oversight

Delayed-Baggage Trends and Options for Compensating Passengers

Published by the Government Accountability Office on 2012-06-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States Government Accountability Office
Washington, DC 20548




           June 14, 2012

           The Honorable John D. Rockefeller IV
           Chairman
           The Honorable Kay Bailey Hutchison
           Ranking Member
           Committee on Commerce, Science, and Transportation
           United States Senate

           The Honorable John L. Mica
           Chairman
           The Honorable Nick J. Rahall II
           Ranking Member
           Committee on Transportation and Infrastructure
           House of Representatives

           Subject: Delayed-Baggage Trends and Options for Compensating Passengers

           This letter formally transmits the enclosed briefing in response to Section 407 of the FAA
           Modernization and Reform Act of 2012, 1 which directs the Comptroller General to (1) examine
           delays in the delivery of checked baggage to passengers of air carriers and (2) assess the
           options for and examine the impact of establishing minimum standards to compensate a
           passenger in the case of an unreasonable delay in the delivery of checked baggage. To conduct
           this work, we interviewed officials from the Department of Transportation (DOT) and
           representatives of airline and consumer organizations, analyzed DOT mishandled-baggage data
           for January 2004 through March 2012, and reviewed pertinent DOT regulations and proposed
           rules relating to delayed baggage. Our focus was limited to domestic air transportation. To
           assess the reliability of DOT’s mishandled-baggage data we interviewed officials in DOT’s
           Office of the Secretary and the Bureau of Transportation Statistics, reviewed DOT’s data
           collection and quality control procedures, and reviewed information collected from prior GAO
           reports. We determined that these data were sufficiently reliable for presenting the numbers of
           mishandled-baggage reports filed by passengers over the time period of our analysis. We
           conducted this performance audit from March 2012 through June 2012 in accordance with
           generally accepted government-auditing standards. Those standards require that we plan and
           perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
           findings and conclusions based on our audit objectives. We believe that the evidence obtained
           provides a reasonable basis for our findings and conclusions based on our audit objectives.



           1
            Pub. L. No. 112-95. 126 Stat. 11, 87 (2012).




                                                                                   GAO-12-804R Delayed Baggage
In summary, we found that DOT’s data do not distinguish between delayed baggage and other
types of mishandled baggage, such as those that are lost, damaged, or pilfered. DOT includes
all of these types of occurrences in its definition of “mishandled baggage.” Using DOT’s data,
we found that the number of mishandled-baggage reports 2 has decreased since 2008, when
airlines first began charging for the first checked bag (see slide 6). There are a number of
factors that could contribute to this decline in the number of mishandled-baggage reports, such
as a decline in the number of bags checked and improved baggage handling processes.
However, because of limitations to DOT’s baggage data, an assessment of baggage delays—a
subcategory of mishandled baggage—cannot be conducted. DOT has proposed a change to
airline-reporting requirements designed to improve its ability to measure airline performance
regarding mishandled bags, but the change would not distinguish among the types of
mishandled baggage (lost, delayed, damaged, or pilfered).

We also describe three options (slides 9-12) for compensating passengers for delayed and
other types of mishandled baggage and the impact of implementing new minimum
compensation standards. The options are for DOT to (1) keep current regulations, which,
among other things, require compensation for reasonable expenses that result because of delay
in the delivery of baggage, (2) reimburse passengers for the checked baggage fee if the bag is
delayed, or (3) implement compensation standards based on the length of delay. We note that
implementing minimum compensation standards could provide transparency and consistency
among the airlines, but would require an administrative structure and entail costs that are likely
to be passed on to passengers. We are not making any recommendations for congressional
consideration or agency action.

DOT provided technical comments, which we incorporated as appropriate. As DOT suggested,
we clarified that the scope of our work was limited to domestic air transportation and clarified the
agency’s reason for including all types of mishandled baggage in a single category.

We are sending copies of this report to the appropriate congressional committees. We are also
sending copies to the Secretary of Transportation. This report will also be available at no charge
on our Web site at http://www.gao.gov. Should you or your staff have questions concerning this
report, please contact me at (202) 512-2834 or dillinghamg@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on the last page of this
report. Key contributors to this report were H. Brandon Haller, Assistant Director; Martha Chow;
Colin Fallon; Geoffrey Hamilton; and Jessica Wintfeld.




Gerald L. Dillingham, Ph.D.
Director
Physical Infrastructure Issues

Enclosure



2
 A “mishandled baggage” report is a report filed with a carrier by or on behalf of a passenger who claims loss, delay,
damage, or pilferage of baggage. A mishandled-baggage report may represent one or more mishandled bags.




Page 2                                                                                  GAO-12-804R Delayed Baggage
Enclosure I




        Delayed Baggage Trends and
         Options for Compensating
                Passengers

              Mandated by Section 407,
       FAA Modernization and Reform Act of 2012
                 (Pub. L. No.112-95)




   For more information, contact Dr. Gerald Dillingham, dillinghamg@gao.gov                 Page 1




          Page 3                                                              GAO-12-804R Delayed Baggage
Mandate

Section 407, FAA Modernization and Reform Act of 2012 directs
the Comptroller General of the United States to:
    (1) examine delays in the delivery of checked baggage to
        passengers of air carriers; and
    (2) assess the options for and examine the impact of
        establishing minimum standards to compensate a
        passenger in the case of an unreasonable delay in the
        delivery of checked baggage.
   In conducting the study, the Comptroller General shall take
   into account the additional fees for checked baggage that are
   imposed by many air carriers and how the additional fees
   should improve an air carrier’s baggage performance.

                                                                  Page 2




     Page 4                                         GAO-12-804R Delayed Baggage
Research Questions

• What is known about delays in the delivery of checked baggage
  to airline passengers?

• What are some options for establishing minimum standards to
  compensate passengers when there is an unreasonable delay
  in the delivery of checked bags?

• What might be the impact of the implementation of minimum
  standards to compensate passengers in the case of
  unreasonable delays in the delivery of checked bags?



                                                                Page 3




     Page 5                                       GAO-12-804R Delayed Baggage
Scope of the Work and Methods

• Analyzed Department of Transportation (DOT) data on
  mishandled baggage* (which includes delayed baggage) on
  domestic transportation for January 2004 through March 2012
• Reviewed pertinent DOT regulations and various rulemaking
  documents related to mishandled baggage
• Interviewed DOT officials and representatives of airline and
  consumer organizations
• Reviewed previous GAO products and relevant industry
  publications


  * Please see appendix for relevant definitions.
                                                                   Page 4




      Page 6                                         GAO-12-804R Delayed Baggage
Data Do Not Distinguish Between Delayed
Baggage and Other Types of Mishandling
• Current DOT regulations define mishandled baggage and require the
  larger U.S. airlines to report monthly the number of domestic
  mishandled-baggage reports filed and the number of enplaned
  passengers
    • A mishandled-baggage report is a report filed with the airline by a
      passenger or on behalf of a passenger claiming loss, delay,
      damage, or pilferage of baggage
    • Using this information, DOT calculates a rate based on
      mishandled baggage reports per 1,000 passengers
• A proposed DOT rule seeks to require airlines to report the number
  of mishandled bags and the number of bags checked, allowing for a
  more precise performance measure
    • The proposed rule would not, however, distinguish among the
      types of mishandled baggage (lost, delayed, damage, pilfered)
                                                                        Page 5




      Page 7                                                GAO-12-804R Delayed Baggage
Mishandled-Baggage Reports Have
Declined, 2004-2012
  Mishandled-Baggage Reports Filed (January 2004—March 2012)




                                                                   Page 6




    Page 8                                              GAO-12-804R Delayed Baggage
Factors Contributing to the Decline in
Mishandled-Baggage Reports
• Improved on-time performance may result in fewer delays and
  transfer mishandling

• According to SITA,* improved processes and infrastructure
  mitigate the conditions that result in mishandled bags

• The decline in the number of bags checked results in fewer
  mishandlings

* Founded as the Société Internationale de Télécommunications Aéronautiques,
SITA provides global integrated communications and IT services to the aviation
industry

