On a recent mistake fare trip to Manchester our return flight experienced a substantial mechanical delay which resulted in our eligibility for compensation under the EU261/2014 regulation. While we certainly pursued the compensation and will continue to until it is paid, our inexpensive fare made me re-evaluate whether the rule (as written) is still fair to consumers, businesses or both.
What is EU261/2014
In a post published last week I covered most of the details found here at the Wikipedia page. For those who don’t even want to bother to click those two links but still want to know what it is, here is the quick and dirty version: All airlines flying from the EU but not necessarily to the EU must deliver compensation to their customers based on distance-based criteria in relation to how late they arrived at their destination. All EU carriers are subject to this rule, as are any carriers leaving any EU country including the UK and Switzerland. For the distance on our flight a couple of weeks ago (Manchester to Toronto) we were due €600 each, paid out in our local currency (equivalent to around $2,100 USD for the three of us combined) – we have been assured that the “check is in the mail.”
In other instances of EU261/2014, funds are disbursed on-the-spot which is naturally a preferable form of payment to the sitting and waiting option – British Airways issued a pre-loaded debit card while Aer Lingus (not to be confused with the SNL version of Aer Lingus) preferred cold hard cash.
What Is It Compensating
Missed meetings, appointments, flight connections could all have a costly knock down effect that far exceeds the cost of someone’s time. In many ways €300-600 may not be enough to replace a day of someone’s once in a lifetime trip, a day of vacation you can’t get back, tickets to events, a cruise ship departure – any number of things. Then again, when given the choice on a weeklong trip I would take the compensation every time.
Regardless, the compensation is to send a message to carriers that maintenance and preventable issues should be handled before it affects passengers and adequate measures should be put in place to avoid problems that are within the carrier’s control. It also helps business travelers and leisure travelers to avoid petty issues with the carriers and perhaps even walk away with a little bit of change in their pockets as a result.
The Rule is Objectively Harder on Discount Carriers
Fares on traditional hub-and-spoke carriers might be just as low as discounters in some cases – I have seen base fares on American of $30 on trans-Atlantic before that appeared to match a discount carrier’s price – that’s not a mistake, that’s a competitive decision. Other passengers on mainline carriers who might have missed out on that great deal could pay as much as $1800 for a coach seat and those higher fares help to offset the penalty if the airline encounters an EU261 situation.
The rule also does not grant any greater allowance for business or first class passengers though their costs were likely higher as are perhaps the stakes of a tardy arrival (they aren’t necessarily flying to visit a cousin for a weekend, they may be going to a meeting where punctuality matters). The UK Air Passenger Duty specifically charges more tax to those customers flying out of the UK in a premium cabin, in some cases hundreds of dollars more than they would a coach passenger on the same flight, however the rule does not pay out a cent more for a higher ticketed cabin. Discount carriers cannot offset the costs of EU261 with higher priced tickets sold because they don’t offer the cabin.
But discount carriers provide a public service. They make mobility possible for hundreds of millions of passengers who would never before have been able to fly. Take passengers on RyanAir flying for as little as €9.99 one way to see a friend that has moved away, when airfare was easily more than 20x that before the carrier began offering their low cost model, such a trip might not have been possible. The same is true for passengers of Spirit Airlines, Frontier or Allegiant in the States. Last week Omaha to Punta Gorda, FL (for Fort Myers) was available for $24.99 one-way, just a few years ago those flights would be priced closer to $400. As Air Asia paints on the sides of their planes, “Now Everyone Can Fly” – that is a public good in every sense of the term.
Yet these carriers are hurt the most by a statute that doesn’t take into account the cost of the ticket itself. If the carrier doesn’t even sell tickets on the route for €600 (as is the case with long haul discount carriers like WOW!) how can they be expected to pay an outsized burden for normal maintenance issues that happen with any carrier?
It Doesn’t Allow For Mistake Fares
We recently flew Air Transat (not a discount carrier but not a mainline either) and the average price for the three of us was $183 on a mistake fare, though this was only about half of what they typically charge. Due to issues on the ground we incurred a lengthy delay that just barely crossed over four hours. In terms of US dollars, the airline was now on the hook for somewhere in the neighborhood of $720 USD per passenger on the flight. If you strip away our fares as limited in scope and remove the taxes from the other passengers, I have a hard time believing that many on the aircraft paid $720 in base fare without a mistake factoring in.
We booked the ticket because we have wanted to get back to Manchester, but specifically because it was a mistake. We would have likely flown some other airline and route if the prices were equal. We seized the opportunity because it was an outsized value. To think that by taking the trip, not only was it free in the end, but they actually paid us to fly it feels a lot like theft.
