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Airlines deal with delay dilemma
By Cao Desheng (China Daily)
Updated: 2004-08-05 09:06

It turned out to be a "black July" for some domestic airlines last month as they were inundated with cries for compensation over delayed flights.

Some airlines even met with passengers who refused to leave their seats on the aircraft after their compensation demands were turned down.

Passengers show petitions demanding for compensation and refuse to get off a plane at Ningbo airport after their July 10 flight from Beijing was delayed seven hours due to mechanical problems. The impasse lasted for nearly three hours until China Eastern Airlines agreed to give each disgruntled passenger 200 yuan (US$24). [newsphoto]
China Eastern Airlines was one of the hardest hit.

Early last month a China Eastern flight from Qingdao in eastern China's Shandong Province was six hours late in landing at Shanghai Pudong International Airport.

The delay was caused by the postponement of previous flights due to bad weather, according to China Eastern officials.

More than 30 passengers refused to leave the plane in Shanghai after they failed to strike a deal with China Eastern staff for compensation over the delay.

The impasse lasted for three hours until the airline agreed to compensate each passenger 300 yuan (US$ 36.30), but more flights had to be delayed because of the stand-off.

Similar problems plagued Air China, China Southern Airlines and Shenzhen Airlines.

In fact, delayed flights have long been a bone of contention for travellers.

"Complaining to the airlines seems to be a waste of breath," said Li Jiawei, a frequent traveller, adding that the airlines always have excuses.

Li said passengers understand uncontrollable factors can cause delays, but if a problem stems from something within the control of the airline company, such as mechanical failure or staffing difficulties, relevant compensation is necessary because air tickets represent a contract between passengers and the carrier.

Passengers' complaints escalated as of July 1 when CAAC issued a guideline saying airlines should compensate affected passengers in the wake of delayed flights if the root cause is the airlines' problem.

Besides offering proper services, the guideline said, airlines should compensate affected passengers based on the length of the delay, such as less than four hours, between four and eight hours and more than eight hours.

Compensation can be in the form of cash, discounted fares or mileage accumulations that can be redeemed for free trips.

Airlines should lay out detailed rules on compensation in line with their own conditions, according to the guideline.

Airline dilemma

Although the nation's airlines have produced customer service plans in responding to the guideline, most have no detailed policies on compensation for delayed or cancelled flights. An exception is Shenzhen Airlines, which became the first Chinese carrier to unveil compensation rules.

The rules released by the air carrier in South China's Shenzhen note that a maximum of up to 30 per cent of the ticket price will be refunded if a flight is four to eight hours late and passengers can receive a full refund if the delay is longer than eight hours.

Compensation for delayed airfreight goods and overbooked flights is also covered in the rules.

"The formulation of such detailed compensation criteria will impose a crisis awareness on airline staff so that they can keep improving their services to ensure flight punctuality," said Dong Lijia, general manager of Shenzhen Airlines.

Air China, the nation's civil aviation giant, is reluctant to lay down a compensation policy.

"Air China has its own regulations on compensation but we do not plan to publicize such criteria, as delayed flights involve a series of complicated issues," Air China Vice-President Yang Lihua said during an interview with China Central Television.

Yang said even if her company delivered compensation criteria in line with CAAC's guideline, they will not be operable since there is no arbitration body within the industry to judge the complicated circumstances.

In fact, how to define "responsibility" for flight delays is a controversial issue.

Generally, airlines should be responsible for delays caused by problems from aircraft maintenance, flight arrangement, transport services and air crew, said Li Jiangming, director of CAAC's Department of Transportation.

"According to the current Civil Aviation Law, in this case airlines should provide boarding and lodging to affected passengers and compensate them for losses resulting from delays of flights," Li said.

If the delays are caused by factors out of airlines' control, such as bad weather, emergencies, air traffic control or lengthy security checks, airlines are exempt from liability but should inform passengers of the reason and help them arrange boarding and lodging, said Li of CAAC.

Lack of arbitration

But airlines are inclined to be circumspect about the sort of compensation they should offer.

Since domestic airlines are under pressure to deliver profits it is hard for them to offer criteria for compensations.

Statistics from CAAC indicate a net loss of 3 billion yuan (US$ 362 million) in the nations's civil aviation industry last year.

"There should be a kind of arbitration agency within the industry to judge the complicated circumstances," said Yan Changzheng, director of Xiamen Airlines' general office.

Yan's voice represents several airlines who contend they are responsible for transporting passengers to their destinations in a reasonable time but the definition of "reasonable time" comes down to individual cases.

Since air passengers do not know the exact liability that airlines should hold and airlines cannot give reasonable explanations about the cause of delayed flights on most occasions, disputes resulting from delayed flights have soared in the past month.

In July, around 300 cases were reported in which passengers refused to leave their planes when compensation demands were rejected following delayed flights.

Why did the guideline, which CAAC says is aimed at urging airlines to take effective measures to improve their services, achieve such an "unexpected" result?

International practice

Internationally, there is not a single airline that provides a legal definition of flight delays, according to Dong Nianqing, a legal expert with China civil aviation management cadre college.

The definition of a delayed flight is made by judges based on individual cases, Dong said in a report on the legal analysis of delayed flights.

Compensation for delayed flights is more of a voluntary commitment from the air carrier association as well as the special commitment of airlines, Dong said.

Generally, foreign airlines in most developed countries take the Montreal Convention - which took effect on November 4 last year - as a reference to outline their compensation policies. China has not signed the convention.

Foreign airlines that China Daily reached refused to disclose their rules on compensation, saying the rules are complicated and involve commercial confidentiality.

One of the foreign airlines said their compensation for delayed flights is only applicable in individual cases if the concerned party persists in demanding it. Even then, passengers have to produce evidence of the real losses they suffer from flight delays, otherwise the compensation is limited.

Let the market rule

Experts say the formulation of compensation rules is not an effective means to alleviate delayed flights.

The market should play a crucial role in the industry to intensify competition among airlines so that flight punctuality rates can be improved, said Hu Dayuan, a professor with Economics Research Centre at Peking University.

The infrastructure construction, management and scale of air fleets of the nation's civil aviation sector lag behind the rapid growth of the industry, which contributes to the increase of delayed flights, insiders say.

In fact, domestic airlines are working to improve their competitiveness by increasing the size of their fleets.

Air China Cargo Co has ordered two Boeing 747-400 Freighters worth a total of about US$400 million, sources at Boeing said.

The planes will be used on the carrier's routes between China and North America. The first is to be delivered in November 2005 and the other in March 2006.

One month ago, China Eastern Airlines signed a memorandum with Airbus to purchase 20 A330-300 passenger jets.

China Southern is reportedly set to invest 10 billion yuan (US$ 1.2 billion) in purchasing new planes.

Insiders say the total number of new airliner purchases by domestic carriers will top 180 within the year.

In addition to strengthening hardware construction, service awareness must be improved, a researcher with Chinese Academy of Social Sciences said on the condition of anonymity.

Consumers have the right to know, to select and to demand compensation for flight delays, so airlines should respect their rights and provide proper services, he said.

But air passengers should adopt a proper way to safeguard their rights and interests, and extreme actions might lead to violations of laws, the researcher said.

Problems resulting from delayed flights cannot be solved in the near future and a comprehensive regulation is needed to map out potential resolutions, he added.

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