When governments try to address consumer protection issues in the airline industry, they sometimes lose their footing on the slippery slopes and bury the industry in a cascade of regulations.
That sort of thing seems to be happening a lot lately at our own Department of Transportation, but we are pleased to report that in Europe, where bureaucracy can be even worse, cooler heads prevailed in a recent debate about accommodating passengers stranded by airline bankruptcies.
There had been talk across the pond of establishing a consumer protection fund in the E.U., which would assess a fee on all passengers and pay out funds to those stranded by an insolvent airline. However, the downsides were obvious even to some E.U. officials.
As the airlines pointed out, the plan would distort the market by requiring "financially prudent airlines" and their passengers to subsidize the risks of others. Besides, a fair amount of the fund would get eaten up by administrative costs in any event-- all for a small number of passengers.
In a welcome show of restraint, the E.U. backed off after IATA airlines flying to and from the E.U. agreed to make their "best efforts" to offer space-available "rescue fares" to uninsured passengers stranded away from home by the financial failure of another airline.
The agreement stipulates that it would be the responsibility of the failed airline's home government to communicate information to stranded passengers about the possibility of "rescue service."
Fare levels and travel conditions would be set by the individual airlines making the rescue offer.
From where we sit, this is a case where the cost-benefit analysis works out just about right.