Bush Proposes Congestion Pricing, Raising Denied Boarding Compensation

Business Travel News, 11/15/2007 (excerpted)

President Bush today outlined proposals to curb airline delays and offer further protections to passengers, which include congestion pricing at airports, the availability of better airline on-time performance data and increased denied boarding compensation for air travelers.

Bush proposed to raise denied boarding compensation to $800 from $400 when passengers have to wait more than two hours to be reaccommodated and require airlines to provide better data to the Department of Transportation about the source of delays. Bush also said DOT and the Federal Aviation Administration would evaluate other airline requirements, "including mandatory contingency plans to aid stranded passengers and penalties for chronically delayed flights." The White House in a statement said those proposals would take several months to move forward, "but the plan is for measures to be in effect by the summer travel season in 2008."

The White House in September directed aviation officials and regulators to reduce air traffic congestion and delays by next summer in attempts to head off a repeat of what is widely considered the worst travel season in domestic airline history. The focus has been on New York-area airports, where Transportation Secretary Mary Peters said three-quarters of airline delays are rooted.

Bush today proposed "market-based incentives," namely congestion pricing through which "fees could be higher at peak hours and at crowded airports or takeoff and landing rights could be auctioned to the highest-value flights."

He said federal officials have been discussing this idea with carriers and airports in the New York area for the past seven weeks. "I've asked Secretary Peters and Acting Administrator of the FAA Bobby Sturgell to report back to me about those discussions next month," Bush said.

Airlines generally have shunned congestion pricing as well as another FAA proposal that aims to cap the number of flights at 81 operated at peak hours at New York JFK.

Bush and the airlines generally agree on what is the most fundamental cure for airline delays: air traffic modernization, which will take longer to implement, but would open more lanes in the sky for airline operations by shifting to global position system technology.

"While additional compensation to delayed passengers sounds good, coupled with extra steps taken to assist stranded travelers, the White House is side-stepping the major source of congestion, the ATC infrastructure that has failed to keep pace with passenger demand," said Association of Corporate Travel Executives executive director Susan Gurley. "Furthermore, the administration's new steps barely hint at the FAA's long-term responsibilities, and shift the blame to Congress and 'market-based' solutions."