02 March 2005

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Flight delay compensation discriminatory, extremely damaging – Air Malta
By Matthew Vella

The European Union’s latest set of regulations to improve the rights of air passengers that suffer delays and flight cancellations has incurred the wrath of airline associations the world over as the International Air Transport Association (IATA) prepares to challenge the regulations in the European Court of Justice.
Malta’s national airline, Air Malta, is also concerned the regulations could have an adverse effect on its operations.
Airlines will now have to compensate their clients for flight cancellations or overbooking following the introduction of new passenger rights rules on 17 February 2005. Passengers are now entitled to compensation when their flight is cancelled less than two weeks before departure or if they are denied boarding due to overbooking, and to total reimbursement if their flight is delayed for more than five hours.
In case of being denied boarding, compensation will range from EUR 250 (Lm107.50) to EUR 600 (Lm259.14) depending on the length of the flight distance.
These regulations are as yet, the world’s strictest rules on airlines, offering, for the first time ever, compensation to cover situations that were traditionally considered outside an airline’s control, such as bad weather.
Although welcomed by the European Consumers’ Organisation, airlines and airline associations have lambasted the regulations, with IATA, which represents 270 of the worlds’ major flag carriers, saying that “at some point, somebody is going to pay for it”, indicating the regulations will mean higher fares.
Air Malta spokesperson Stephen Gauci has told this newspaper the regulations are considered to be “discriminatory and extremely damaging to the potential development of the airline business itself, as well as the relationship that exists between airlines and their customers.”
Whilst airlines are not excluding they may have to factor in the costs of this new regulation into their pricing, Air Malta said “it has no plans of increasing current rates in the short term” and will only consider increasing fares as a last measure after having analysed the market’s reaction and the real impact on the airline.
But following the recent onslaughts on the airline industry, most notably by the increase in fuel costs, SARS and the 9-11 attacks, the new regulations have imposed an added financial burden after airlines such as Air Malta have had to take on hikes in fuel costs and increased passenger and security taxes.
Air Malta is backing IATA in its legal action in the European Court of Justice to challenge the compensation rules and will back and follow any action undertaken by these two bodies.
Gauci said that Air Malta routinely assist their passengers in the event of delays and find alternative routing through their alliances with other airlines. “The problem arises when all flights at the same airport or neighbouring airports are affected. Unlike other modes of transport, airlines pay for their use of infrastructures. Air Malta augurs that airports improve on their inefficiencies so airlines would not have to suffer any increased costs and continue to meet customer expectations at all times.”
But fledgling low-fare airline owner Robbie Borg, whose British Jet will start operating in May, had more positive comments on the regulations:
“I generally agree with compensation. It is not fair for somebody who has a flight to catch to face the consequences of overbooking. We never have any cases of overbooking. We don’t abuse in that manner. The only case we had was by accident and that happened three years ago. Our policy is to direct people to chance a last-minute boarding in the case of a no-show.”
Borg said he had no intention of increasing flight prices because of the regulations, although other low-fare airlines, such as easyJet, called the new regulations a “piece of bad law unfairly biased against the airline industry”. The airline is claiming its average GBP 42 one-way fare could start at GBP 172 under the new legislation.
It is believed that several million passengers are the victims of overbooking, lengthy delays and sudden cancellation of flights every year. In an attempt to discourage airlines from overbooking, passengers will be entitled to approximately double the existing compensation if they are denied boarding, with the right to choose either a refund, a flight back to their original point of departure, or an alternative flight to continue their journey.
However, there is a catch - airlines will not have to pay compensation if the reason for delays or cancellations was due to “extraordinary circumstances”, which could mean anything from labour strikes to security alerts.

Compensation for airline passengers
These are some of the new rules, according to passenger information material distributed by the EU:


Airlines must first ask for volunteers when a flight is overbooked – standard with the world’s airlines today. Volunteers would be offered a free ticket to the destination, cash compensation and alternate transportation.
If there are insufficient volunteers, however, bumped passengers must be paid EUR 250 (Lm107.50) for flights of less than 1,500km up to EUR 600 (Lm259.14) for flights over 3,500 km that operate outside Europe.

If a flight is cancelled without “sufficient advance notice”, that is less than two weks before departure, the airline must give the passenger, on request, a ticket refund with transportation back to the point of origin, plus meals and refreshments.
Compensation must be paid within seven days and may be paid by cash, cheque or bank transfer, and may be paid in travel vouchers only by an agreement signed by the passenger.

If an airline expects a delay from an EU airport, it must provide meals and refreshments, communication facilities and a hotel if necessary.
If the delay is five hours or more, the airline must also refund the price of the ticket if the passenger desires and provide free transportation back to the passenger's originating point if the passenger has already begun the trip.
If a passenger feels damaged in some way by a delay – such as missing an important meeting – the airline may be subject to greater penalties, which could run into thousands of euros. If the airline does not accept the claim, the passenger can go to court.

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