Missed Connections & New Legal Challenge

When the FAA forced American Airlines to ground its entire MD-80 fleet in mid-April, effectively canceling about 3,000 flights over the course of five days, meeting planners were left to deal with decreased attendance, cancellation fees, and hotel attrition costs.

"Planning a meeting in Boston, we expected to maybe encounter a weather catastrophe, but we ended up getting done in by the airlines," said Richard Skinner, senior vice president of programs and research for the Association of Governing Boards of Universities & Colleges (AGB).

The Washington, DC-based organization held its annual conference in Boston April 11-15, and about 80 of its planned attendees—all of whom held American Airlines tickets—were unable to make it to the event.

While the group still attracted its planned attendance of 1,000 people thanks to last-minute registrants, the no-shows affected the format of the meetings: small group sessions led by carefully chosen facilitators.

"We spent seven or eight months deciding on just the right person, then had to scramble to replace a few of them when they couldn't make it," said Skinner.

The organization also had to stick to its tight refund policy because it had made commitments for food and beverage, so attendees were unable to get their registration fees back. Some attendees who were able to get to Boston, but unable to get flights home on the last day, also had to pay for additional hotel room nights—at a price higher than the negotiated group rate during the conference.

While the AGB conference attendees were responsible for paying their own way—about $2,000 per person—companies that footed the bills for meeting attendees were affected by hotel attrition charges incurred when stranded attendees left blocked-off rooms empty. Dallas-based attorney Steve Rudner, whose Rudner Law Offices firm exclusively represents hotels and resorts in regards to group issues, said that several of his clients were left with vacancies from attendees who could not make it to their meetings or group retreats.

While many of the properties Rudner represents were understanding in this situation, he warned that they might not be as flexible in the future if airline problems continue. Rudner advises planners to purchase insurance for their meetings, because the question of arrival is considered a business risk.

"The financial burden of an insurance policy is less than the attrition costs groups could face," said Rudner.

While some planners might think that adding "curtailment of transportation facilities" to their force majeure clauses would cover them in case of another mass airline grounding, Rudner said that will not always apply. "If other airlines are flying and if some people are able to arrive, it means that the curtailment did not make the meeting impossible," he explained. Plus, he said, most hotels will most likely not accept such rewritten contracts because it is not a smart business move for them.

Originally published May 5, 2008