Transportation Department Recent Orders Shakes Airline Community

Airline Route, refund mandates raise legal concerns

While running through my usual roster of aviation data and regulatory updates, I came across a website which went chapter and verse on the route changes that almost every airline in the United States is planning to make in the face of greatly reduced traffic. As CODIV-19 has been a once in a life-time health crisis for the political leaders, and health providers with new rules, a new generation of virus, with little reliable information to act on; the scope and duration has also been a hammer-blow to the aviation industry. The airlines are in a state of flux and if the aviation experts are on target with their estimates, we may not be back to normal until the summer of 2021.

Consumer advocates and plaintiff attorneys, get out your legal pads; you may have struck a mother-lode of new cases to bring to the court-house. As for the airlines, you can expect a flood of litigation if the DOT holds fast to these new regulations because it will be impossible for the airlines to stay solvent, and follow these mandates to the letter.

The warning lights are flickering because of one particular final statement by the DOT on Tuesday, April 7th.  The DOT issued the final order revising minimum service obligations for air carriers that accept grants, loans or other relief funds from the third COVID-19 economic relief package, the Coronavirus Aid, Relief and Economic Security Act.

Days earlier, the DOT issued an enforcement notice warning airlines that they’re still required to refund passengers for flights that are canceled or significantly delayed, even as they contend with the unprecedented global health crisisWhat is most worrying for the airlines are the orders regarding airlines’ service routes and consumer practices during the coronavirus pandemic will fuel litigation, but airlines struggling with cash flow are expected to continue pressing the government for more flexible mandates.

U.S. airlines won’t have free rein to eliminate unprofitable routes or withhold customer refunds for canceled flights even as government travel advisories and stay-at-home mandates aimed at combating the COVID-19 outbreak obliterate their passenger volumes and revenues.One industry expert, Mark Dombroff chimed in saying:  “I don’t think that any requirement that may be put out by the DOT is going to be cast in concrete. With respect to the levels of service, the levels of seasonal service or the airports being served, I think you’re going to see something of a moving target [and] requirements that adapt to the reality of the circumstances.”

JetBlue and Spirit First to Apply for Exemptions

New York-based JetBlue and Florida-based low-cost carrier Spirit Airlines were among the first airlines to apply for DOT exemptions.

Spirit, which says it’s in “survival mode,” asked to cut 26 cities from its network, saying none of the cities on its list are small or remote, and each will have continuous access to air transportation either directly or through a neighboring hub, according to its DOT exemption request.

JetBlue applied for a DOT exemption to temporarily suspend service to nearly a dozen airports — including Dallas/Fort Worth International Airport, Minneapolis−Saint Paul International Airport and Portland International Airport — from April 15 through June 10.

Those are in addition to JetBlue’s previously announced plans to consolidate or bundle flights to five major markets — Boston, Los Angeles, New York, San Francisco and Washington, D.C. — that have access to several airports.

Here Come the Lawyers

Meanwhile, an April 3 DOT notice related to airlines’ refund policies has amplified tension in the industry, creating an opening for consumer advocates and plaintiff’s attorneys to pursue legal challenges they say protect passengers’ rights.

Mark Dombroff, a partner with Fox Rothschild in Washington DC described the trend toward class action litigation as “unfortunate.”

“For it to become sort of that one man’s crisis is another man’s opportunity — unless there’s a solid basis for the lawsuits — I just think it’s a sad comment upon the direction we’re going and how this is being dealt with,” he said.

Within days of the DOT’s notice, Chicago-based United Airlines was hit with at least three proposed class actions over its alleged refusal to refund passengers for canceled flights, instead offering travel vouchers to be redeemed on future flights.

“Such changes to the refund policies strengthen plaintiff’s claims for consumer fraud and deceptive business practices, as well as for fraudulent misrepresentation against United Airlines,” said a spokesperson for the San Diego-based Slate Law Group.

United Airlines defended policies it has implemented to give its customers flexibility since the start of the COVID-19 crisis, including allowing them to change their travel plans without a fee.

The International Air Transport Association, the industry group for air carriers worldwide, has said it was “deeply disappointed” by the DOT’s hard-line stance on travel vouchers. IATA CEO Alexandre de Juniac acknowledged in an April 3 blog post that passengers have the right to get their money back because they paid for a service that cannot be delivered. But given the “profound crisis,” he urged regulators to relent on ordering airlines to provide immediate refunds.

“For any airline — United or anybody else — to suggest that because of the financial situation they find themselves in, they’re unable to offer refunds and basically follow the law, that strikes me as a fairly weak argument,” John Breyault, National Chairman of the Consumers League said. “We’re talking about the worst economic downturn since the Great Depression and consumers are trying to pay the rent and keep the lights on. 

Whatever the outcome of the cases, airlines struggling with staying alive may be spending time in the courtrooms.

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