Many people drive more carefully for a while after receiving a traffic fine. But do large corporations, such as airlines, also change their behavior when they face financial penalties? We examine this question by studying penalties imposed in the United States for lengthy tarmac delays.
A tarmac delay occurs when an aircraft remains on the ground for a long period with passengers still on board. In the United States, such delays are generally limited to three hours for domestic flights and four hours for international flights. Airlines that violate these rules may face financial penalties. However, when a penalty is small compared with an airline’s profits or the operational costs of preventing such delays, the airline may view it not as a serious punishment but simply as another cost of doing business. Research in behavioral economics has also suggested that a small fine can sometimes be seen as a “price” for breaking a rule, potentially making noncompliance seem more acceptable.
In this paper, we examined delays associated with severe weather, which airlines cannot fully predict or control. This allowed us to compare changes in the operations of penalized and non-penalized airlines using statistical methods designed to estimate causal effects. We found that lengthy tarmac delays declined for some airlines after penalties were imposed, but the improvements were generally modest and did not always last. For other airlines, we found responses that differed from the rule’s intended effects, including increases in long ground delays and flight cancellations.
In follow-up research currently underway, we are examining whether the size of the penalty matters. Our findings so far suggest that larger penalties are followed by reductions in tarmac delays exceeding three hours, but that these effects are mainly short-lived. We also find evidence that airlines may adjust their operations around the three-hour regulatory limit. For example, very long ground delays lasting slightly less than three hours may become more common.
These findings suggest that simply increasing penalty amounts does not necessarily produce clear or lasting improvements in corporate behavior. Effective consumer-protection policies should therefore consider not only the size of penalties, but also how long any behavioral changes persist and whether airlines respond in unintended ways, such as by increasing flight cancellations.
Transportation Research Part A Policy and Practice