Abstract

On April 29, 2010 United States Department of Transportation rules banning taxi-out, taxi-in and diversion ground times greater than three hours became effective. These rules were the product of a decade-long debate between airlines, consumer groups and regulators over the federal role in mandating how airlines manage departures during severe weather events.

Our research program outlines the background and specific of the tarmac delay rules. Using historical data of tarmac delays, the causes and patterns of extended tarmac delays are analyzed. We analyze airline responses to the tarmac delay rule and provide a case study. We review reported cancellation data for May 2010 and compare current (post-rule) trends against historical patterns. We assess public cost and benefit with particular focus on the balance between tarmac delays and cancellations. DOT had projected that public benefits exceed public costs from the tarmac delay rules, but initial results under the rule indicate that public costs have far outweighed realized benefits. The rule and enforcement strategy have created significant public harm.

This paper concludes that while 110,000 passengers a year will be spared an average of 3.26 hours of taxi-out delays, at least 200,000 passengers will be on more than 2,600 flights cancelled directly and solely to comply with tarmac delay regulations. Due to aircraft availability and network design, these 2,600 flights will drive at least another 2,600 indirect cancellations, displacing another 200,000 passengers. The total impact will be at least 5,200 flights and 400,000 passengers impacted. DOT had projected just 41 annual incremental cancellations from the rule; this number was exceeded in the first month alone.

In the long term, we estimate that a 4:1 ratio of direct and indirect cancellations to prevented delays will result. For every three-hour tarmac delay prevented by the rule, two flights will be directly cancelled and another two flights indirectly cancelled. In the short term, profound uncertainty about enforcement of the rule has driven a significantly higher cancellation ratio. Airlines are canceling flights that would not otherwise be impacted to avoid prohibitive and disproportionate fines. Because tarmac-related cancellations peak during the summer months, when airline load factors are the highest, finding new seats for displaced passengers is challenging. For passengers on cancelled flights, re-booking time is significant. The net cost to public welfare from the DOT rules approaches $4 billion, discounted over a 20 year period.

We conclude that DOT’s tarmac rules and punitive fine threats have driven significant cancellations and public costs far in excess of quantifiable benefits. A transparent, rational fine structure, publicly available and disclosed, will reduce cancellations resulting from airlines’ extreme risk-aversion and minimize the public costs. The underlying tarmac delay rules, particularly those related to weather-driven taxi-out delays, should be re-examined by regulators, legislators and consumers to determine if the trade-offs inherent are in the public interest.

Study Materials

• Overview Presentation (July 20, 2010) – Overview.pdf
• Research Paper (July 20, 2010) -  Tarmac_Paper.pdf
• Letter to The Hon. Secretary Ray LaHood, DOT (July 20, 2010) – DOT_Letter.pdf
• Appendix:  Reconciliation of Public Welfare – Slide_Appendix.pdf

Background & Relevant Materials:

• DOT Regulatory Impact Analysis (December 19, 2009) – DOT_RIA_JAN10.pdf
• Marks, J. and D. Jenkins. Modeling Passenger Re-Accommodation Time for Flight Cancellations in Airline Networks (June 30, 2010) – Passenger Displacement Paper.pdf
• DOT Enforcement Guidance (April 28, 2010) – DOT_Guidance.pdf