Are airlines treating passengers of disrupted flights fairly?

Courtesy Reuters

IF you were travelling on Singapore Airlines (SIA) out of London and your flight is delayed or cancelled, you may be compensated up to €600 according to European Union (EU) regulations. However, if it is an outbound flight from Singapore, what compensation a passenger may receive, if any, will depend on the policy of the airline.

This is because EU regulations do not apply to non-EU carriers arriving at an airport in member countries although it covers all departing flights of both EU and non-EU carriers.

The regulations have recently been extended to include connections even if these are operated outside the EU by non-EU airlines. The ruling states that “an operating air carrier that has performed the first flight cannot take refuge behind a claim that the performance of a subsequent flight operated by another air carrier was imperfect.” It is therefore obliged to offer passengers alternative transport for the disrupted flight, in addition to monetary compensation.

Over in Canada, the Air Passenger Protection Regulations introduced by the Canada Transportation Agency require airlines affected by flight disruptions to meet certain obligations which will apply to all flights to, from and within Canada, including connecting flights. Passengers whose flights are delayed or cancelled will be compensated up to C$1,000 depending on the size of the airline and length of the disruption. Non-compliance carries a fine of up to C$25,000.

Countries elsewhere do not generally legislate on mandatory fiduciary compensation of a stipulated amount for flight disruptions. In the United States, airlines are obliged to compensate passengers who are bumped off a flight due to an overbooking situation (as in the EU and Canada), but there are no federal regulations requiring them to do the same thing for passengers whose flights are delayed or cancelled.

Consumer rights groups have long been pushing for fairer treatment of travellers under these circumstances. Besides arranging meals and hotel accommodation in the event of a long delay, some airlines hand out in-flight gift vouchers, but most do not make any form of financial payment. In many cases the affected passengers get not much more than an apology while they wait to be put on the next available flight.

The International Civil Aviation Organization (ICAO) recognises the vulnerability of passengers and supports “due attention… (which) could include rerouting, refund, care and/or compensation”, but it stops short of spelling out specifics and making them industry standards. The International Air Transport Association is however concerned that airlines may be adversely affected, advocating “an appropriate balance between protection of consumers and industry competitiveness.”

Affected passengers therefore by and large can only rely on the goodwill of the airlines, whose policies differ across the industry. Many of them have come to realise that to take the matter further on their own – including bringing an airline to court – can be tedious, frustrating and, more often than not, futile. What they need is the support of an authority who can enforce compliance within a legal framework.

Yes, even with mandatory compensation in place in the EU and Canada, there have been complaints that the airlines are not forthcoming in meeting their obligations, citing extraordinary circumstances that do not render them liable or delaying payment indefinitely. Still, in the context of good governance, what the EU and Canada have introduced is a significant step forward in recognition of the uphill challenge passengers face in their battle with the airlines for fair compensation.

Some airport authorities fine airlines for flight delays or operating off-schedule because it disrupts and causes less-than-optimal resource allocation that can be costly to the airport’s operations. By the same argument, passengers of disrupted flights deserve to be fairly compensated. The disruption can be costly in terms of making alternative arrangements, staying in some place longer than planned, and losing opportunities as in failing to make a business deadline. Above all, it causes anguish and distress.

The amounts recommended by the EU and Canada are miniscule compared to the fines of up to US$27,500 per passenger imposed by the US Transportation Department for planes left on the tarmac for more than three hours (or four hours for international flights) without taking off. American Airlines and Southwest Airlines share the honour of holding the record fine of US$1.6 million, the former in 2016 and the latter in 2015.

Non-US airlines that have been penalised by the US Department of Transportation (DOT) include Japan Airlines which was fined US$300,000 for two incidents in 2018 in which passengers were made to wait more than four hours on the tarmac before they could deplane.

All these measures serve the common goal of encouraging airlines to ensure their flights operate as scheduled and hopefully too that they become more conscientious about how they treat their customers. However, the fines imposed by DOT do not directly benefit the passengers who are the very reason why an airline is in business.

An example of how an airline may take the EU regulations seriously is when British Airways, faced with the threat of strike action by its pilots recently, informed its customers as early as two weeks of cancellations of some flights to avoid paying compensation.

However, do not expect similar regulations to be introduced any time soon in other parts of the world. For one thing, consumer rights groups do not appear to be as aggressive, and many countries especially Asia are less prone to industrial action. Besides major Asian carriers known for good customer service are more responsive to feedback and complaints and may already be offering some form of compensation even if they are not as generous.

