Airline compensation – who pays in the end?

TravelMole guest comment by Andrew J Wood, general manager of Chaophya Park Hotel & Resorts, Thailand.

The recent European Court ruling for guaranteeing passengers compensation for flight delays or cancellations brings to the table once again the discussion concerning consumer’s rights in the field of travel-related legislation.

The low cost airlines were quick off the mark to react angrily to the new ruling, which comes into force in February, claiming the compensation is out of line with ticket purchase prices.

Many observers in the tourism industry, however, are asking is it ‘fair’ and does the ruling have any implications on passenger safety and costs?

I guess at the heart of the issue is what is reasonable and fair in relation to a delayed or cancelled flight. Certainly, the industry well understands that acts of god, war, strikes, congestion and weather are all beyond the scope of responsibility of any individual airline and that compensation is not normally paid.

However, each airline will deal with individual cases on their merits and according to their own pre-set rules and regulations. Some will exceed the minimum required by law and others will follow strictly to the letter. First class, business class and frequent flyers may well be dealt with under a separate set of rules and regulations.

If delays are down to the airline, such as overbooking or poor maintenance then I guess there is no argument where the blame lies. The new legislation sets the price for a passenger bumped off a flight at US$725 per passenger. For flight delays of two to four hours airlines are required to serve snacks or full meals and delays over five hours entitles passengers to a refund and a hotel room if necessary. Ultimately, who will be paying these higher compensation charges? The airlines or the passengers?

In the hotel industry we have, I believe, behaved reasonably and fairly in dealing with “out bookings”.

A hotel which has guaranteed a reservation and is not able, for whatever reason, including acts of god, to provide that accommodation, has in my experience, accepted full financial responsibility to find alternative accommodation. This includes paying any transfer costs to and from the hotel, with an option for the guest  to return to the hotel the following day, usually with an upgrade to a suite or similar and profound apologies from the hotel.

Too much? Not really, particularly if the individual happens to be a frequent guest and you want them to remain loyal and return repeatedly.

In the European ruling, there is recognition of the fact that a business traveller may need to be compensated for the entire round trip journey in the event of a missed business meeting, negating the main reason for travelling.

Fair or not?  Most of us would say fair. After all, as passengers we follow strictly the booking procedures and arrive at the airport at the designated time and place and generally do what we are told. We also face a financial penalty in the event of a change of date of travel, if travelling on a restricted ticket.

Will this lead to higher prices or, heaven forbid, yet more surcharges to the end users? My belief is most definitely. The biggest question, however, is whether it will be widely accepted by the airlines. There will be intense lobbying by European airlines to oppose it and for non-European airlines, it will most likely be ignored.

As to safety…increased pressure to get mechanical objects flying on schedule, on time and in all weather conditions either means better attention to repair and maintenance or simply cutting corners. It is not for me to suggest what will happen, but I guess the more responsible airlines, if forced to accept the new ruling, will take an equally responsible attitude to safety. The increased cost of aircraft being serviced more frequently to avoid disruption and cancellations will, however, be passed on to the end user.

Moreover, passenger cancellation insurance will likely be affected. If airlines are made more accountable financially, will this lead to higher premiums or reduce pressure on individuals to purchase cover for potential mishaps?

Whatever happens if the new legislation does take effect it will have a number of repercussions and, in my mind, one of those is more expensive air travel.