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Travel disruptions spawn compensation programs

Posted On: Apr. 1, 2007 12:00 AM CST

JetBlue Airways Corp. canceled more than 1,000 flights in a six-day period following a Northeast U.S. ice storm on Valentine's Day, but its subsequent handling of the troubles has been described as a textbook case of effective crisis management, experts say.

Following the storm that left some of its passengers stranded aboard aircraft for up to 10 hours, JetBlue admitted fault, offered compensation and announced steps that it would take to correct the problems.

The airline also announced a Customer Bill of Rights that seems to have spurred proposed federal air passenger rights legislation that was introduced in the U.S. House of Representatives in early March. The European Union has had such a law in force since early 2005.

"We've learned some huge lessons from this experience," said JetBlue Chief Executive Officer David Neil during a Feb. 22 investor conference. "We have operated this airline in very difficult weather conditions for the last seven years and this isn't the first storm we've ever seen. It was a collision of a lot of events that came together that exposed some of the weaknesses in our operation, particularly in our recovery side. If there is any good news to come out of this, then (it is that) we have already started implementing new operations to make sure this never happens again."

JetBlue's response to a subsequent winter storm on March 16 was markedly different--it warned customers of cancellations and waived change fees and air fare differences to allow rescheduling before the storm hit.

Meanwhile, JetBlue has been praised for introducing its Customer Bill of Rights that was made retroactive to Feb. 14. The code promises notifications of delays, cancellations and diversions, and compensation up to a full refund for cancellations and delays.

U.S. consumers have called for a federal passenger bill of rights for some time. Indeed, legislation was introduced March 1 in the House by U.S. Rep. Mike Thompson, D.-Calif. The Airline Passenger Bill of Rights Act of 2007, which does not provide details of compensation, has been passed to a House subcommittee.

In Europe, rules stipulating passenger rights have already been introduced. The European Union introduced "air passenger rights" in a regulation that went into effect Feb. 17, 2005.

The E.U. regulation (Directive 261) established common rules on compensation and assistance to passengers in the event of denied boarding, cancellation or a long flight delay. E.U.-based airlines must compensate each passenger on a European flight for denied boarding or cancellation. The amount of compensation varies between g250 ($330) and g400 ($528) depending on the distance of the flight. Airlines must compensate passengers for cancellations unless the airline can prove "extraordinary circumstances."

European airlines under this E.U. regulation also must show "reasonable care" to passengers in the case of delays or cancellations. This includes offering "free of charge" meals and refreshments, two telephone calls or the equivalent, and hotel accommodation when a stay of one or more nights becomes necessary. The air carrier also is obliged to pay particular attention to the needs of people with reduced mobility as well as unaccompanied children.