Will Accessibility Fines spell Sunset for some Airlines?
There has been some debate about whether the new fines being levied on the airline industry for breaches of accessibility legislation, as a result of the record fine imposed on Delta, has the potential to put an already financially stressed industry out of business. Discount airlines in Australia have been using the same argument for some time. I think there needs to be some context put around the fines and its potential affects on the industry.
The Context
Every business operates in an environment and a set of rules set by the community. Those rules embody the values and expectations of society and change over time. The current set of rules relating to accessibility are just one of a raft of rules affecting the aviation industry that include aircraft safety, workplace safety, noise regulations, environment restrictions etc. Every business has to structure its operations to remain profitable in the particular environment in which it operates. Those rules are the same for all players as they have to be to maintain a level playing field.
Industry Structure and Compliance
It has also been said that the financial margins of the industry are low and that it cannot absorb large financial penalties. Lets be very clear on something. The aviation industry is highly competitive. IATA has even recognized that the pricing behaviour is not sustainable. Price cutting has seen the industry produce airfares at all time lows. That is an industry structural issue that may or may not be sustainable over the long term. Under such competitive pressures some airlines will fail and others with a more streamlined cost base and operating model will survive. Fewer airlines will ultimately be the outcome as will a higher airfare base. World wide that competition was encouraged by open skies policies of governments from around the world. Individual airline failure will be a result of that airlines inability to compete with its most efficient rivals and have a pricing model that yields a positive rate of return on all of its assets and operating costs. Financial performance has nothing to do with accessibility. Accessibility is simply just another compliance requirement in an industry governed by rules and regulations. No one would accept for a second a shortcut on safety related maintenance or say the fines imposed for those breaches shouldn't applied because it might send the airline broke. Not applying the fines would actually have the potential of penalizing those operators playing by the rules.
Mobility Aid Repair Costs - The final Red Herring
There has also been discussion on the high cost to airlines or repairs to mobility aid equipment sustaining damage while in transit. This is not a new problem, luggage has been damaged since airlines began operation. The care associated with that damage has been negligible as liability has been limited by the airlines in their carriage contracts. Effectively the airline industry has taken an all care no responsibility attitude and the travelling public has been powerless to do anything about it. All seasoned travellers buy inexpensive luggage in the full knowledge it will be lucky to last half a dozen trips. In a recent trip through LA I witnessed a luggage throwing competition on the tarmac between two American Airlines baggage handlers. The problem is well know in the industry but no airline has moved to change the culture. With the advent of unlimited liability rules applying to mobility aides the airlines have simply accepted the repair bills instead of attempting to fix decades old bad practice. All baggage is actually the asset of the paying customer and should be treated with respect. Don't blame accessibility legislation for bad practice, procedures and supervision.
To put some final context around this issue the US airline industry is currently running at around 3.5 passenger damage reports per month for every 1000 passengers travelled according to the Air Travel Consumer reports product by the Aviation Consumer Protection and Enforcement Division of the US Department of Transport. That is across all forms of baggage so with the extra care that should be afforded to mobility equipment the total financial quantum is small.
Policies have to be Effective
Any policy or expenditure to meet any compliance requirement has to be effective. You can employ as many consultants as you like, appoint as many advisory boards as you like, have as many project teams as you like, and have as many cross division task forces as you like but unless they can effectively do the job they are tasked with and the organization as a whole takes ownership for the policies and procedures then you have wasted your money. I am not saying that Delta’s management didn’t have ownership of the accessibility agenda, but the regulator did find that what it had done wasn’t effective. The breaches were repetitive and consistent and actually represented a step backward from the 2003 position. The fine was imposed accordingly. It isn’t the fine that might put Delta under pressure but the organizations inability to effectively implement its accessibility strategy and embody it into its overall culture
The Market
Currently accessible tourism represents 11% of the total tourism spend and by 2020 will be 25% of the total tourism market. Accessibility isn’t just a social justice and compliance issue it is good business sense. Perhaps that market size is not fully understood and if it was there may well be a very different attitude and hence a different degree of effectiveness in the application of accessibility policies. I don’t know of many industries that would just turn their back on 11% of their total market let alone the potential 10 year growth to 25%. Airlines globally should be looking to this market to help them through the recovery phase from the GFC. Those that embrace accessible tourism as a valid market sector will have a totally different view of expenditure on accessibility. It will be mainstreamed into the culture and all forms of organizational training and then will cease to be add-on ineffective project cost.
So back to the original question: Will Accessibility Fines spell Sunset for some Airlines?
Those that do not embrace the inclusive tourism market and persist in ineffective risk management strategies may not. That is not the result of accessibility rules but the failure of the particular airline to meet the community expectations in the environment in which it operates. There is a simple business philosophy that has been around since business began,
“Evolve or Perish”.
Inclusive tourism is a lucrative and growth market, embrace it and reap the rewards.