CHEAP air fares could be threatened by steep new compensation payouts to passengers, following recent
proposals in Brussels.
European airlines are vowing to fight new rules forcing them to compensate passengers for cancelled
flights or overbooking today, saying potential hefty payouts were disproportionate to rock-bottom ticket
prices.
Travellers who cannot board flights due to cancellation or overbooking can claim up to £415 -
even if they paid only a fraction of that for the tickets - as the compensation sums are a huge increase
on budget airlines' average fares.
The new EU laws have sparked outrage amongst low-cost airline carriers in particular, and experts claim the
legislation could land the industry with a £1 billion bill which they will pass onto customers.
"Airlines themselves will have to find ways around this because airlines cannot absorb further costs,"
said Jan Skeels, Secretary General of the European Low-Fares Airlines Association (ELFAA), which is
mounting a legal challenge to the laws.
EasyJet says the European Commission, which framed the rules for the EU, failed to consult the industry and
the result is a "bad piece of legislation", which penalises airlines.
A Spokesperson said: "The new rules are going to be confusing to most passengers because compensation only
applies in certain cases and the EU has totally failed to manage expectations on this front.
"To put this into perspective, 250 euros in compensation for cancellations amounts to 400 per cent
of EasyJet's average fare - one way, excluding taxes - on top of a refund to the passenger concerned."
EasyJet insists the legislation is a piece of bad law that is unfairly biased against the airline industry
and thus damaging, and believes that ultimately the new EU rules will fail to achieve their objective.
Chief Executive Ray Webster, warned: "EasyJet will look after its passengers and will implement the
legislation.
"What started as a good piece of legislation to prevent traditional airlines bumping off passengers
through overbooking has become a bad piece of legislation and will cause unnecessary confusion and
conflict between airlines and their customers."
Ryanair is also spearheading the budget airlines in their response. A Spokesperson said: "Some small
airlines may only have a couple of aircraft, and would be really hit by compensation claims if one of the
craft has problems and it can't get passengers to their destination."
No-frills Ryanair also said compensation of 250 euros was a huge percentage hike on its average ticket cost
of 35 euros.
"We are not happy about these new rules, but we will comply with them.
"It is going to have an effect on our cost-base. However whether or not we absorb the impact, or
whether we re-examine our price strategy, is something we will have to look at."
However, already the airline industry has launched a two-pronged counter-attack.
In addition to the appeal by ELFAA, another has been lodged by the International Air Transport Association,
IATA, which represents most of the large scheduled airline companies.
It too calls the EU rules "a bad piece of legislation, which will add costs for consumers and will be
difficult to implement." The organisation says more than half of delays - such
as bad weather, controller strikes or government security requirements - are outside of the control of
airlines.
However, while airlines will have to provide assistance in all cases of delay or cancellation -
whatever the cause - they will not have to pay the new compensation rates if the reason for delay is not
their fault.
Poor weather, strike action, or delays caused by air-traffic control are all examples where
compensation rules do not apply. The impact is less severe for full-service carriers
like British Airways which had forms of compensation in place. However, they are also likely to raise
ticket prices to offset compensation costs.