EU261/2004

I recently benefited from an awful piece of European legislation, and whilst I am financially better off it demonstrates why the industry is in such bad shape. Several months ago we booked a family holiday in the US; the ticket price for the four of us routing London-New York and Washington - London was £1877.42. Of that my itinerary tells me that £1221.72 was “taxes and fees” leaving just £656, or 35% of the total paid, as the airfare. I am not proposing to get into a discussion here about the ridiculously low amount of the fare goes to the airline but I am sure that they have received some of the “fees and taxes” in addition to the airfare under the guise of a fuel surcharge and its not quite as bad as it looks.

On the day of departure I received a notification via blackberry travel that our flight had been delayed from midday to 10PM and that the aircraft had been down gauged from an A330 to a B767. We arrived at the airport by 9AM and went straight to the ticket desk where I was told that there was no chance of a transfer to another flight as it was Easter and everything was full. I then quoted my knowledge of the “EU261 legislation” at that point I was offered the option of leaving at 8AM the following morning some 20 hours late and by way of compensation we would be offered overnight accommodation at Heathrow including Lunch and Dinner as well as £500 per head. At the industry rates I believe that the Hotel accommodation would have costs them £150 so the total cost of our offload would have been about £2150. Due to the down gauging of the aircraft they were looking for 77 volunteers. I will point out that this was “voluntary compensation” paid in order to encourage us to offload but the value of this was driven by the “EU261” compensation levels.

European regulation 261/2004 sets out to determine the levels of compensation that should be paid if flights are cancelled or if a flight is overbooked and some passengers are involuntarily offloaded. Delays were incorporated into the legislation after it was discovered that Airlines were avoiding paying out by delaying flights instead of cancelling them. The levels of compensation have been set at eye watering levels as the table below shows.
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:046:0001:0007:EN:PDF

A flight of less that 1500KM delayed over 2 hours....... €250
A flight greater than 1500KM within Europe delayed over 3 hours...... €400
A flight of between 1501KM and 3500KM delayed over 3 hours..... €400
A flight not within the EU of greater than 3500KM delayed over 4 hours.......€600

At todays exchange rates this means that the airline was legally obliged to compensate us to the value of £490 for the 10 hour delay. Bearing in mind that we had only paid £469.43 of which about £200 was actually going to the airline they were paying out compensation on 150% of the money that they had been paid for providing the service. Which other industry is subject to these levels of legally enforceable compensation levels? Can you imagine buying a car for £10,000 and because the garage delivered it a week late the garage was required to pay you £15,000 compensation AND give you the car.

As you can imagine the airlines are resisting the pay outs and there have been a number of legal cases against airlines who are trying to find ways to resist paying.