But as the number rises, there is a greater need to ensure that affected passengers are fairly treated. The powers that be can ensure that. According to aviation data and analytics experts at Cirium, about 3.9 million flights or 10,700 a day were delayed by over 30 minutes or cancelled worldwide in 2018. Take a typical day on 5 August 2019.there were 22,386 delays and 1,107 cancellations globally, of which 29 per cent of the combined total occurred in the United States, 26 per cent in Europe, and 34 per cent in Asia Pacific.

Until then, here’s a poser for SIA and the likes: Will they accord the same level of comnpensation to all passengers even if they are not bound by regulations, for no better reason than simply one in the name of fairness?

A matter of fair play: Canada and European Union expand protection of air travellers’ rights

Courtesy LaPresse

Flight delays and cancellations may be said to be part and parcel of air travel given that they are happening more often than not.

Take a typical day as 5 August, 2019: According to Cirium, there were 22,386 delays and 1,107 cancellations globally, of which 29 per cent of the combined total occurred in the United States, 26 per cent in Europe, and 34 per cent in Asia Pacific.

But what recourse do affected travellers have in the event that they are inconvenienced?

While the International Civil Aviation Organization (ICAO) recognizes the vulnerability of passengers and supports “due attention… (which) could include rerouting, refund, care and/or compensation”, the agency stops short of spelling out specifically what the entitlements could amount to. Similarly, the International Air Transport Association in voicing support for ICAO’s stand is concerned how the airlines may be adversely affected, seeking “an appropriate balance between protection of consumers and industry competitiveness.”

In the Untied States, for example, there are no federal regulations requiring airlines to compensate passengers when flights are delayed or cancelled, unless they are bumped off a flight due to an overbooking situation. Strictly applied, airlines are not obliged to put you on another airline’s flight.

So too around much of the world, many governments do not legislate on the matter. Different airlines have different policies to handle such situations, but it has always been arguable as to what constitutes fair compensation. And travellers who have been left high and dry are often impotent seeking redress, resigned to the mercy of the airlines.

What air travellers need is an authoritative voice to decide on fair play There is hope however if more regulators will follow in the footsteps of their counterparts in Canada and the European Union which have in recent weeks expanded legislation to protect passengers’ rights.

Canada

The Air Passenger Protection Regulations introduced by the Canada Transportation Agency require airlines affected by flight disruptions to meet certain obligations which will apply to all flights to, from and within Canada, including connecting flights.

Passengers whose flights are delayed or cancelled will be compensated up to C$1,000 (US$756) in accordance with the size of the airline and length of the disruption. Large airlines will pay out more than small airlines: C$400 and C$125 respectively for delays between three and six hours, C$700 and C$250 for delays between six and nine hours, and C$500 and C$1,000 for delays nine hours or more.

Non-complying airlines may be fined up to C$25,000 for non-compliance.

The regulations also cover other obligations such as clear communication and updates, reasonable food catering, the need for ventilation if passengers are stuck on the tarmac, allowing passengers to leave the aircraft if the delays exceed three hours, re-booking and refund. Passengers may be compensated up to C$2,100 for lost luggage and up to C$2,400 if bumped from a flight.

Not surprisingly, the airlines – supported by the International Air Transport Association (IATA) – are saying the rules go too far. Advocates of passenger rights on the other hand say they do not go far enough. But it nevertheless is a step forward.

Europe

The European Union’s regulations have been expanded to include connections even if they are operated by non-EU airlines.

The new regulation states: “In the case of flights with one or more connections that are subject to a single reservation, an operating air carrier that has performed the first flight cannot take refuge behind a claim that the performance of a subsequent flight operated by another air carrier was imperfect.”

The operating carrier will also have to offer passengers alternative transport for the disrupted flight, in addition to compensating them with an amount ranging from US$290 to US$700.

The European Union has been a prominent pusher to protect passengers’ rights. Considering its history of disruptions caused by industrial action by airline and airport staff, this is a welcome move to air travellers.

However, many travellers may be discouraged by the cumbersome claims procedure which may involve a cut by an agency handling the claim on their behalf if they choose to go through a third party, and by the long settlement time of a claim. Still, it is another step forward.

One wonders, if a non-EU airline agrees to abide by the EU regulations for its flights operating into and out of Europe, is there a good chance it would be as amenable to similarly apply fair treatment to its customers outside the region, particularly at its home base?

A new deal to reduce carbon emissions: Better late than never

alaska-courtesy-alaska
Picture courtesy Alaska Airlines which was ranked the msot fuel-efficient airline in the United States by the International Council on Clean Transportation in 2013.

