Regional airlines warn of price hikes after compensation deal

Date: 12/12/02

By Karen Carstens

REGIONAL airlines fear they may have to increase fares if rules giving passengers greater compensation for cancellations and delays enter into force.

The rules won the backing of EU transport ministers last week and now await a second reading in the Parliament, which is due to take place early in 2003. They could become law before next year's summer break.

However, the European Regions Airline Association warns that they threaten the survival of affordable flights to Europe's remoter airports.

Andrew Clarke, the organisation's air transport policy director, offered an example of what might happen in an extreme scenario:

A passenger on a flight from Chicago to London misses a €200 connecting flight on a regional airline to a remote Scottish isle and then demands to be immediately returned to his or her point of origin.

The regional airline would then have to foot the bill back to Chicago, which could easily cost more than €1,000.

"We must have an evaluation of these sorts of impacts," he said.

Budget airlines such as Ryanair and Easyjet are also aghast at the implications of massive compensation payments.

The compensation regulation aims to dramatically reduce the frequency of "denied boarding" via a two-fold procedure.

First, airlines and tour operators would be obliged to call for volunteers to surrender their seats.

In return passengers would be offered a hotel stay and fly on the next available flight.

Second, if this option does not work out, airlines and tour operators would pay cash compensation: €250 for flights of less than 1,500 kilometres; €400 for flights of up to 3,000 kilometres; and €600 for up to 3,500 kilometres. These amounts would be revised after four years.

The idea is to forge an air-travel climate similar to that prevailing in the United States, where most overbooked passengers give up their seats voluntarily and few are bumped off flights.

But BEUC, the Brussels-based European consumers association, believes the levels of compensation are not sufficiently dissuasive. "Even more worrying is that consumers who travel outside of the EU will receive no compensation whatsoever should their return flights with non-EU carriers be cancelled," it warned.

A get-out clause covering "extraordinary circumstances" such as strikes and adverse weather conditions would allow airlines too much leeway to wriggle out of their obligations, it claims. BEUC president Jim Murray was also disappointed that the Council's common position was "very much weaker than what the Commission was going forward with". Budget airlines had no reason to gripe: "They're running airlines, not a lottery," he said.

The issue almost overshadowed the transport ministers' decision to give the go-ahead to the European Commission's "single sky" proposal, which aims to harmonise EU air traffic control systems by 31 December 2004.

"Europe's sky will no longer be a mosaic of different systems but a continuous space, a genuine system to the benefit of all Europeans," said Loyola de Palacio, the transport and energy commissioner.

Philippe Hamon, director general of Airports Council International, echoed that: "This much needed overhaul of Europe's air traffic control will ultimately benefit the air passenger by improving safety, reducing flight times and delays, as well as decreasing fuel consumption

Regional airlines fear they may have to increase fares if rules giving passengers greater compensation for cancellations and delays enter into force.