That doesn’t mean that I didn’t take the compensation, I lobbied for it and told other passengers about their rights while on the plane. However, in retrospect it doesn’t seem fair that the airline couldn’t at least have just washed their hands of our route. Consider this, of $183 average price we paid for our roundtrip tickets, only $64 of that price was the fare that went to the airline, the rest was UK APD. On our outbound, the airline made $32 in revenue and spent at least that in fuel which doesn’t include the meals, rights to the IFE entertainment, the printing of our luggage tags and boarding cards, and so on. Only our return flight was affected so at most, in my opinion, we should have gotten a refund of $32 for the one way return that the airline really had control over.
For Premium Customers It’s Not Even Close to Fair
It seems a few times every year sales crop up where fares across the Atlantic can be had in a premium cabin for $1000-1500 without it being a mistake. These are great for passengers that normally would fly in coach or premium economy classes expecting to pay about the same. However, most often these cabins are filled with business travelers (hence Business Class) buying last minute tickets on the company dime.
For this group of travelers that fill the front end of the aircraft and make the whole flight profitable regardless of how many passengers are seated behind the curtain, it is imperative to the purpose of their trip that they arrive as expected. Going to a last minute meeting across the Atlantic is rarely a picnic and at least one direction will be a redeye flight. Consequences for a tardy arrival (especially if it causes the passenger to miss a connection) could be millions of dollars, euros or pounds. Even if the business is not lost, their employee is tired having waited through the delay at the airport, is not at their level best and is less happy with the need for the trip in the first place.
The business is not compensated for their portion of the ordeal as the financier of the trip, it goes to the traveler as he or she is the affected party and actually endured the wait. Is the business not due something for their own risk or financial loss as a result of the delay? Should both parties split whatever amount is due?
My Proposed Changes
To update the regulation – which remains necessary not only in the EU but I also believe it’s needed in the US – I propose the following changes to the regulation to make it relevant and fair to consumers and businesses alike. These apply solely to coach and premium economy classes and flights in excess of 3500kms or all trans-Atlantic flights to or from North America among other destinations:
- Coach and premium economy compensation for delays in arrival of 120-179 minutes is due in the amount of €50 or a refund of the fare paid excluding taxes (not pretend fuel surcharges, I am looking at you British Airways), whichever is less. This will help carriers like WOW! that are making trans-Atlantic flights possible for nearly any budget without taxing them for mechanical issues that all carriers have from time-to-time.
- Coach and premium economy compensation for delays in arrival of 180-239 minutes is due in the amount of €300 or 50% of your fare excluding taxes whichever is less. This amps it up to the current level except in cases just like mine where the airline was paying me to fly them – that was ludicrous when it happened and (while I will fully pursue the compensation and spend it on something wonderful) it really wasn’t fair to the carrier.
- Coach and premium economy compensation for delays in arrival of 240 minutes is due in the amount of €600 or 100% of your fare excluding taxes whichever is less. If you paid less than €600 for your return to Europe (which is more expensive than the going rate most days now anyway even on full service carriers). Adjusting to 100% makes it clear that the airlines aren’t going to make any money on those passengers for this flight anyway, but if they didn’t pay €600 for the ticket, they shouldn’t have to pay passengers to fly them, especially leisure passengers who might have significant flexibility in their schedule or long layovers upon their arrival.
For Business, First and “Super First” (Suites Class, Residence) of the same distance criteria the following apply:
- Delays of 120-179 minutes incur a €200 on-the-spot (or when they land) disbursement. The same amount also returns to the billed party.
- Delays of 180-239 minutes incur a €300 on-the-spot (or when they land) disbursement. The same amount returns to the billed party.
- Delays of 240 minutes or more incur a €600 on-the-spot (or when they land) disbursement to the traveler and 50% of the roundtrip excluding taxes returning to the billed party.
Does This Even The Playing Field?
Perhaps, perhaps not, it’s all speculation of course. But what remains undisputable is that the market has changed from when the original law was written. Discount carriers are offering an opportunity for those who have never had a chance to travel abroad before, the entry-level price point they needed. That’s in the best interest of everyone, not just the travelers but the airlines that need to fill seats, airports that need landing fees to modernize, adjust and grow – the corner coffee shop in Paris that is struggling with lower tourism spend. Penalizing those carriers in an outsized fashion while they expand the growth of tourism across the continent is a bad idea. However, all carriers (European, North American, the world over) should be accountable for delays that have real impacts on their customers.
If a passenger is delayed (by a flat tire, or stuck in traffic) then shows up for their flight that departed on time, they are up to the mercy of the airline and may have to pay change fees, differences in fare, or other penalties if the carrier decides to impose them. The carrier will say, “We had a contract and you’re in breach” and with EU261 consumers get to say the same back to the carriers. But failing to perform on a contract, shouldn’t necessarily mean the carrier is paying passengers to fly them simply because the EU hasn’t revisited whether the compensation amount still serves the same penalty to the carrier.
What do you think? Should EU261/2014 make adjustments to the compensation levels based on cabin and fare paid?