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The Price of Flight Being Late
http://www.sina.com.cn 2004/10/22 11:58  Beijing Review

  Airlines begin to compensate passengers for flight delays

  By WU ZONGZHI

  One of the most frustrating things that can happen to an air traveler is to be told that your flight has been delayed. It sets off a whole chain of events and causes untold inconvenience. China has been coming in for its own stick in this regard, with statistics released by the General Administration of Civil Aviation of China (CAAC) showing that the number of delayed flights reached over 300 in July alone. Disgruntled passengers can, however, at least now derive some benefit from their forced circumstances after the CAAC issued guidelines for compensation of delayed flights on July 1. These state that airlines should compensate affected passengers in the wake of delayed flights if the root cause is the airlines’ problem.

  The guideline notes that airlines should compensate affected passengers based on the length of the delay, such as between four and eight hours and more than eight hours, if the problem is deemed to be the airlines’ responsibility. Compensation can come in the form of cash, discounted fares or mileage accumulations that can be redeemed for free trips.

  The CAAC has pointed out that it is only a guideline and the details of the policies should be handed down by different airlines themselves. All airlines are asked to publicize their customer service plans focusing on flight delay compensation by the end of this year.

  Airline Dilemma

  When the guidelines were first released, some insiders predicted that airlines would likely offer high compensation to attract passengers. But things are just the opposite.

  NOT BUDGING: A China Eastern flight from Beijing to Ningbo is delayed for seven hours. Passengers refuse to leave the plane until their written demands for compensation are met

  Most airlines have not responded positively to CAAC’s guidelines. An exception is Shenzhen Airlines, which became the first Chinese air carrier to unveil compensation rules.

  The rules released by Shenzhen Airlines on July 5 note that a maximum of up to 30 percent of the ticket price will be refunded if a flight is four to eight hours late caused by mechanical problems, improper flight arrangements, or errors by flight service and crew. Passengers can receive a full refund if the delay is longer than eight hours for similar reasons.

  But other airlines are inclined to be circumspect about the sort of compensation they are prepared to give, not stating precisely what they will do for customers whose flights are delayed or cancelled.

  Air China, the nation’s civil aviation giant, is reluctant to lay down a compensation policy.

  “We do not plan to publicize such criteria, as delayed flights involve a series of complicated issues,” said Air China Vice-President Yang Lihua.

  But Air China is planning to take three measures to improve flight punctuality, such as providing reserve planes at airline hubs, including Beijing Capital International Airport, increasing the efficiency and quality of aircraft maintenance and improving service.

  On July 17, a Shenzhen Airlines flight from Lanzhou to Shenzen was 13 hours and 17 minutes late. Among the 105 passengers, 94 received a full refund a week after travel and the remaining 11 returned the tickets shortly after learning the flight would be late.

  It is the first time for the airline to refund passengers 100 percent of their ticket price based on their newly released compensation rule. The flight delay brought about a loss of 400,000 yuan ($48,309) to the airline.

  While other airlines have not worked out a compensation rule for flight delays, they have compensated passengers on a situational basis.

  On August 11, a China Southern flight from Haikou to Beijing was late due to mechanical problems, causing over 50 passengers to spend 19 hours in Haikou. The unhappy passengers struck a deal for compensation of 500 yuan ($60.39) each. The air carrier said that they had made a promise through the media to refund 100 yuan ($12.08) for a delay of 4-8 hours and 200 yuan ($24.15) for a delay longer than 8 hours. Finally the airline paid each passenger 200 yuan ($24.15).

  Prior to these cases, experts said that airlines’ circumspect attitudes toward CAAC’s guidelines were out of concern for their profits. Releasing a rule for compensation, they are obligated to compensate for flight delays, including those they think are not fully their fault. They therefore reason that a better way is to deal with each case separately, according to the conditions at the time.

  But this move seems to send off a signal that only when passengers strike a deal for compensation, can they be refunded, making the case more complicated to tackle. For instance, some passengers refuse to leave the plane, which increases flight delays because of the stand-off.

  To this, an official in charge of security at the Chongqing Airport said that passengers have the right to require compensation, and airlines should give them a relevant explanation or compensation. But the passengers should be reasonable, rather than disrupting the order of airports. The public security department of airlines will punish violators and even detain those who take the lead in making trouble.

