Willie Walsh, the director general of the International Air Transport Association (IATA), a trade body that represents nearly every major international airline, has slammed proposed changes to generous European passenger compensation rules, saying it has become the “poster child of bad regulation.”
Speaking at IATA’s annual conference in Brazil, where airline executives from around the world have gathered, Walsh said that a years-long process to reform the compensation rules had been “hijacked” by populist EU Parliament politicking.
First introduced in 2004, the European Union’s so-called EC261 regulations allow passengers hit with a flight delay of three hours or more to claim between €250 and €600, depending on the flight distance.
For several years, however, the EU transport committee has been discussing major changes to the ways the regulations work, potentially making it harder for passengers to claim compensation.
The current rules
Under the current rules, compensation is payable at the three-hour delay mark, regardless of the flight distance, although the compensation amount differs between short-haul, medium-haul, and long-haul flights.
- 1,500 km or less: €250
- 1,501 km to 3,500 km: €400
- More than 3,500 km: €600
The proposed rules
Following lots of back and forth, the transport committee has now settled on a formula in which compensation payouts would be linked to different delay lengths and flight distance.
The thinking is that short-haul passengers should qualify for compensation sooner than passengers on a long-haul flight.
- 1,500 km or less – Delay of two hours or more: €250
- 1,501 km to 3,500 km – Delay of three hours or more: €400
- More than 3,500 km – Delay between three and four hours: €300
- More than 3,500 km– Delay of four hours or more: €600
Overall, the changes are being viewed as very pro-consumer. For example, short-haul passengers will be eligible for the same compensation amount at a much shorter delay period than before.
In addition, lawmakers are proposing some interesting additions to the legislation to ensure that passengers are aware of their rights. As of now, airlines are meant to direct passengers to materials about their rights, but in the future, they’ll have to email delayed passengers with a link that sends them straight to a compensation claim form.
This email would also have to clearly explain the reason for the delay and state whether the airline intends to challenge the compensation claim by using the ‘extraordinary circumstance’ caveat.
In any case, airlines would no longer be able to leave passengers in limbo, and would either have to pay out the compensation within 30 days of a claim or justify why they were refusing the claim.
Last year, EC261 claims cost the aviation industry around €8 billion, and airlines fear that the proposed changes will raise annual costs to as much as €15 billion.
“The proposed deal is so bad that scrapping it and starting over is the better option,” blasted Walsh on Sunday. “EU261 is not fixing delays or cancellations, and that’s because a large percentage of delays and cancellations can be directly attributed to air traffic management and other infrastructure deficiencies,” the former chief of British Airways continued.
“It’s like fining bus drivers to solve roadworks delays.”
What Walsh doesn’t mention, however, is that airlines are not liable for delays caused by air traffic control problems and bad weather. Both of these delay categories fall within the scope of ‘extraordinary circumstances.’
EU261 was designed to make airlines control delays and cancellations within their control. And this is exactly how the regulations have been interpreted by the courts.
When a delay occurs outside of an airline’s control, they are required to provide passengers with certain rights, but no compensation is owed.
Faced with the possibility of compensation bills ballooning in size, Walsh and other airline executives warn that airfares are likely to rise, in effect passing on the cost to consumers, whether they like it or not.
While the airline industry is clearly very unhappy with the proposed changes, they are likely to be passed without opposition from lawmakers.