FOUR years after the failed implementation of the Emissions Trading Scheme by the European Union (EU) in 2012, last week’s agreement among more than 190 countries in a deal to reduce CO2 emissions under the International Civil Aviation Organisation (ICAO) umbrella was a momentous event. Britain’s Aviation Minister Lord Ahmad said: “This is an unprecedented deal, the first of its kind for any sector… Until now, there has been no global consensus on how to address aviation emissions.”

From 2020, any increase in airline CO2 emissions will be offset by activities such as tree planting. Participation in the program will be voluntary right up to 2026. However, most nations are expected to comply. Countries that had previously protested have shown their support, including China and Brazil. Exceptions include Russia and India. India reiterated that the deal puts an unfair burden on emerging economies.

As much as there is applause for the new pact to stabilise climate change, noting that aviation alone contributes to at least 2 per cent of the world’s carbon emissions, there are also reservations about its effectiveness. Environmentalists are concerned about the effort lagging behind the demand for air travel. Bill Hemmings from the green group T&E said: “Airline claims that flying will now be green are a myth. Taking a plane is the fastest and cheapest way to fry the planet and this deal won’t reduce demand for jet fuel one drop.”

The pressure will be on the airlines to acquire more fuel efficient aircraft but plane makers may not have the capability not only to cope with the demand but also to constantly innovate fast enough for better solutions. A brighter note is how some airlines have begun using cleaner-burning biofuels.

The new deal banks on a principle of offsetting that may be viewed more amenably as a form of investment in a greener world instead of the previously proposed carbon trading scheme of the EU and the pecuniary penalty of a fine imposed on defaulters. Under the program, airlines will buy credits to offset emissions. The credits could come from projects aimed at reducing greenhouse gas emissions, such as forest conservation programs and alternative energy sources.

The costs of offsetting are likely to be passed on to the consumer. No surprise there. It will mean higher airfares, or another surcharge in an already long list of ambiguous costs. While industry experts say it will not be significant, more discerning travellers will be quick to point out how sometimes “other charges” amount to more than the so-called airfare per se.

Presently offsetting rules are far from being clear and there is need too to consider methods of monitoring, measurement and implementation. The question of fairness will remain a perennial problem, hence dissension by some nations. So far only about one third of the agreeing nations have said they would participate in the voluntary phase.

Yet to be discouraged by negative considerations however numerous they are is a failure to recognise the breakthrough after years of wrangling to get the parties concerned on board. The road ahead is not without bumps as the industry works at finding an acceptable balance between growth in aviation and an increase in carbon emissions. There is some comfort to be optimistic and hoping.

Garuda Indonesia poised to expand

IT came so timely that following the opening of the new Terminal 3 at Jakarta’s Soekarno-Hatta International Airport and its declared ambition to rival Singapore Changi Airport and Kuala Lumpur International Airport in attracting international traffic, Indonesian carriers have been cleared to resume flights to the United States after an absence of nine years.

The Federal Aviation Administration (FAA) is satisfied that Indonesia is complying with International Civil Aviation Civil Organization (ICAO) safety standards. Formal final approval from Department of Transport (DOT) and FAA is expected soon.

Indonesia has been plagued by a number of air mishaps involving home-based airlines Lion Air, Mandala Airlines and Garuda, particularly in the years before 2007 when the US imposed a ban on its operations on its soil. More recently in 2014, Indonesia AirAsia crashed into the Java Sea, killing all 162 people on board.

The US lift of the ban came after the European Union had lifted its ban on three other Indonesia airlines – Lion Air, Batik Air and Citilink – in June this year.

Garuda AFP

With the US and Europe open, Garuda for one, if not the other Indonesian carriers as yet, is poised to expand. The Indonesian flag carrier has launched direct services to London (Gatwick) and is planning to launch services to New York (JFK) and Los Angeles next year. And if the Sytrax survey for the last two years (2014 and 2015) is anything to go by for its success, the airline was ranked among the world`s top ten airlines which include other Asian airlines namely Singapore Airlines, Cathay Pacific and EVA Air.

The elusive Asean Open Skies dream

Courtesy Asean

Courtesy Asean

STILL waiting. Asean Open Skies continues to be an elusive dream for the ten-nation bloc as members renewed their commitment at this year’s Asean meeting of their leaders in Kuala Lumpur. Asean, which stands for Association of Southeast Asian Nations, is made up of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

A new declaration to form an Asean Community all but reiterated the association’s original manifesto, the progression reinforced as building “economies that are vibrant, competitive and highly integrated, and an inclusive community that is embedded with a strong sense of togetherness and common identity.” The Community will be formally instituted on Dec 31, aiming to eliminate trade barriers to form a single market and production base.

