On Monday, the Biden administration announced new regulations for airlines, requiring them to compensate passengers when flights are canceled or delayed. While many praised the decision, some are asking what the economic impact of the policy will be.
Dr. E.J. Antoni, an economist and research fellow at The Heritage Foundation, joined Talk Radio 1210 WPHT’s Rich Zeoli to discuss how airlines could react to the new regulations.
“Later this year, my administration will propose a historic new rule that will make it mandatory… for all U.S. airlines to compensate you with meals, hotels, taxis, ride shares, and rebooking fees… whenever they’re the ones to blame for the cancellation or delay,” Biden said.
Biden shared during his Monday press conference that other nations have already put regulations like this into place, saying that it shows “it works,” but Antoni isn’t convinced.
Critical of the decision, Antoni says that the move only shows those in the Biden administration have little to no experience working in the private sector.
“It shows with nonsense like this, where they think that all of these costs can be heaped on to these companies and that somehow, they’re not going to be passed on to the consumer,” Antoni said.
Drawing comparisons to the effect inflation has had on numerous industries, Antoni said that when costs go up for companies, consumers are the first ones to bear the brunt of it.
One point he made was recent changes in hotel policies where room service standards have all but changed compared to years past as hotels look to cut costs because of inflation.
Bottom line, Antoni says that while it’s hard to “measure it,” often increased costs that companies face all get handed down to consumers.
With airlines receiving exorbitant amounts of funding through taxpayer dollars from the government to help them stay afloat during the pandemic, Zeoli argued that they should be compensating their passengers when they mess up.
“Well, sure, that sounds great. But the problem is once we get beyond the talking points and we actually like war game this out of how’s this going to go, we realize it all gets passed on to the consumer,” Antoni said.