American Airlines CEO Says New Refunds Rule Has Some ‘Gray’ Areas

Skift Take

American CEO Robert Isom is one of the first top executives in the U.S. airline industry to voice some concerns over the Department of Transportation’s latest rule.

American Airlines CEO Robert Isom said Thursday that certain aspects of a new federal government rule that would require airlines to provide automatic refunds were “gray.”

“I’d tell you that from top of mind, there are a lot of issues that I think are still gray,” Isom said during a call with analysts. 

One issue in particular that Isom described as “fairly gray” was who takes the blame when a flight is delayed or canceled. 

“There’s a lot of parties that are involved with air transportation,” Isom said. “We control a lot of it. We certainly don’t control the weather, but we also depend on the FAA for aircraft control, not just in the short run, but in the long run as well. We have to make the right decisions for our customers.”

Isom wondered about the intent of the rule. Is it meant to prevent meltdowns? Or something broader? 

“That’s something that we need to figure out,” he said. 

A Long-Awaited Rule

The Department of Transportation released a long-awaited final rulemaking on Wednesday that tackled “junk fees” and set requirements for when airlines should provide customers with automatic refunds. 

The rule said airlines would need to provide automatic refunds in instances where flights are significantly delayed or canceled, checked baggage is delayed and when ancillary services that were paid for were not provided. 

Customers are eligible for refunds if departures or arrivals for domestic flights are delayed by three hours and international flights are delayed by six. The new rules would take effect over the course of two years, according to the AP. 

Isom is one of the first major U.S. airline CEOs to voice his concerns about the new DOT rules. Airlines for America, a trade group that represents American and other airlines, said the industry already offers consumers a large range of options. 

American also announced first-quarter earnings Thursday morning. The carrier reported operating revenues of $12.6 billion and a loss of $312 million, trailing its competitors Delta Air Lines and United Airlines. Isom said in an earnings release that despite the first-quarter loss, American was on track to meet its full-year financial targets. 

[embedded content]

Airlines Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more airlines sector financial performance. 

Read the full methodology behind the Skift Travel 200.

Go to Source...