Consumer protection is needed in public transport, not just airlines. The proposed legislation could create more misery than it alleviates
Last week four associations, between them representing over 90% of the airlines operating in Europe, joined forces to denounce forthcoming legislation on passenger compensation. They argue that the proposal is ill thought-out and would constitute an extra burden on air transport, just when it is at its most vulnerable.
Everyone who travels frequently knows about - and may have personally experienced - being "bumped" from overbooked flights and has felt the misery and frustration caused by cancelled services. Indeed, the proposal is rumoured to be the direct result of one senior European Commission official's experience of consistently overbooked busy Sunday night flights to Brussels.
Yet like many pieces of well-intentioned legislation created in haste, the denied boarding compensation proposal suffers from a lack of rigour. Unusually, the EC did not embark on a careful impact-assessment study before recommending compensation levels of €1,500 ($1,680) for each passenger delayed more than 4h on flights over 3,500km (1,900nm). These levels have now been reduced to between €250 and €600 by the European Parliament, but the proposal still risks causing a major - and very costly - bureaucratic headache for the carriers.
Overbooking is a consequence of airlines' complex tariff structures and yield management systems, which encourage passengers to abuse the system to their advantage. For example, savvy travellers often book two "back-to-back" flights encompassing apparent weekend stayovers for a fraction of the price of a weekday return, abandoning one of the legs on each. The airlines then try to estimate the resultant no-shows and resell the seats - hence overbookings. But the biggest single cause of overbookings is the high-priced, fully flexible ticket that requires passengers to name intended flights and then allows them to miss their booked services and take priority seats on later flights with no penalty. The carriers need to look carefully at this product, assess whether it is genuinely valued or simply abused, and whether it is appropriate in today's marketplace.
Airlines have also been known to cancel flights when the load factor is below a profitable level if there are no knock-on aircraft positioning problems, since compensation payouts were capped by the Warsaw Convention. The carriers are obviously reluctant to see these privileges eroded.
The airline associations stress the impact the proposal will have on three areas: customers, staff and earnings. Passengers using feeder flights to mainline hubs may lose the benefits of interline bookings as regional airlines tear up their codeshare agreements for fear of being liable for the price of the entire journey if a technical delay causes the passenger to miss the booked onbound leg. Furthermore, with the airlines now responsible for issuing free return tickets after a 2h delay, for providing hotels after a longer delay and taking responsibility for the effects of adverse weather, airport staff will have their workloads significantly increased, just as the airlines have trimmed back to the bare necessities.
The Association of European Airlines estimates additional costs of around €300 million a year for its members, largely national flag carriers. While this may be tolerable for large airlines, payouts amounting to even one-tenth of that could lead to the bankruptcy of smaller companies. Low-cost carriers, too, point out that the fixed compensation is frequently a multiple of the fare the passenger has paid and could kill the kind of service they offer.
The EC argues that the inconvenience of a long delay is the same regardless of the ticket price. This may be so, but why is this obligation to be applied uniquely to aviation and not equally across all forms of public transport - buses, ferries and trains? Thousands of travellers were stranded in June when French and Belgian train workers went on strike for several days, bringing the high-speed train network to a halt. Affected passengers are haggling with the state-owned train companies for compensation above the bare minimum.
So while there is a need for legislation to protect passengers against deliberate overbooking and inadequate back-up measures, the European Commission should scrap this ill-drafted set of rules and think again from scratch about the nature of the issues involved for all forms of public transport. Without doing so, as the EC admits, the vagaries of the text will lead to court cases and bankrupt airlines before the legislation is fully defined.
Source: Flight International