Since the Open Skies policy has been part and parcel of that umbrella ambition, it marks another milestone as a positive thrust in the desired direction although the target was to have it fully implemented this year. But where does the Open Skies stand in the development?

Much was said in the past about hurdles posed by the region’s disparate geography, economic disparity, different political make-up and diverse cultural practices. Not in the least, the different levels of economic progress and welfare across the region continue to pose difficulties for member nations to move at the same pace towards the ideal commonality. A single market modelled on that of the European Union (EU) is still a long way off.

No one denies that liberalisation will benefit Asean and fuel aviation growth in the region. It may open up channels for collaboration among operators but lest it be misconstrued, it does not necessarily run on complementary operations as a single entity against the rest of the world. Open skies means freeing up the competition across the borders and breaking down barriers of entry which allows neighbouring carriers to compete with home carriers on a level playing field. Therefore, the fear of competition among Asean carriers – each at a different level of growth – is real. The major carriers operate very much the same routes, and there is competition to channel traffic away from home bases through hub and other airports. Asean has a myriad of carriers, many of them thriving on niche and closed markets. The question is: Are they ready?

The EU has seen increased competition in the single market, benefitting customers and driving carriers to be more cost-efficient. Low cost carriers such as Ryanair and easyJet have grown to be more than just low-end niche players but serious threats to legacy airlines which are already struggling to stave off competition from foreign carriers which are more efficient and service-friendly. The single market has also led to mergers for strength, such as the International Airlines Group which conglomerates British Airways, Iberia, budget carrier Vueling and Aer Lingus, and is 10-per-cent owned by Qatar Airways. (See International Airlines Group partnership works, Nov 26, 2015) It is hard to envisage at this stage such a development within Asean, no less for the reasons already mentioned.

To be fair, the region has seen some progress in the liberalising process, even as the goal post keeps moving away. Some major airlines are already preparing for the eventuality as the market shows signs of growing, particularly in the demand for budget travel. However, if the failure of Tigerair’s forays into the Philippines and Indonesia as a joint-venture partner is any indication of the climate for cross-border investment, it again points to the region’s readiness and propensity to sustain the efforts. The pace is not moving fast enough, and so long as the goal post keeps shifting forward, it is easy to lose that drive.

Priorities can change quickly. Asean nations are caught in the current of the global scramble for economic pacts across a wider region in a world that is increasingly being threatened by geopolitical rivalry down economic lines. They, not as a bloc but individually, risk isolation and being disadvantaged by non=participation. This could be a distraction away from the Asean agenda.

Four Asean members – Brunei, Malaysia, Singapore and Vietnam – signed the Trans-Pacific Partnership (TPP) agreement which took effect on October 5 along with Australia, Canada, Chile, Japan, Mexico, New Zealand, Peru and the United States. Indonesian president Joko Widodo at a subsequent meeting with US president Barack Obama expressed his country’s interest in joining the bloc. Asean itself has proposed a Regional Comprehensive Economic Partnership to engage non-members Australia, China, India, Japan, New Zealand and South Korea. However this does not prevent member nations from independently pursuing bi-lateral trade agreements which may see implementation of some measures such as faster immigration channels between these parties ahead of similar facilitation within a common Asean union.

Within the aviation industry too there are alliances and there are alliances, so to say. Global alliances represented by Star, OneWorld, SkyTeam do not preclude member airlines from forging other partnerships outside their ambit, some of which are cross-border agreements. It seems to complicate the relationships, but apparently it also opens up opportunities that may otherwise be thwarted by restrictions of exclusivity.

This year’s Asean Summit – its 27th – is focused on forging an Asean Community which will be formally instituted on Dec 31. The lack of an Asean identity is viewed as a major hurdle in the progress towards a no-barriers common marketplace. Singapore prime minister Lee Hsien Loong said: “One of the constraints on government – and one of the reasons Asean finds it difficult to make progress together – is (that) there is not a very strong sense of Asean identity:” (The Straits Times, Nov 23, 2015) He added: “I think there is some distance yet.”

There was mention of the Asean community engaging in projects such special lanes for citizens of member nations at airports and facilitation vide an Asean Business Travel Card.

But new issues that surfaced recently aren’t going to make the forward thrust any easier. Indonesia, the largest community in the bloc, has expressed its intention to rein in administration of part of its airspace presently under the purview of the Singapore authorities, but its aviation safety record is raising reservations. Following findings by the United Nations International Civil Aviation Organization (ICAO), the US Federal Aviation Administration (FAA) has downgraded its safety rating of Thailand’s aviation authority over concerns about safety standards.

