Some CEOs are already questioning how airlines will comply with the Biden administration's new rules requiring refunds for canceled or excessively delayed flights.
Frontier CEO Barry Biffle said on a call with analysts Thursday that U.S. airlines are well-equipped to respond to changes such as disclosure of fees and refunds to customers in certain situations. He said that there is a possibility that it is not. He pointed out the ineffectiveness of the industry's technological capabilities.
“I think the reason some parts of the industry are having a hard time is because they don't have the technology in place right now to do exactly what they're looking for,” Biffle said. “But hopefully we can all get there.”
The Department of Transportation, led by Biden appointee Pete Buttigieg, last week announced new rules to make refund policies friendlier to customers and more consistent across airlines. The new rules will require airlines to provide refunds if a flight is delayed by three hours, or six hours for international flights. If a customer is downgraded from first class to coach. Or if your flight changes and adds more connections than expected.
Frontier Airlines did not immediately respond to Fortune's request for comment.
Biffle's hesitance is echoed by American Airlines CEO Robert Isom. Isom said on an earnings call last week that there was “quite a bit of gray” in the revised obligations.
Mr. Isom, who runs one of the nation's largest airlines, which brought in $52 billion in operating revenue last year, seemed ambivalent. He said if the new rules are aimed at keeping airlines from overstaying their schedules and avoiding meltdowns, that's fine, but the scope could raise questions for airlines. Stated.
That includes how the new rules take into account issues such as inclement weather, air traffic control (a responsibility of the Federal Aviation Administration) and diversions for medical emergencies, he said. Isom added that airlines have refunded approximately $2 billion in ticket fares to customers in 2023.
story continues
“We don't want to end up in a situation where we can't provide the service that a customer wants just to avoid a penalty,” he said.
Asked for comment, an American Airlines spokesperson directed Fortune to Mr. Isom's remarks on an earnings call last week.
The DOT's rules are likely to result in additional costs for airlines, and some analysts believe low-cost carriers could be particularly hard hit. Biffle added on Thursday's conference call that the new rules should not have a negative impact on airline revenues.
“Last year, we refunded more than $300 million in the same category. [and] I believe we are pretty much compliant with what they are asking for,” Biffle said by phone. “We don’t see any economic impact from this.”
This article originally appeared on Fortune.com
