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Seven Years and Counting

Seven Years and Counting

Why a reform of EU261 is more important than ever

By  Brussels,

In a world upended by the COVID-19 pandemic, March 2013 seems an eternity ago. Yet that was when the European Commission first proposed to update the air passenger rights framework, known as Regulation 261, which dates to 2004.

It is worth recalling that the Regulation originally gave passengers the right to compensation for denied boarding and cancellations, but not delays. It was the European Court of Justice, not the co-legislators, that expanded the scope by ruling in 2009 that compensation should also be given for delays over 3 hours.

It is hard to believe that seven years later, reform of Regulation 261 has still not been completed. In less than half that time, the EU’s institutions were able to negotiate a revision of the rail passenger rights regulation. COVID-19 has now raised new issues to consider. It begs the question: where do we go from here?

The Commission’s 2013 proposal sought to clarify grey areas that have led to complexity for passengers and airlines alike, including inconsistent application of the rules. As the European Consumer Centres Network has pointed out, difficulties in interpreting the law has led to numerous court cases. For example, the concept of “extraordinary circumstances”, which determines whether airlines are liable to pay compensation for flight disruptions, was never precisely defined. The Commission therefore proposed a list of incidents which would generally be considered beyond the control of air carriers.

These changes would give passengers and airlines more certainty than at present, while strengthening certain rights, for example on re-routing, and improving complaint handling and enforcement procedures. The lack of clarity in the existing rules has also seen the burden on airlines grow, with compliance costs increasing from €1.6 billion in 2011 to €5.3 billion in 2018. This has given rise to an industry of claims management companies, which seek to profit from the current situation.

The impact of COVID-19 comes on top of the issues identified by the Commission in 2013 and by Steer, an external consultant, in a detailed study published in January 2020. The current framework was designed to deal with disruptions of individual flights — not the systemic collapse of air travel that we have witnessed this year.

Following the closing of borders this spring, which caused mass flight cancellations, airlines struggled to preserve liquidity and survive the crisis, while receiving an unprecedented volume of claims. Haphazard travel restrictions continue to present a challenge, as Europe now confronts a second wave.

There was never any question of airlines not meeting their obligations towards their customers. However, the 7-day reimbursement deadline is hard to meet under such extreme circumstances. At the heart of the matter is the need for more time to process the claims. We have seen national enforcement bodies, such as the Danish Transport Authority, take a pragmatic approach to airlines clearing their backlog.

EU Member States in the Council, based on a non-paper by the German Presidency, and the Commission, which is developing a new consumer strategy, are now reflecting on the way forward. In both cases, a key question is whether specific rules should apply during COVID-type crises.

A4E believes that an extended deadline for reimbursement and the possibility to offer vouchers as an alternative to cash refunds is justified in those cases. It would also be important to specify, as the Commission clarified through guidelines in March 2020, that pandemics are exceptional and that airlines are not required to pay compensation when flights are grounded.

In its non-paper, the German EU Presidency argues that it cannot be determined if the Commission’s 2013 proposal still provides an appropriate basis for reform as long as the crisis continues. We would disagree. Some of the Commission’s proposed measures, such as a list of extraordinary circumstances, would already have given passengers and airlines more clarity now.

The reform remains both necessary and urgent. Most, if not all, of the interested parties agree that the framework could be improved and should be updated. We now need to add suitable measures when major systemic disruptions of air travel occur to make it crisis-proof. It would be best to kill two birds with one stone and tackle both aspects through the general pending revision.

As Steer put it in a recent blog post, “the COVID-19 crisis has further highlighted the need for a simple, clear and enforceable framework of air passenger rights that balances the protections for passengers and the obligations of airlines.” A4E is engaging in discussions with the EU institutions, consumer organisations and industry partners to achieve progress — further delays are in nobody’s interest.