Should Airlines be Compensated for Grounding?
[Guest post by DRJ]
Some airline executives claim flights were improperly grounded after the Iceland volcano eruption so governments should compensate the airlines for their losses:
“The International Air Transport Association (IATA) put the overall cost to the airline industry at 1.7 billion dollars (1.3 billion euros): at its peak, said IATA, the crisis was costing 400 million dollars a day.
“For an industry that lost 9.4 billion dollars last year and was forecast to lose a further 2.8 billion dollars in 2010, this crisis is devastating,” said IATA chief Giovanni Bisignani in Berlin.
“Airspace was being closed based on theoretical models, not on facts.”
Now governments needed to look at how to compensate the airlines, he said.
“I am the first one to say that this industry does not want or need bailouts. But this crisis is not the result of running our business badly.”
An extraordinary situation had been exacerbated by “poor decision-making” from the governments,” he argued.
“Governments should help carriers recover the cost of this disruption.”
British Airways chief executive Willie Walsh had already branded the ban unnecessary, and British opposition leader David Cameron called for a public inquiry into the government’s handling of the crisis.”
I sympathize but wouldn’t any payment be a bailout? The best solution is to elect a more responsible government.
— DRJ
Sue the volcano.
Existence has devolved into one of the least funny Monty Python sketches.
(Choose your deity) wept.
Ag80 (f67beb) — 4/21/2010 @ 10:14 pmThis was a no-win situation for the governments involved. If /any/ incident had occurred, even one that ended safely every government that allowed flights would be facing even more pressure than they are now.
Perhaps what is needed is the purchase of Act of God insurance with some minimum threshold to trigger the payout.
Soronel Haetir (795f5a) — 4/21/2010 @ 10:22 pmIf they didnt fly – no
EricPWJohnson (1d0270) — 4/21/2010 @ 10:46 pmBased on the articles I’ve seen in the insurance trade rags, the airlines were not covered for this.
daleyrocks (1d0d98) — 4/21/2010 @ 11:16 pmNo, it would not be a bailout, it would be the governments paying compensation for the damage they caused by their own acts. Had they left it up to the airlines whether to fly or not, and the airlines had decided it was too dangerous, then that would be their problem; but by taking the decision out of their hands the goverments owe them this money. Electing more competent governments in the future is a great idea, but how will that make up for the damage these governments did? Do you think all governments should be immune from having to compensate their victims?
Milhouse (ea66e3) — 4/22/2010 @ 1:00 amI think this would be a bailout because any payment to the airlines ultimately comes from the taxpayers, regardless of fault.
So would you make this an exception to governmental immunity? If so, how would it prevent government from making the same decision(s) in the future?
DRJ (09fa6c) — 4/22/2010 @ 1:20 amShould the fliers whose flights were canceled be compensated with new flights?
imdw (597e10) — 4/22/2010 @ 4:56 amRebate the gate-tax for the unused days.
Otherwise, Nothing!
What a bunch of whiners.
AD - RtR/OS! (898e6a) — 4/22/2010 @ 8:51 amAirline Compensation?
Perhaps a rebate of the daily charge for gate access, nothing more.
What a bunch of whiners?
AD - RtR/OS! (898e6a) — 4/22/2010 @ 9:00 amSorry about the double-post….it seemed to disappear into the ether, and then, poof!, it was back after I reposted.
What seems really delayed, is the time to return to the home-page after seeing that a comment has posted, along with the occassional delay in getting something posted.
AD - RtR/OS! (898e6a) — 4/22/2010 @ 9:03 amFor the legal experts – where is the line between act of God and a reasonable duty to perform services?
EricPWJohnson (1d0270) — 4/22/2010 @ 9:23 amThey should no more be compensated by the government than they should be if they were grounded by a blizzard. Let them negotiate something with their insurance carriers for this eventuality, next time.
The Sanity Inspector (ef5d4d) — 4/22/2010 @ 1:28 pmVolcanic activity–and other disruptions–are part of the risks you take as an airliner.
This is no government-caused disaster; it’s just part of the business model.
They should not be given a big government bailout just because an inherent risk of their business came about.
Mitch (f22c18) — 4/22/2010 @ 4:13 pm