Analysts Say Three-Hour Delay Rule Could Cost Airlines Millions Per Plane

Airlines are saying they will cancel flights rather than face potentially millions of dollars in fines once a rule goes into effect that could make ground delays longer than three hours very costly. Both American Airlines and Continental Airlines are on record as saying they would definitely cancel flights rather than face the penalties.

Television station KXAS in Dallas reports that Continental CEO Jeff Smisek said as much to investors Tuesday, and aviation consultant Denny Kelly says there is no reason for other airlines not to follow suit. “They'll do it partially because they think they are going to punish passengers," he said, "and if they punish them, someone will get this legislation removed.”

Under new DOT rules set to go into effect April 29th, airlines can be fined up to $27,500 per passenger if a plane is delayed on the ground for more than three hours. Airlines would either have to return to the gate and allow passengers to deplane, or face the fines. A fully-loaded MD-80 could cost an airline nearly $4 million, while a packed 757 would be more than $5 million.  American Airlines spokesman Steve Schlacter said cancellations are unavoidable. “It's one of the unintended consequences of a bill that has no flexibility.”

DOT spokesman Bill Mosley said that airlines should be able to schedule flights in such a way that they can avoid delays, cancellations, and fines. "Carriers have it within their power to schedule their flights more realistically, to have spare aircraft and crews available to avoid cancellations," he said. He added they should also be able to rebook passengers when cancellations do happen.

FMI: www.aa.com, www.continental.com, www.dot.gov