The European Parliament has radically changed proposals by the European Commission (EC) on passenger rights, although airlines still face increased compensation claims for delays, cancellations and denied boarding.

The bill passed by parliament sets compensation levels for overbooking and cancellations at €200 ($190) for short-haul, €400 for medium-haul and €600 for long haul flights. This compares with the EC's demand for €750 for short-haul and €1,500 for long-haul flights. There was much wrangling in parliament before the vote, with a coalition of political groups taking on the greens and their allies.

Members of the European Parliament (MEPs) sympathetic to the airline industry managed to get an exemption for charter carriers, arguing that there is already adequate legislation in place. However, attempts to include the seat-only portion of charter business in this exemption failed.

The Association of European Airlines (AEA) is relieved that the EC's initial proposals have been watered down. "We're quite happy with this. It is far more sensible than the EC proposals," says the AEA. The EC also makes it clear that it could live with the amendments. "This could be acceptable if other issues prove satisfactory," says Gilles Gantelet, spokesman for EC transport commissioner Loyola de Palacio.

However, the low-cost sector has been critical of the proposals, arguing that since they take no account of the fare being paid by the passenger, carriers that are offering low-fares will be discriminated against.

"The proposals, even in their amended form, remain a disaster for the airline industry and particularly the low-cost sector," says Jim Callaghan, head of regulatory affairs at Ryanair. He points out that the minimum €200 payout is over four times Ryanair's average sector fare, a far higher ratio than that for mainline carriers, and also points out that carriers could be heavily penalised for the failings of others.

"Why should any airline be expected to provide compensation of €200 per passenger simply because Italian air traffic control decides to go on strike?" he asks. More controversially, perhaps, he also complains that the proposals will put pressure on airlines to try to operate flights rather than cancelling them for safety reasons.

Supporters of the airline industry within the European Parliament are critical of the way low-cost carriers have tackled the issue, however. One MEP complains that the refusal by low-cost carriers to sign up to the voluntary agreement on passenger rights drawn up last year by mainline carriers undermined their position, encouraging the EC to press ahead with its own plan for a compensation system backed by European law. The MEP says that the low-cost carriers have been slow to see the dangers for them in the EC's proposals and have suffered through their poor connections in both Brussels and the parliament.

Even so, there is much criticism of the EC's decision to press ahead with its proposals. "The EC did not leave enough time for the voluntary agreement to kick in," complains the MEP.

Parliament noted industry concern that the proposals discriminate against the air transport industry, and called for similar measures in other transport sectors. Carriers from outside Europe would also be hit by the proposals, and the US Air Transport Association has already objected, questioning the validity of the proposals in international law.


Source: Airline Business