President Joe Biden and Transportation Secretary Pete Buttigieg have announced plans that would require airlines to pay compensation to passengers in case of flight disruptions that are within the purview of the airline. The move echoes legislation that has existed in the European Union for almost two decades.
In principle, delay compensation sounds good. If an airline fails to make you arrive on time at your destination out of its own incompetence, compensation will make up for the lost time and incentivize the company to do better in the future. Exemptions such as bad weather conditions make sure that the company isn’t unjustly punished for situations for which it is not responsible.
In fact, American travel influencers are keen to explain online that a delay in Europe can get them easy cash, and passengers can access compensation payments well beyond the actual price of their ticket.
However, EU261, which is the law requiring airlines to compensate passengers for delays, has a set of problems that would also extend to the U.S. if Biden’s plans go ahead. Most importantly, rather than a compensation scheme, you can think of the policy as a mandatory insurance plan.
Insurance companies currently offer trip delay insurance plans that operate on the same baseline as government compensation programs — and private insurance companies, obviously, will charge you for the privilege. If insurance for passengers is made mandatory, airlines will simply offset the increase in cost to ticket prices, stripping the consumer of the choice of flying insured or not.
In 2011, Irish low-cost airline Ryanair added a little over $2 per ticket to cover the cost of the EU’s mandatory flight compensation rules. Given that Ryanair attempts to offer the lowest fares in Europe — and does not fly intercontinental routes on which delays become considerably more expensive to airlines — it is safe to assume that other carriers added more charges to the ticket.
Flight compensation laws are not a benefit the government grants you; it instead, is a mandatory insurance policy you pay for out of pocket. Now you might say that this constitutes a bonus service you didn’t know you needed and that, given the significant delays of many airlines, you would want it anyway.
On that note, take it from a European like myself who has attempted to seek compensation on multiple occasions: You are much better off dealing with competing insurance companies for trip insurance than with the airline itself.
The process for receiving compensation is deliberately made cumbersome by airlines, who bank on the fact that you don’t consider it worth a few hours to fill out forms and send emails to automated customer service addresses to get your money.
In fact, the process is so complicated that a large number of companies in Europe have specialized in doing the job for you. The catch: They take varying commissions for their services, reducing the amount of compensation you are legally entitled to.
What Buttigieg and Biden should focus on instead is reforming the FAA air traffic control to avoid avalanches of delays that Americans have had to experience in the past. This would positively impact delays without inundating passengers with a swath of paperwork that they do not want to deal with.
Originally published here