SALT LAKE CITY -- Continental Airlines says it plans to cancel flights rather than pay huge fines for violating the passenger bill of rights that takes effect next month.

New federal rules will fine airlines if they keep passengers waiting on a plane on the tarmac for more than three hours. Under the Transportation Department rule, airlines can be fined up to $27,500 per passenger if planes are delayed three hours and passengers can't get off.

Now Continental's CEO Jeff Smisek says rather than face the fines, Continental will cancel flights instead.

It's a smart move, says KSL Travel Show host Doug Wren.

"For Continental to say, ‘Well, if we know it's going to be longer than three hours we'll cancel it right away,' to me I'm thinking, ‘Great, at least I know and I won't be sitting out there for three hours.'"

Wren says it's cheaper to cancel flights because the fine for sitting on the tarmac could get up into the millions per plane. How would the airline would pay the fines? By passing the price on to the passenger.

"We can think this is the passenger bill of rights, but guess what, if that plane was delayed and they have to pay $4 million, where does that money come from? It comes from the passengers," Wren said.

Delta Air Lines and JetBlue are asking if they can be exempt from the new federal rules when it comes to their planes at JFK airport because of the major construction going on there.

"Airlines will be more savvy," Wren said. "They'll have airlines looking at when will we have fees, when will we incur fees. They will hire analysts to figure out, ‘How do we not get charged?'"

E-mail: mrichards@ksl.com