                                                                             Page 7




      Page 9                                                      GAO-12-804R Delayed Baggage
Data Necessary to Assess Delays in
Delivery of Checked Baggage
• Because delayed bags are not reported to DOT as a separate
  category, assessing the delays in their delivery is not possible
• A comprehensive assessment of the delays in the delivery of
  checked baggage and their impact on consumers would require
  measures of airline performance and passenger inconvenience,
  including:
    • Number of delayed bags and number of claims made
    • Delayed baggage rate per unit of checked baggage
    • Cause and length of delay
    • Amount of reimbursement, if applicable
• DOT currently does not collect these data because it believes that
  the required reporting of mishandled baggage reflects airlines’
  performance sufficiently for consumer comparison
                                                                     Page 8




      Page 10                                          GAO-12-804R Delayed Baggage
Option 1: Keep current regulations

Current DOT regulations put in place by its 2011 Final Rule require
airlines to adopt a Customer Service Plan that complies with specified
minimum standards including:
• Making every reasonable effort to return mishandled baggage within
   24 hours

Current DOT regulations also require airlines to:
• Not limit their liability to less than $3,300 per passenger for domestic
  transportation
• Compensate passengers for reasonable expenses that result from
  delay in the delivery of baggage
• Inform consumers how to file a complaint, acknowledge receipt of
  complaint within 30 days, and send a substantive response within 60
  days of receipt

                                                                        Page 9




      Page 11                                                GAO-12-804R Delayed Baggage
Option 2: Reimburse checked baggage fee
if baggage is delayed
In a 2010 Notice of Proposed Rulemaking, DOT solicited comments
regarding (1) reimbursement of fees charged to transport a bag if that
bag is lost or not timely delivered, and (2) the time when a bag should
be considered not to have been delivered in a timely manner.
• Based on comments, in its 2011 Final Rule, DOT did not require
   airlines to reimburse checked baggage fees for delayed baggage
    • DOT stated that transporting baggage is similar to the transport
        of passengers whose fare is not reimbursed if their flight is
        delayed. Although a delay in receiving baggage may be
        inconvenient, once the carrier delivers the bag the service for
        which the passenger paid has been performed.
• DOT did require airlines to reimburse the checked baggage fee when
   a bag is lost


                                                                    Page 10




      Page 12                                             GAO-12-804R Delayed Baggage
Option 3: Implement compensation
standards based on length of delay
• Standardized compensation system based on the length of time
  to deliver a bag that has been delayed
• DOT would need to address what constitutes an “unreasonable
  delay” which may include the cause of the delay and the
  circumstances of the traveler
    • Defining a standard for which airlines should be responsible
      for reimbursement is complicated by the factors that can
      cause a delay, such as late passenger check-in, missed
      transfers, or mistagged baggage
    • Such a classification is often contingent on factors in
      addition to length of delay (i.e., problem occurs on outbound
      versus homeward flight, purpose for travel, etc.)

                                                                  Page 11




     Page 13                                         GAO-12-804R Delayed Baggage
Impact of Implementing Minimum
Compensation Standards
• Could provide transparency and consistency among airlines

• Would require an administrative structure—the cost of which
  would likely be passed on to passengers

• Would require valid and reliable data about delays as a basis
  for developing compensation standards




                                                                 Page 12




     Page 14                                        GAO-12-804R Delayed Baggage
Appendix I: Definitions

• Mishandled baggage—As defined by DOT regulations,
  baggage that has been lost, delayed, damaged, or pilfered.
  Delayed baggage is not defined or tracked separately by DOT.

• Mishandled-baggage report—A report filed with an airline by or
  on behalf of a passenger who claims loss, delay, damage, or
  pilferage of baggage. According to DOT officials, a single report
  may represent one or more bags.

• Reporting airlines—U.S. airlines with at least 1 percent of total
  domestic scheduled-service passenger revenues. These
  carriers report data on enplaned passengers and mishandled
  baggage reports, among other things, to DOT.
                                                                    Page 13




      Page 15                                          GAO-12-804R Delayed Baggage
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Contact
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(202) 512-4800, U.S. Government Accountability Office
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  Page 16                                                    GAO-12-804R Delayed Baggage
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