arrangements for you, the compensation doubles (400% of your one-way fare, $1,300 maximum).
  • If your ticket does not show a fare (for example, a frequent-flier award ticket or a ticket issued by a consolidator), your denied boarding compensation is based on the lowest cash, check, or credit card payment charged for a ticket in the same class of service (i.e., coach, first class) on that flight.
  • You always get to keep your original ticket and use it on another flight. If you choose to make your own arrangements, you can request an "involuntary refund" for the ticket for the flight you were bumped from. The denied boarding compensation is essentially a payment for your inconvenience.

Staycation, Anyone?

With the Thanksgiving travel season here next week, keep in mind Macsata's word of caution: "Typically, we see an uptick in travel during the winter months. And with the holidays an uptick in volume of passengers," he noted.

That may increase the chance of a bump. And despite a potential of increased compensation for tarmac delays following the American Eagle fine, or a payout from an involuntary bump, most consumers would likely prefer getting to their destination on time during the holidays.

After all, who wants to eat warmed-over turkey?

Motley Fool contributor Dawn Kawamoto does not own any shares in the companies mentioned.



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