Congress Set to Weigh Whether State AGs Can Tackle Airline Complaints

Congress could soon determine whether to let state attorneys general go after airlines for violating federal law involving refunds, lost baggage and other consumer protection issues, a power that attorneys general of both parties have asked for in the wake of recent airline meltdowns.

House and Senate lawmakers in recent weeks have both unveiled legislation to reauthorize the Federal Aviation Administration, a task they take up roughly once every five years. The reauthorization process is the main way that Congress makes changes to aviation policy.

Neither the House nor the Senate versions of the bill made the changes the attorneys general asked for. In fact, both drafts had fewer consumer protection measures than advocates had requested. But consumer groups hope that the Senate, in particular, will add some of those measures as the bill is amended.

The airline industry is one of the few that is exempt from state consumer protection laws and enforcement, said Teresa Murray, the head of the consumer watchdog office for the U.S. Public Interest Research Group (PIRG) Education Fund, a consumer advocacy group.

“Eliminating federal preemption and allowing the state attorneys general to share the enforcement would give consumers more outlets to make sure that their rights are being protected,” Murray said. “If they could file complaints with their state attorney general just like they can with robocalls and medical bills and identity theft that would better protect consumers.”

The added enforcement could also spur the U.S. Department of Transportation, which is currently the only governmental agency that handles airline complaints, to step up its own activity, Murray added.

The airline industry, however, has long resisted state attempts to interfere with its operations.

“It is no surprise that Congress enacted a broad preemption provision for aviation,” two industry groups told the Supreme Court two years ago.

“Air transportation is integral to the nation’s commerce, which is precisely why Congress sought to establish national uniformity in this area. Preemption of patchwork state regulation has helped create a cost-effective and efficient transportation network throughout the United States—since deregulation, for example, ticket prices have fallen dramatically,” wrote lawyers for Airlines for America and the International Air Transport Association.

Since customers resumed flying in the last two years—after largely abandoning the skies in the early days of the pandemic—several airlines have experienced widespread flight cancellations and related problems. That culminated with a meltdown of Southwest Airlines operations over the Christmas season last year, when the airline canceled 17,000 flights and left thousands of passengers stranded for days.

The job of responding to those widespread problems has mostly fallen to the federal government.

Airlines gained a special exception from state consumer protection laws in 1978, when Congress deregulated the passenger air industry. The Airline Deregulation Act prevents state and local governments from regulating the “price, route or service of an air carrier.” The Supreme Court has interpreted that law broadly, blocking states from applying their own laws to promote price transparency or regulating frequent flier rewards.

Instead, the job of policing airline behavior falls to the Transportation Department. Attorneys general and consumer advocates say the agency doesn’t have the resources to pursue claims against airlines, especially after the number of consumer complaints reported to the department in 2022 were twice as high as the previous record.

“Over the past couple of years,” wrote the attorneys general of 38 states and territories last year in a letter to congressional leaders, “our offices have received thousands of complaints from outraged airline passengers about airline customer service—including about systematic failures to provide required credits to those who lost travel opportunities during the pandemic.”

The Colorado attorney general’s office, they noted, received more consumer complaints about Frontier Airlines than any other company in 2020. (After the attorneys general sent the letter, the federal Transportation Department fined Frontier $2.2 million for not issuing refunds promptly and ordered the airline to refund $222 million to consumers. Frontier was the only domestic airline that the federal government fined.)

But the legal officers, who routinely handle consumer protection cases dealing with other industries, have little recourse to deal with those complaints, they wrote. The attorneys general have relayed the complaints to both Democratic and Republican administrations, but federal authorities were “unable or unwilling to hold the airline industry accountable,” they said.

“This vacuum of oversight allows airlines to mistreat consumers and leaves consumers without effective redress. Moreover, given the increased level of concentration in the airline industry and the decreased levels of competition, the ability of the marketplace to punish or reward industry behavior that harms or helps consumers is lessened, increasing the importance of effective enforcement of consumer protection requirements,” they wrote.

Letting attorneys general enforce state and federal consumer protection laws for airlines could help customers get relief, they said. The group also suggested putting a different federal agency—like the Federal Trade Commission—in charge of consumer complaints about air travel, rather than the Transportation Department.

“If state attorneys general had a substantial and meaningful role in overseeing airline consumer protection, the failure of the USDOT would be ameliorated by the ability of state attorneys general to enforce the law,” they argued.

Murray, the PIRG advocate, said attorneys general could have a big impact even if all they could enforce was federal law, rather than state laws. “They’re basically more police on the streets. The airlines should not be afraid of accountability. They don’t have to worry about new rules. They just need to follow the ones that exist right now,” she said.

The added oversight would help improve many aspects of the consumer experience with airlines, she added. It could speed up refunds for canceled flights and ensure airlines replace or repair damaged wheelchairs quickly.

“We really hope that some of the most important protections that involve people’s safety, transparency and people’s money get adopted,” she said.