  Industry insiders believe that problems normally stem from airlines’ failure to give passengers a full reason for the delay. If the airlines respect passengers’ rights to being informed and having choice and compensation, the contradiction between them will be alleviated, said Xu Shiying, economic and law professor of East China University of Politics and Law. Passengers are the disadvantaged people in this equation and we should be inclined to protect their interests, Xu said.

  A month-long survey conducted by an airlines’ website recently showed that facing a flight delay, 37.86 percent of passengers hope to take other flights or other transportation to arrive at their destinations on schedule, 13 percent want to know the reason for the delay, 14.23 percent wish to be kept up to date about proceedings, and only 18.95 percent hope to be compensated.

  The Cost Factor

  Why did the guideline, which CAAC says is aimed at urging airlines to take effective measures to improve their services, achieve such a negative result?

  Not long ago, Li Jingao, an official in charge of market management of CAAC East China Management Bureau, said if all passengers who had the experience of flight delay required compensation of 200 yuan ($24.15), the air carrier of China Southern alone would have to pay 160 million yuan ($19.3 million) for compensation over the flight delays in 2003. But the total return of the whole airline sector last year was several hundred million yuan.

  Aside from the huge amount of money needed for compensation, the complicated reasons for flight delays can number over 20, a factor that influences various airlines to have a cautious attitude in formulating a compensation rule. Some most common reasons for delays include change of weather, flight scheduling, mechanical problems and late boarding of passengers. Flight delays caused by weather account for 70 percent of all delays. This reason seems to be easily understood by passengers. Yet passenger frustration does occur when the weather is fine at takeoff, but there are thunderstorms over the destination. Furthermore, the delay of one flight usually affects the punctuality of other flights. Any explanations under such conditions are likely to incur doubts of passengers. They think it is the problem of flight scheduling.

  In addition, due to the rapid increase in air traffic volume, flight delays caused by airline management is on the rise. To absorb passengers, all air carriers try to increase their flights at peak times. To guarantee security, airline management has to adopt strict air traffic control, leading to the increase of flight delays. Sources show that over the past decade, air traffic volume in Beijing, Shanghai and Guangzhou rose by 10 percent annually. China’s passenger and freight air transport volume ranks fourth and sixth, respectively, in the world.

  In fact, air carriers are afraid of flight delays most as it always incurs huge financial losses. It is time-consuming work to check tens of thousands of aircraft parts when mechanical problems occur. The cost for aircraft parking per day is more than 100,000 yuan ($12,077.29), to say nothing of the cost for compensation over the flight delay and for providing meals and lodging for affected passengers.

  According to a survey, nearly one-fifth of China’s domestic flights do not arrive at their destination on time each year, affecting more than 10 million passengers. Prior to May this year, the rate of flight delay was 22.1 percent, an increase of 1 percentage point over the same period last year. According to the CAAC consumption affairs center, flight delay is the prime

  reason for passenger complaints.

  “The awkward situation caused by the guideline is beyond our expectation, which is contrary to our wishes,’’ said a CAAC official. The guideline aims to set a standard for compensation to safeguard the interests of passengers and, more importantly, to improve the punctuality rate of flights, he added.

  Tian Jing, with CAAC Management College, said that insufficient flights is the root cause of flight delays. To solve this problem, all airlines have added flights. But due to a lack of aircraft, airlines already use up most their aircraft. For instance, an aircraft in China Eastern flies 5.7 flights every day on average. Under such circumstances, when a flight is late, others will follow suit.

  The CAAC estimated that in 2006-10, the growth of China’s air transport volume will stand at around 8 percent. At this rate, the number of passengers traveling by air will reach 100 million and the volume of freight transported by air will reach 2.8 million tons next year.

  Chen Huai, who works with the Development Research Center of the State Council, noted that in the years, the number of China’s civil aircraft will increase from its current several hundred to 2,000 or more, which would still not meet the number of 2,200-2,400 needed at that time, due to the acceleration of urbanization.

  Some experts noted that the high rate of flight delays is the result of backward management of the whole airline sector, which cannot be improved by changing the service plan of a couple of air carriers. The solution is to revise the law and rules on civil aviation. The Civil Aviation Law, drafted in 1995, is partially outdated. The related department is now pondering how to revise the law, which will cover compensation for flight delays.


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