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INFORMATION
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ECONOMIC ANALYSIS AND POLICY (EAP) SECTION

ECONOMIC POLICY PROGRAMME


ECONOMIC REGULATION

CONSUMER INTERESTS


Introduction

Consumer interests cover many issues, including air “passenger rights” and the contractual relationship between air carriers and their users. Furthermore, the subject has many implications: at the government level is the need for, and nature of, regulatory action; at the industry level there are numerous competitive, cost and operational consequences as well as issues of self-regulation; and globally the subject raises questions of harmonization and, potentially, problems of extra-territoriality when legal regimes differ and are applied beyond territorial jurisdictions.

Along with the continuing liberalization of air transport regulation, the protection and improvement of airline passenger rights has gained greater importance, particularly but not exclusively in major markets. A significant number of States, in recent years, have adopted regulatory measures that address some of the issues such as denied boarding compensation, bans on smoking, on-time performance statistics and access for disabled passengers. Some governments have also required airlines, inter alia, to ensure that all tariffs are made available to the public, to disclose information on cancellation policies and to avoid misleading advertisements.

At the industry level, many airlines have also taken the initiative by making voluntary commitments (i.e. non-legally binding self-regulation) to clarify or improve their policies or practices with regard to certain customer services (such as fare offers, ticket refunds, denied boarding, flight delays and cancellations, baggage handling, response to complaints, and special passenger needs), often in response to public pressure and to avoid regulatory measures.

A summary of the airline and governmental responses to some of the more prominent consumer interest issues is provided in Table A (pdf) (revised, September 2011). The summary includes relevant cross-references to certain liability regimes. Table B (pdf) provides additional information on conditions of contract/carriage including a list of the elements covered by the 2000 version of IATA’s Recommended Practice 1724.

ICAO's work

ICAO has done considerable work in this field, including the development of guidance material in such areas as conditions of carriage, fare guarantee, baggage, tariff disclosure, denied boarding and code sharing. The ICAO Code of Conduct for the Regulation and Operation of Computer Reservation Systems (CRSs) covers the consumer protection aspects in the context of CRSs. This guidance can be found in Policy and Guidance Material on the Economic Regulation of International Air Transport (Doc 9587).

Guidance material for air transport users has also been prepared to assist States in publishing or encouraging the publication of booklets intended to inform air passengers and shippers of their rights and obligations. Furthermore, Annex 9 to the Chicago Convention sets out standards and recommended practices for passenger facilitation designed to allow air transport passengers to proceed through airports with minimal delay and difficulty.

The issues identified above were also addressed by the fifth ICAO Worldwide Air Transport Conference (AT Conf/5), held in March 2003, which drew the following conclusions in respect of possible action by States:

  1. As a premise in addressing consumer interest issues, States need to carefully examine what elements of consumer interest in service quality have adequately been dealt with by the current commercial practices of airlines (and service providers if applicable) and what elements need to be handled by the regulatory and/or voluntary commitment approaches1.
     
  2. States need to strike the right balance between voluntary commitments and regulatory measures, whenever government intervention is considered necessary to improve service quality. States should rely generally and initially on voluntary commitments by airlines (and service providers), and when voluntary commitments are not sufficient, States should consider regulatory measures.
     
  3. In implementing new regulatory measures, States should minimize the unnecessary differences in the content and application of regulations. Efforts to minimize differences would prevent potential legal uncertainty that could arise from the extra-territorial application of national laws, without diminishing the scope for competition or hampering the operating standards and procedures for interlining2.
     
  4. ICAO should continue to monitor developments regarding voluntary commitments to and government regulation of consumer interests with a view to providing useful information to States to assist in the harmonization process. Such monitoring should, in due course, enable ICAO to decide whether some form of action at multilateral level, such as the eventual development of a global code of conduct, is feasible or necessary to ensure harmonization of regulatory measures.
     

Notes

  1. In this regard, the following indicative list, together with airlines’ conditions of contract/carriage, could serve as a checklist of many of the consumer interest issues a State may wish to monitor: the availability of lower fares including fares on websites;
     
    • reservation, ticketing and refund rules;
    • advertisements;
    • airline’s commercial and operational conditions;
    • check-in procedures;
    • handling of and compensation for flight delays, cancellation and denied boarding;
    • baggage handling and liability;
    • operational performance disclosure such as on-time performance and complaints; and
    • assistance for disabled and special-needs passengers (i.e. people with reduced mobility).
       
  2. Interlining refers to transportation on more than one air carrier.