It's a bitter pill for U.S. airlines, but it's medicine they have to take.

Beginning next month, airlines can be fined up to $27,500 per passenger if a plane is delayed three hours and passengers can't get off the plane, according to a new federal rule issued by the U.S. Department of Transportation, The Associated Press reported Wednesday.

Airlines may respond by canceling flights, but the goal of the program is to encourage airlines to do a better job of scheduling flights and crews -- and, by extension, a better job of treating passengers.

With the news of impending M&A in the airline industry, based on my flight yesterday with Delta Air Lines Inc. (NYSE: DAL), the merger should be with Yellow Cab.

I was on a flight from JFK to Seattle, and the plane had finished boarding 10 minutes prior to takeoff when a flight attendant got on the PA system and thanked everyone for boarding so quickly but said they would have a delay anyway since the pilots had yet to arrive to the plane. Well to make a long story short we took off an hour late because the pilots, who were staying at a hotel in midtown Manhattan, weren't picked up by Delta transportation, and then when finally picked up they hit traffic and came really late.

Forget about merging with another carrier. How about buying a cab company so that you can get your pilot's to the plane on time?

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no positions in any stock mentioned as of 2/8/08.

Imagine a car industry that only offered two models, a Mercedes-Benz (NYSE: DCX) S600 and a Chevrolet (NYSE: GM) Aveo. A restaurant industry that forced you to choose between Taco Bell (NYSE: YUM) and Smith and Wollensky (NASDAQ: SWRG), with nothing in between. A clothing industry that offered only K-Mart (NASDAQ: SHLD) house brands and designer labels, no Old Navy (NYSE: GPS) or Crocs (NASDAQ: CROX).

Intolerable, right? We middle-class shoppers demand products with a modest price but acceptable quality.

So how did we end up with an airline industry that offers only two real choices, cattle car or royalty? Where are the middle-class offerings? My wants are not complicated. I want a little more room. I want quicker check-in. I want to talk to real people when my flight is delayed. I want the kind of service I would receive at Applebee's (NASDAQ: APPB), or a Holiday Inn (NYSE: IHG), or (to shoot for the moon), Nordstrom (NYSE: JWN)

Unfortunately, I receive service that is rated by the American public as worse than the IRS, seating reminiscent of my grade-school desk, and the punctuality of a grunge band concert.

Latest FAA statistics confirm that air travel has reached a new low. In the first third of 2007, over one-quarter of flights within the U.S. were late on arrival, and almost 70,000 flights were canceled. And this despite many airlines padding their arrival times to give them a generous cushion against delays.

Nearly half of the delays were weather-related, including the Denver snowstorm debacle that sent JetBlue's (NASDAQ: JBLU) reputation for customer service plummeting. Even in April, after the weather improved, JetBlue was second only to US Airways in lowest on-time arrivals, at 64.8%. Comair joined the tardy trio with 67.9% on-time arrivals.

US Airways (NYSE: LCC), which I've nicknamed "Air Mañana," operated four of the six most frequently delayed flights in April. These six flights you most want to avoid: