Airline compensation rules come under fire

Date: 01/10/1998

By Chris Johnstone

INTERNATIONAL airlines have attacked new EU rules for compensating accident victims as unnecessary bureaucratic interference and are urging the Union to think again before they come into force later this month.

The International Air Transport Association (IATA) claims more than 100 airlines, including most European carriers, have moved to waive past rules setting an upper limit on their liability for compensation, going significantly further than will be required under new EU regulations.

"We want no limits on liability, for the airline to be like any other industry," said an IATA spokesman. "The EU should consider what airlines have done. The fact that they have indulged in some knee-jerk reaction is regrettable."

IATA is also seeking to reverse a decision by Commission competition officials to withdraw the immunity from legal action granted to airline cooperation on cargo shipments. Such collaboration on, for example, the price one airline would charge another if it took over shipment of goods for part of a journey, benefited until recently from an industry-wide block exemption from competition rules.

But the Commission decided in July to end this concession, arguing that cargo cooperation was now a relatively minor feature of airline activity, with companies only invoking so-called interline agreements (under which other carriers take on freight at pre-set prices) for 10-15% of all journeys. "The Commission does not seem to think this is important any more, but we disagree," said an IATA official.

The association has vowed to continue its fight to retain the exemption, although in a more limited form. "We are seeking an individual exemption through IATA, not an industry-wide exemption," explained the official.

Competition officials are still considering whether key aspects of IATA's activities, such as the coordination of airlines' tariffs and schedules, can be allowed. Such coordination is aimed at permitting interlining, allowing passengers to switch flights from one airline to another.

The Commission was due to deliver its verdict this summer but, distracted by the ongoing scrutiny of airline alliances, it has extended IATA's protection against legal action for a further year until June 1999.