Setting the Record Straight
February 01, 2023
Consumers have benefitted from robust competition within the U.S. airline industry for decades
WASHINGTON| February 1, 2023 – U.S. Department of Transportation Secretary Pete Buttigieg appeared on CNBC’s Squawk Box today. Airlines for America sets the record straight:
Secretary Buttigieg: Our focus is getting results for consumers, so, for example, with the frustrations we’ve seen over last year with cancellations and delays, we took a lot of steps over the summer that won more benefits for passengers in terms of enforceable requirements on getting, you know, getting your expenses covered, getting a voucher for a meal or hotel when you get stuck, things that came in handy, by the way, during the Southwest debacle. Until we got those customer service agreements that are enforceable by our department, we won that progress over the summer inch by inch.
FACT: A4A carriers already had these policies in place before the dashboard. A4A member carriers provide a range of benefits to passengers based on their individual flight circumstances. The dashboard lacks full transparency as it does not recognize discretionary relief that carries provide to passengers. If the carrier does not commit to providing relief in all circumstances, the carrier receives a red “X,” which is misleading.
A4A member carriers abide by – and frequently exceed – DOT regulations regarding consumer protections. There is no evidence of a market failure or unfair or deceptive practices in this area. In addition to other forms of compensation, the 11 largest U.S. passenger airlines issued $32.3 billion in customer refunds, roughly $900 million per month, between January 2020 and December 2022. This includes $11.2 billion in 2022 alone, exceeding 2019 by almost 50 percent.
CNBC: What else can you do within your own purview, and what kind of potential legislation — can you imagine legislation, we were talking to one of the CEOs of one of the airlines this week about the bill of rights that exists, for example, in Europe, and whether that is a path to pursue or not pursue. As you might imagine that the airlines don’t like that.
Secretary Buttigieg: They don’t, but we’ve got to look for ways to continue making for a better passenger experience and so I think everything has to be on the table.
FACT: That kind of legislation in the U.S. would undermine and eliminate decades of successful policies that have transformed air travel, allowing the vast majority of Americans to take flight. In fact, more than 90 percent of Americans have flown in their lifetime – versus less than half 50 years ago — and more than half have boarded a commercial aircraft by the time they turn 16. The proposed policies in a similar Bill of Rights effort – instituting government-controlled pricing, establishing a private right of action and dictating private sector contracts – would decrease competition and inevitably lead to higher ticket prices and reduced services to small and rural communities. In addition to having eliminated most change fees over the past couple years, airlines are investing record amounts into the aircraft, facilities, IT and ground equipment to better the customer experience, and we hope to see commensurate investments in our National Airspace System.
Secretary Buttigieg: Some things we can do with the authorities that we have we’re pursuing those aggressively with a small but mighty team. We have about 15 lawyers and 15 analysts in our consumer protection shop doing everything from rule making and enforcement for passengers with disabilities, to following up on thousands of complaints about Southwest Airlines, to preparing regulations on ancillary fees. But I think this is also a good time for that conversation to happen in Congress. We’ve got FAA reauthorization coming up. Aviation is going to be on everybody’s mind on Capitol Hill, and look, we’ve had a business model that has seen more and more consolidation, more and more, you know, for lack of a better of term, nickel and dime’ing.
FACT: In 2021, domestic air travel (including ancillary fees) was 55 percent less expensive than it was in 1979. In 2022, inflation-adjusted fares averaged 6.8 percent below 2019. U.S. airlines have maintained this level of affordability while facing unit costs that in 2022, for A4A member carriers, were 31 percent higher than in 2019. One of many drivers of higher costs is the price of jet fuel, which averaged 83 percent more in 2022 than in 2019 and is running 109 percent higher in January 2023 than in January 2019. U.S. passenger airlines are also employing the most workers in 20 years – at wages 37 percent higher than the average private sector job.
Secretary Buttigieg: If this is the direction that airlines are going to continue moving in, we’ve got to make sure the backstop is getting tougher and tougher. Last year we set an all-time record for civil penalties assessed against airlines for violations, what we’d rather see of course is a high standard of service in the first place so people don’t need to come to us and complain and we don’t need to issue those fines. We’re going to do it if that’s what it takes. I think both on our end and on the legislative side, you’re going to see more proposals and more steps that I think, by the way, are perfectly consistent with airlines doing well as businesses, but not on the backs of the miserable passenger experience.
FACT: U.S. airlines strive to provide the highest levels of customer service, and it is in each carrier’s interest to provide a positive flight experience for all passengers. Commercial air travel in the U.S. is safer and more environmentally friendly than ever before thanks in large part to the competition and innovation unleashed by multiple decades of deregulated air service. This great success is not only why many other countries followed suit in their own markets, but also why the U.S. government began deregulating international air travel in the early 1990s.
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