Under-pressure airlines push for end to big payouts for delayed passengers

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For nearly two decades, passengers on a European trip delayed by more than three hours have been able to claim back between €250 and €600 for the trouble. That could soon be a thing of the past.

The Czech presidency of the EU has hinted it plans to revive long-dead discussions on revising the EU’s compensation rules, after negotiations were jammed for years because of a row between the U.K. and Spain over Gibraltar’s airport.

Although some hoped the U.K.’s exit from the EU would unblock the file, discussions haven’t moved forward, causing frustration among carriers for whom the consumer-friendly legislation is a top concern.

Airlines have long argued it’s unfair they are compelled to pay out hundreds of euros for a delay that is likely to have had a negligible impact on a traveler’s trip. They also point out that the compensation is typically far higher than the price of the ticket.

“I think everyone would agree that if you pay €50 for the ticket, then you get €300 back, that’s not right,” said Thomas Reynaert, managing director of Brussels-based industry lobby Airlines for Europe (A4E). “It doesn’t make sense.”

The European Commission previously tried to reform the legislation, releasing a revised proposal in 2013 that recommends a five-hour window before compensation kicks in, and provides examples of “extraordinary circumstances” in which an airline would not be required to pay out.

Airlines are hopeful that the Czech presidency will now take up the issue again and move things in that direction. “They said they will have a dialogue on it but what it exactly means we don’t know,” said Reynaert.

Claims agencies and passenger rights groups are on high alert, warning against any efforts to relax the legislation.

Steven Berger, a legal officer at Brussels-based consumer group BEUC, argued that the regulation needs to go further, not be watered down, and said compensation should be automatic. He also disputed airlines’ claim that a delay or cancelation doesn’t have a big impact on a traveler.

“If you go from Lithuania to Portugal for €30 and you’re trapped there for two days between the flight, is it fair to receive just [a few] euros’ compensation? We need to keep the level of compensation and reinforce the enforcement.”

Top complaint

The grounding of flights during the pandemic and the current summer travel chaos, which has seen airlines cancel flights in bulk, have drawn the issue of compensation into sharper focus.

The International Air Transport Association (IATA) and lobby group A4E estimated that refunds due to passengers for tickets sold but not used between March and May 2020 amounted to €9.2 billion in the EU and U.K.

But the issue also long predates the pandemic, with carrier CEOs listing it as their top concern on visits to Brussels.

Under the current rules, airlines don’t have to pay out if a delay or cancelation is due to an “extraordinary circumstance.” But there’s no consensus on what should actually count as extraordinary.

Because so many cases go to court, and a large proportion end up in the EU’s Court of Justice, new legal precedents are constantly being set — meaning the original legislation has been sharpened over the years.

“The law that the [European] Parliament passed is not the law that we have; whole swathes of it made up by judges in defiance of the text,” said Harry Snook, global head of aviation at Oracle Solicitors in Belfast.

“The substantive provisions ought to be clear, unambiguous so that the outcome in the majority of cases ought to be pretty obvious. If most have to be decided by dispute resolution, you have a problem with your draft,” he added. “You ought to be able to read the resulting law without being a lawyer, and understand it.”

But passenger rights organizations say the number of court cases stems from the fact that airlines often don’t pay out compensation as they should.

“We ended up with courts flooded with cases and claim agencies,” said BEUC’s Berger. “If claim agencies are there, it’s because there is no enforcement; if airlines respect passenger rights, then there would be no market for this.”

Airlines “basically created the market” for claims agencies because they make it “very opaque and difficult to get [consumers’] rights,” said Patrick Gibbels, director of Gibbels Public Affairs, a consultancy based in Brussels, which lobbies on behalf of claims agencies who take airlines to court over passenger rights issues.

“They say we have aggressive commercial practices. What they mean is we make passengers aware of the fact that they have rights,” he added. “Of course we’re a big stone in their shoes. But only because we’re doing what they should be doing.”

Genie back in the bottle

The issue is a delicate one for EU policymakers, many of whom are sympathetic to airlines but don’t want to appear to be rolling back passenger rights.

One Commission official said there is a “certain comms issue” on the regulation’s revision, which can only be overcome if there’s a “clear explanation from the industry on why certain measures really don’t make sense.”

A Czech official said Prague has been calling for the discussion to be reopened, but added that it “wouldn’t be easy” to find a compromise.

Airlines say they’re not pinning all their hopes on the Czechs, but also looking ahead to the next presidency, which will be helmed by Sweden, starting in January 2023.

“We really look forward to working with them as well,” said Reynaert. “We believe it ought to be probably a priority for them. Consumer rights for the Nordic countries are typically quite important.”

The difficult times that the industry, and passengers, have faced in recent years, he argued, “prove that it’s one of the dossiers we need to make progress on.”

Ryanair boss Michael O’Leary suggested the Commission should take notes from the U.K.’s upcoming proposal to reform air passenger rights, which envisages a tiered system tied to the cost of a ticket, rather than a set figure.

“If Britain makes some effective reform … it could put pressure on the Commission to do something,” he said. “There is some hope here.”