US Increases Rebooking Fee For Airline Failure

US airlines have successfully lobbied regulators to let them charge more money to accommodate passengers holding tickets on rival carriers that fail.

The Transportation Department said on Friday it would allow airlines to double the fee, to USD$50 one way, to rebook displaced passengers on any overlapping routes when they have room and accepting additional travelers would not disrupt operations.

Travelers have 60 days to make arrangements with another airline.

Congress created the provision as part of the airline bailout after the 2001 hijack attacks accelerated the industry's financial slide, heightening fears that one or more airlines could go under.

Lawmakers extended the program last year until November 19, 2005.

The initial fee amount, USD$25 one way, was questioned by big airlines who complained the amount did not cover per-seat expenses when taxes, personnel expenses and record costs for fuel were included.

The biggest airlines continue to struggle financially even though passenger traffic is strong.

Rebooking a small number of people at a small airport is not considered a burden, regulators said. But they conceded that responding to a surge in passenger traffic at a large airport in the days immediately after an airline failure could result in "considerable additional costs."

Delta Air Lines was required to temporarily reassign ticket agents to Las Vegas from other locations after Vanguard Airlines, a much smaller carrier, went out of business.

"Since the vast majority of passenger itineraries will involve one or more high traffic volume airports and in light of the substantial expenses that may occur, we conclude that the increased maximum rebooking fees of USD$50 are reasonable," the agency said.

While no big carriers are in immediate danger of liquidation, US Airways and United Airlines are restructuring in bankruptcy.

Airlines who cut routes during court restructuring must, in most cases, accommodate their passengers with other service or refunds.

(Reuters)