XJT Expressjet Holdings Inc.

U.S. airlines are finding a chillier climate in Washington, after a series of moves by the Obama administration that they say cater to consumer groups and organized labor but could hurt the industry.

The Transportation Department announced last month it would start fining airlines up to millions of dollars for keeping passengers on a runway for longer than three hours. The rules are part of a broader regulatory crackdown that's also taking aim at how airlines advertise fares and charge for baggage, and come as regulators move to overhaul standards for the hiring and training of pilots.

Meanwhile, the Obama administration has twice rebuffed industry requests for economic-stimulus funds to upgrade the nation's air-traffic management system. And after the Federal Aviation Administration signed a deal with the National Air Traffic Controllers Association that will elevate the union's influence on aviation policy, the industry views the administration as looking the other way as a government agency proceeds with a rule to make it easier for airline employees to organize.

Airlines and industry observers warn that the new tarmac rules will ultimately hurt carriers and consumers by causing more cancellations and delays. And they question whether the recent moves are a knee-jerk reaction to a few highly publicized incidents and political considerations rather than a genuine effort to improve industry conditions.

"It's populism," Gordon Bethune, a former Continental Airlines Inc. (CAL) chief executive, said of the tarmac-delay penalties. "It sounds good to the public. It sounds like, 'we're rough and tough and doing something.' "

But, Bethune added, "It's going to come back to haunt them."

Airline consultant Mike Boyd said the tarmac rules will lead to more delays and are emblematic of a broader problem in Washington.

"It's consistent with the lack of understanding, it's consistent with the lack of hard solutions" that characterized previous administrations when it came to the airline industry, Boyd said.

DOT officials said the new regulations are designed to address long-standing problems and disputed that they will lead to a significant increase in cancellations.

"It is our job to ensure that all airlines treat customers fairly and respect their rights," said Bob Rivkin, the DOT's general counsel.

Consumer groups have applauded the administration's efforts after years of unsuccessfully lobbying for a passengers' "bill of rights."

A public draft of the tarmac rules required that airlines produce contingency plans to prevent lengthy delays, but the three-hour limit didn't surface until the final rule was announced in late December, taking some industry officials by surprise.

Rivkin said the department made it clear in the proposal that a time limit was coming and sought industry comment during the rule-making process.

The DOT previously had authority to fine airlines for tarmac delays but seldom used it. That changed in November when the agency fined Continental Airlines Inc. (CAL) and ExpressJet Holdings Inc. (XJT) $50,000 each, and levied a $75,000 fine against Mesaba Airlines. The fine stemmed from an August incident in which 47 passengers on a plane were stranded nearly six hours overnight at the airport in Rochester, Minn.

David Castelveter, a spokesman for the Air Transport Association, the industry's largest trade group, noted lengthy tarmac delays are on the decline and constitute a small fraction of all flights.

With the new rules, "the carriers are not going to risk the fines, and those flights that cancel might otherwise have flown," Castelveter said. "We're going to have to figure out how to reduce, to what extent we can, those cancellations."

Meanwhile, the White House appointed a former flight attendant union leader to serve on the National Mediation Board, shifting the board's balance. Then, the board in November moved to make it easier for thousands of airline and railway workers to unionize under the Railway Labor Act by seeking to throw out a 75-year-old election rule.

The airline industry has said that Congress, not the NMB, has authority to overhaul the rule.

A White House spokesman didn't return an email this week seeking comment.

"There's a lot of concern that their lack of weighing in is a silent nod that we're going to allow this to happen," said an airline-industry official who spoke on the condition of anonymity.

-By Josh Mitchell, Dow Jones Newswires; 202-862-6637; joshua.mitchell@dowjones.com

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