In the wake of the Department of Transportation's landmark decision to find American Eagle $900,000 for the May 29th stranding of nearly 600 passengers on Chicago O'Hare's tarmac, remarkably similar stories claiming that the fines would terrify the airlines and drive them to cancel huge numbers of flights appeared all over the national media.
The fact is that American Eagle was fined for loading 15 aircraft that they knew had no chance of making an on-time departure and for those flights' passengers spending hours on the tarmac as a direct result of their decisions. The $900,000 fine is far from fatal for American Eagle parent company AMR, and is a small fraction of the $43.3 million they could have been fined.
Moreover, AMR management earns bonuses that vary with their stock price. Even at the stock's recent price in the $1.75-$2.00 range the 'Performance' bonuses management will divide could amount to millions in 2011, well in excess of the DOT fine amount.
Some stories cited a recent Government Accountability Office report that suggests a relationship between implementation of the DOT's Three-Hour Tarmac Rule and a slightly increased cancellation rate in the final months of 2010 when compared to 2009. FlyersRights.org views that study with skepticism. The GAO study has many flaws. It compares one year to one other year, but history shows that cancellation rates vary wildly from year to year. In fact, the 2009 and 2010 cancellation rates are lower than those of 11 of the last 16 years. What about the other 11, higher years? They can't be attributed to The Rule.
The GAO study concludes only that there "appears" to be a relationship between the rule and cancellations, and recommends that DOT "should collect and publicize more comprehensive on-time performance data to ensure that information on most flights, to airports of all sizes, is included in the Bureau of Transportation Statistics' database." That is, more data and analysis is needed to understand the issue.
The DOT is completing a more comprehensive study, which we hope to see by the end of the year. We believe that study, based on much more comprehensive data and methodology, will yield far different results that that from the GAO's questionable approach.
Implementation of the Rule has made airlines more circumspect, and they are now proactively canceling flights that they know are likely to be canceled in any event during bad weather periods. They acknowledge that those actions provide them with better operations management and give their customers many more options for rescheduling to flights that are more likely to operate on time.
The DOT fine imposition illustrates their commitment to protect airline passengers from mistreatment by the airlines, and FlyersRights strongly supports their action.