Kuttner on TAP: Will the FAA Serve Passengers or Industry Special Interests?

A couple of weeks ago, Transportation Secretary Pete Buttigieg at last began doing his job for long-suffering airline passengers rather than just for airlines. In the face of repeated abuses by the carriers, Buttigieg ordered the airlines to cease levying a variety of nuisance fees, including extra charges for families that want to sit together. Buttigieg also directed the airlines to give immediate cash refunds when flights are delayed three hours or more or canceled, rather than the current practice of giving passengers who complain a credit for a future flight.

As a mark of the importance of this pro-consumer move, the final rule was announced by the White House rather than DOT. Buttigieg declared, “Passengers deserve to get their money back when an airline owes them—without headaches or haggling.”

It didn’t take the airlines long to work to reverse the rule. Their vehicle is the five-year FAA authorization bill, which must pass Congress by this Friday. The airlines wrote an amendment that allows airlines to give credits rather than cash, and puts the burden back on consumers to haggle for a cash refund.

Not surprisingly, the airlines’ champion in this maneuver was the Commerce Committee’s ranking Republican, Sen. Ted Cruz of Texas, a state that is headquarters to several influential airlines including American and Southwest. What is surprising is that the committee chair, Democrat Maria Cantwell of Washington state, went along. Cantwell has been terrible in her defense of Big Tech against consumer regulation, but has been decent on other consumer issues.

According to my sources, a charitable reading of Cantwell’s deal with Cruz is that it was the Republican price for reporting out a bipartisan FAA authorization that does include several good provisions. These include measures to close the staff shortages of some 3,000 air traffic controllers and of safety inspectors supervising airline production, as well as improved technology to prevent midair and airport near misses.

Cantwell’s press release on the FAA bill includes a charmingly disingenuous description of what it does on the question of consumer refunds. “For the first time, passengers will have clear standards in law for refunds when an airline cancels or significantly delays a flight.” To read that, you’d never know that the Cruz-Cantwell provision significantly weakens the Buttigieg rule.

Sen. Elizabeth Warren (why are we not surprised?), joined by Republican Josh Hawley of Missouri, has sponsored a floor amendment that would restore Buttigieg’s original rule. Passenger rights are a popular issue. It will be instructive to see which senators are willing to get on the wrong side of public opinion.

The FAA bill has been in the news due to another special-interest maneuver. As I wrote in this column in mid-April, Senate Democratic leader Chuck Schumer tried to turn the bill into a classic Christmas tree measure by encumbering it with two entirely extraneous provisions as a favor to different wings of the financial industry.

One of these riders would promote the marketing of stablecoins by subjecting them to a light-touch federal regulatory regime, giving them a government seal of approval without investor protections to match. The other would create safe-harbor protections for banks that open accounts for business customers in the marijuana industry, which is now legal in many states. Since cannabis is still illegal under federal law, in the absence of this bill bankers who do business with pot shops would be vulnerable to a variety of regulatory hassles.

The crypto industry has emerged as one of Washington’s most potent lobbies. According to a recent investigation by Public Citizen, crypto super PACs have already raised over $100 million to spend on their political friends in the 2024 election cycle.

But mercifully, Schumer’s creative scheme to aid crypto and pot bankers via a rider on the FAA bill has collapsed of its own weight. Key legislators of both parties in both houses have told Schumer that passing the FAA authorization by Friday is challenging enough, and they insist on a clean bill. Schumer has bigger fish to fry and he has now backed off.

Let’s hope the Cruz-Cantwell effort to tie Secretary Buttigieg’s hands on consumer protection collapses of its own weight, too.