- Associated Press - Monday, November 14, 2011

The government’s $900,000 fine Monday against an American Airlines affiliate for holding hundreds of passengers on board jets for hours on an airport tarmac may serve as a deterrent to future such incidents. But industry analysts warned it may come with the price of more canceled flights.

Even before the fine against American Eagle Airlines, airlines had canceled more flights to avoid pushing up against the new three-hour limit on tarmac delays the Department of Transportation imposed 20 months ago. Now, cancellations will shoot up even more, said airline analyst Michael Boyd.

“If there’s a 20 percent chance of this happening, an airline will cancel,” Mr. Boyd said, because of the potential for massive fines.

Airlines that violate the rule can be fined as much as $27,500 per passenger, but transportation officials had held off fining air carriers in any of the several dozen instances where the rule has been broken. Industry officials are watching for an action from DOT on a similar incident at the Hartford, Conn., airport during a freak snowstorm in October.

The fine imposed on American Eagle was the largest penalty to be paid by an airline in a consumer protection case not involving civil rights violations, although airlines have paid much higher fines for violating federal safety regulations.

The transportation department “understands that many of these instances are outside of an airline’s control,” said Steve Lott, a spokesman for the Air Transport Association, which represents major carriers. Sometimes, airports have a shortage of Customs officials on hand for international flights, or an airport may not have enough buses to transport passengers safely to the terminal, or experience other emergency shortages.

But officials apparently felt the case involving American Eagle was particularly egregious and wanted to send a warning to other carriers the week before Thanksgiving travel.

American Eagle kept planes on the tarmac for more than three hours on 15 flights arriving at O’Hare International Airport in Chicago on May 29, according to a settlement agreement between the department and the airline. A total of 608 passengers were aboard the delayed flights.

Poor weather that day had intermittently prevented scheduled flights from departing O’Hare, including American Eagle flights that were sitting at the airline’s gates. But the carrier continued to send planes from other airports into O’Hare even though airline officials knew there were no gates for the planes. In some cases, the flight crews needed to enable American Eagle planes to leave gates, and make room for incoming flights, were stuck aboard the planes waiting on the tarmac.

American Eagle had a plan in place that might have avoided the gridlock, but failed to implement it until it was too late, the department said.

The airline must pay $650,000 of the fine within 30 days, the department said. But up to $250,000 can be credited for refunds, vouchers, and frequent flier mile awards provided to the passengers on the 15 flights, as well as to passengers on future flights that violate the three-hour rule, the department said.