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What happens when you change the incentive?

The government announced in December it would fine airlines $27,500 per passenger for long tarmac delays – or $2.75 million for a 100-passenger flight.

The fines haven’t started yet and airlines are already deciding on how this will change their flight cancellation policies. What you can expect: More cancellations and less time waiting on the tarmac.

Cancellations cost far less than a huge fine, especially since seats are routinely prepaid and airlines save fuel cost.

“You’re not going to get penalized for tarmac delays if you don’t fly the flight,” said Massachusetts Institute of Technology professor John Hansman, an aviation expert.

From Feb. 5 through Thursday, when severe snowstorms hit the Mid-Atlantic and Midwest, airlines canceled about 15,000 flights, according to the Air Transport Association. It took days for the 500,000 to 1 million passengers to rebook.

The fines for lengthy tarmac delays – defined as three hours or more – go into effect April 29. Airlines such as JetBlue Airways have already made the decision that it is better to aggressively drop flights from their schedules when bad weather strikes.

Amy Cohn, an associate professor at the University of Michigan who has done extensive research on airline scheduling, said she had seen a substantial increase in cancellations across the airline industry. “They’re canceling a lot more,” she said.

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Source: Mark Perry