More cash for fliers as airlines do the bump

Attention, summer vacationers. Here’s some good news from the Department of Transportation: Passengers who are involuntarily denied boarding -- “bumped” -- because of an oversold flight will be eligible for as much as $800, depending on the length of the delay. That’s double the amount of compensation that used to be offered.

So much for the good news.

Now for the not-so-hot news: Planes are flying fuller, so the number of denied boardings has been edging up. From 1978, the last time denied-boarding compensation amounts were adjusted, to 2006, the percentage of seats filled on U.S. airlines increased about 18%, to 79.2%, the agency said. Current monthly figures are in the mid-80% range.

In 2006, more than 55,000 passengers were involuntarily denied boarding and received cash compensation. That number didn’t include the passengers who voluntarily gave up their seats for travel vouchers.

The airlines don’t report the number of volunteers, said David Castelveter, spokesman for the Air Transport Assn., a Washington, D.C.-based airline industry group.

But, he added, “the vast majority are denied voluntarily.”

At least one group is crying foul about that.

The vouchers should be banned because they are difficult to redeem and have no residual value if part of one is unused. Further, consumers often don’t redeem them. Those are the arguments of the American Society of Travel Agents, an Alexandria, Va.-based travel agent organization. The airlines can overbook without fear of penalty, so they do.

“The voucher value turns out to be an illusion,” said Paul M. Ruden, the group’s senior vice president of legal and industry affairs. “We think it would be better to offer cash since it is, after all, cash they had to pay out to get the ticket in the first place.”

Many consumers who commented to the DOT during a public comment period thought the airlines should be banned from overbooking. But the agency disagreed, reasoning that consumers receive an indirect benefit from overbooking because airlines can fill more seats and thus, in theory, charge less.

“We are not aware of levels of consumer harm that require such a sweeping solution at this time,” the DOT ruling said.

An airline seat is a perishable product, not unlike a head of lettuce. If it is not sold by a certain time -- that is, the minute the plane’s doors are closed and the craft pushes back from the gate -- it is spoiled and unsellable.

The airlines employ teams of people who study inventory management, Castelveter said. Most of the time, they gauge correctly what it will take to make sure everyone has a seat.

But when they don’t -- and there aren’t enough volunteers willing to give up their seats -- the new rules kick in. Here’s what you can expect:

* If you’re delayed less than an hour to your destination, you receive no compensation.

* One to two hours late to your destination, you receive $400 or 100% of the cost of your one-way ticket, whichever is less.

* If you’re more than two hours late getting to your destination, you get $800 or 200% of the cost of your one-way ticket, whichever is less.

The airline is still obligated to get you to your destination.

The new compensation rules are a compromise between consumer rights and airline business needs. Ruden said ASTA was pleased that the DOT doubled the compensation limits, but he argued that an automatic adjustment should be included in the rule, having the amounts revisited and adjusted every five years or so.

Waiting another 30 years to adjust the amounts is not consumer friendly, he said.

“We don’t think we ought to have to go through another proceeding” like this, Ruden said, noting that the process took almost seven years to complete. The adjustments, he said, “ought to be automatic.”

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