Such issues are likely to shift the priorities of not only the affected nations but also the bloc as a common entity, particularly considering its small composition of member states. So it appears that Open Skies will be taking a backseat in the meantime

This article was first published in Aspire Aviation.

Australia will adopt carbon trading scheme

While the European Union’s carbon trading scheme remains frozen following protest by airlines across the globe, Australia has said it will be scrapping its current carbon tax and switch over to the emissions trading scheme similar to that of the European Union.

Qantas is one of some 300 companies affected by the carbon tax.

Photo Oscar Siagan/The Age

Photo Oscar Siagan/The Age

Australian Prime Minister Kevin Rudd said the new scheme would reduce the cost from the current A$25.40 (US$23.42) per tonne to about A$6.00 per tonne, and hopefully the benefits would be passed on to consumers. While the tax is a penalty levied on companies for not being green enough, it is inevitable that the higher cost eventually finds its way to pinch the consumer’s pocket.

It is not clear how the trading scheme, if implemented, will affect Australian and other airlines operating to and from Australian destinations; the universal application of the EU scheme has drawn objection from foreign carriers. Australia may yet have the benefit of learning from the outcome of the EU’s review expected by November – if it comes then – before its own implementation, which will be formalized after the nation’s elections for which a firm date has yet to be fixed. But, only if the Labour party continues to govern the country, for the opposition leader Tony Abbot has said he would do away with a price on carbon altogether if the Conservative party won.

Mr Abbot called the emissions trading scheme a “so-called market in the non-delivery of an invisible substance to no one.” He added: “It’s been absolutely obvious that the world is not moving towards taxes, whether they’re fixed rates or floating taxes.”

Whether it is good or bad news, it is a complex issue. Mr Rudd said the rationale for the termination of the carbon tax in favour of the EU-style trading scheme is “the reduction of costs for small businesses” although the penalty is really one imposed on the big polluters. Whatever the tax mode, the consumer will bear the brunt of the cost. The question is: How much? The trading scheme as introduced by the EU, however, is also aimed at encouraging affected companies to be more efficiently green – they may even gain from the trading. The problem is that most companies are diffident about that benefit and more concerned about the penalty.

So far the International Civil Aviation Organization which has been entrusted with the task to propose an alternative scheme to the EU’s scheme by November has not reported on any significant progress in its review. Do not be surprised that it will be a long time coming, although the EU has said that short of that, it intends to push ahead with its original plan. But if the delay does happen, it would be interesting to see if Australia would take over the lead.

Carbon emissions policy setback: EU suspends scheme

THE European Union (EU) has succumbed to international pressure to suspend the Emissions Trading Scheme (ETS) that it introduced on January 1 this year. The ETS rules that airlines that land at EU airports will have to pay a carbon emissions tax.

Among the chief protesters are the United States, China and India – the last two countries actually banning their airlines from participating in the scheme.

Imperfect as the ETS may be, its suspension is a setback in the efforts to combat pollution and global warming. The EU commission on climate change had earlier said it was going ahead with the implementation only because international agencies such as the International Civil Aviation Organization (ICAO) had failed to come up with any proposal. There is little evidence that while airlines brag about their commitment to the green effort, they are keen on any framework that would add to their operating costs, in spite of the EU’s argument that the ETS would add but only between four and 24 euros (US$1.27) to the price of a long-haul flight. To the airlines, it is 17.5 billion euros (US$22.3 billion) collectively over eight years.

EU Climate Commissioner Connie Hedegaard, Courtesy reuters.com

The EU is prepared to allow the ICAO another go at working out an acceptable framework, with EU climate commissioner Connie Hedegaard saying, failing which the ETS would be reintroduced a year from now. Having taken a step backward, it may be difficult to re-implement the veiled threat in the absence of a compromised solution emerging. The game belongs to ICAO – no doubt an unenviable task – so long as it can demonstrate progress, a little each time even if it is the mere act of meeting and agreeing to disagree, and the commitment to continually meet again to try and resolve previous disagreements.

Meantime, will Australia succeed where the EU has failed? The proposed date of its implementation of a similar scheme by July this year has come and gone. And lest it be forgotten, Qantas and Virgin Australia announced early in the year that they would be adding a carbon tax to the fare. Travellers would be wise to check out the component costs of their tickets – another controversial policy that makes you wonder why so many airlines are finding it so hard to be honest about what they are charging their customers for!