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Transportation Secretary Pete Buttigieg testifies before the House Transportation and Infrastructure Committee on Capitol Hill, July 19, 2022.
Transportation Secretary Pete Buttigieg has been widely criticized for allowing airlines to cancel flights with no consequences. The big carriers sell tickets for flights that they know they lack the crews to serve, a practice that then leads to mass cancellations. The airlines have successfully duped passengers into taking credits for future flights, rather than offering cash refunds as required by law, giving the airlines billions of dollars in cash flow that belongs to their customers.
On August 3, Buttigieg finally issued a draft rule for public comment, compelling airlines to give cash refunds to passengers whose flights are canceled and providing clearer definitions. It sounds great, but in practice the rule could actually give the airlines two more years to continue their anti-consumer behavior.
The cancellation crisis is the airlines’ own fault. The major carriers, trying to maximize profits during the pandemic, took $54 billion in emergency federal aid, tied to a no-layoff commitment. But they evaded that condition by giving pilots incentives to take early retirement. And then, due to a combination of bad planning and greed, found themselves short of pilots when consumer demand predictably resumed.
Buttigieg’s new rule does nothing to force the airlines to refund the roughly $10 billion still owed to consumers for canceled flights since the pandemic began in 2020. The Department of Transportation statement announcing the rule states, “This proposal would codify the Department’s longstanding interpretation that a failure to provide refunds when a carrier cancels or significantly changes a flight to, from, or within the United States is an unfair practice.”
But if this is DOT’s long-standing interpretation, why do we need a new rulemaking process, which will not even become effective for two more years? It does nothing but allow DOT and Buttigieg to claim they are making an advance on policy while actually taking a step backwards. Codifying the policy will take time and resources away from just enforcing the existing interpretation, at a time when cancellations are high.
Here’s what American Airlines’ website disingenuously advises passengers regarding cancellations: “If your flight is canceled or a delay causes you to miss your connection, we’ll rebook you on the next flight with available seats.” Delta sends texts offering passengers e-vouchers. Neither airline offers the cash refunds required by current DOT rules.
These actions amount to a smoking gun. The airlines are mocking DOT policy, and Buttigieg is letting them get away with it. By kicking the can down the road with a new rule that will be subject to an extended comment period and further delay, Buttigieg lets the airlines off the hook for actions that flagrantly violate current DOT policy right now.
Bill McGee, who follows airline issues for the American Economic Liberties Project, points out that Buttigieg could do a great deal more under existing law, which prohibits deceptive practices. He could levy fines large enough to quickly change airline behavior. “Not a single U.S. airline has been fined so much as $1 by the DOT over refunds,” McGee told me.
The airlines are mocking DOT policy, and Buttigieg is letting them get away with it.
As I was talking to McGee, a colleague of his had his flight canceled—and was offered a voucher but no refund, proving the point. Matt Stoller, of the American Economic Liberties Project, received a text message from Delta announcing the flight cancellation and adding, “If you prefer not to rebook your trip, your ticket value will automatically be available as an eCredit that can be used towards a future Delta ticket.”
“It’s a sign of disrespect for Buttigieg,” Stoller told me. And why not—the airlines have nothing to fear from the transportation secretary.
What could be an advance is a new dashboard advising consumers what they are owed for a canceled flight. DOT has promised this before Labor Day. But in the letter to airline CEOs announcing this, Buttigieg asked for a minimal offer of meal vouchers for any delay that lasts over three hours, and hotel vouchers for any overnight delay. It seemed like a form of bargaining, which discounts the much greater compensation that travelers whose flights are canceled are owed. And of course, the proposed dashboard is only as good as how many travelers know about it.
Still unresolved, with no DOT action, is a long-standing push by consumer groups to prevent the airlines from charging extra fees when families want to travel in the same rows with small children. Meanwhile, Sen. Ed Markey of Massachusetts, long a champion of tougher airline regulation, has introduced legislation to mandate cash refunds for cancellations, tougher and more explicit than the Buttigieg proposed rule.
