An article from BBC News this morning talks about a new law (taking effect in a little over a year) that will call for significant pay-outs to customers whose flights are delayed or canceled or who are forced off due to overbooking.

It remains to be seen what the direct effect will be of this new law, but the airlines (especially the low cost providers) are screaming.

Frankly, I can't blame them. Since you seldom forfeit your ticket if you don't show up for a flight (often these days you pay a fee to change it, but very rarely do you lose it), the airlines are out of luck when you don't show up. For example: if a plane carrying 50 passengers at $100 each were scheduled to take off and booked full, but only 40 passengers showed up, the airline would still fly the plane, but would make $1000 less. Sure, the passengers would pay $50 to take the flight later, but that still leaves the company turning away passengers for a flight on which they will receive $4500 instead of $5000. For high-price airlines, that may work. But, the smaller the margins, the more troubling the issue, as running an aircraft is a (mostly) fixed cost endeavor.

I sympathize entirely with the passengers who get bumped (although it has, admittedly, not happened to me in years). However, I have less sympathy when I look at most of the "bumpees" paying $300 for a round trip ticket that is costing me $2100. And most of the complaining comes from people who are paying $300, not people paying $2100 for the same flight.

Perhaps what we need is less uncertainty in flight costs. Instead of charging business travelers huge amounts of money for travel during the week and giving the vacationers (or business travelers stranded fro a weekend) a sizable break on the fares, they should raise the lowest economy fares to $500 or $600 for a cross-country trip without regard for considerations other than the destination. This would allow the companies to go back to their models where you could change flights without penalty. However, this would likely decrease travel, which would likely increase fares to $1000 and decrease the number of planes flying each day, dropping the need for personnel and reducing the positive economic effects of the last 20 years of air travel.

Sounds good to anyone paying $2100 today, but it would certainly lead to a larger number of driving vacations and extended use of iChat AV, as most families wouldn't be paying $4000 to fly across country as they would have previously when the rates were $1200.

What constantly surprises me about the government types who write regulations like these is that they seem to have no regard whatsoever for the market. We (at least in the US) have a wide variety of airlines and good access to information on how those airlines treat their customers. You can choose to fly cheap when you want cheap, or expensive when you want expensive. If you pay $2100 to go the same place as somebody who pays $300, don't you think it is right for the airlines to value your time more than the time of the cheap guy back in 38C?