US proposed passenger compensation rule will raise costs but not solve delays, says IATA

The International Air Transport Association (IATA) has criticised the US Department of Transportation (DOT) and the Biden Administration’s decision to mandate airlines to provide financial compensation to passengers for flight delays and cancellations.

The IATA argues that airlines already have financial incentives to minimise delays and cancellations and that managing such disruptions is costly. The regulation is expected to raise ticket prices as airlines will need to recoup the added expense. The IATA also highlights that weather, air traffic controller shortages, runway closures, equipment failures, and supply chain issues are major factors contributing to delays and cancellations, which airlines have limited control over.

The IATA points out that similar regulations in the European Union have not effectively reduced flight delays and cancellations.

Instead, the IATA suggests focusing on fully funding the Federal Aviation Administration, ensuring a fully staffed controller workforce, and completing the FAA NextGen air traffic control modernisation programme.