EU air passenger rights: Welcome clarification but forcing airlines to pay compensation will drive up ticket prices

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James Stamp, KPMG’s Global Head of Aviation comments on the revision of European Union air passenger rights rules which were approved by MEPs today:

“The new rules offer some welcome clarifications on air passenger rights: For example, there is now better clarity over what constitutes ‘exceptional circumstances’ exemptions. In the future, severe weather or air traffic control disruption will be exempt whereas maintenance problems will not be exempt.

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“The new legislation also limits the amount of compensation passengers would be entitled to; forcing airlines to pay for unlimited hotel costs during the ash cloud disruption was untenable, for example. Under the text adopted today, passengers would be entitled to: €300 for journeys of 2,500km or less which were delayed more than three hours; €400 for journeys between 2,500 and 6,000km which were delayed more than five hours and €600 for journeys of 6,000km or more which were delayed more than seven hours.

“The downside for passengers is that mandatory compensation will continue to feed through to higher ticket prices. The airline industry is highly competitive, and has thin margins, so these costs cannot be absorbed. The new regulations also do little to change national differences in how effectively compensation can be enforced?, and still leaves significant room for dispute about who is responsible for any given delay.”

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