European Commission Considers Fee For Traveler Bankruptcy Compensation

The price of air travel in Europe could rise after the European Commission confirmed it is considering launching a European Union-wide plan to protect passengers from scheduled airline failures. "A public consultation on this issue is due to be launched by the European Commission in autumn 2009," a transport spokesman told EuroBTN yesterday.

The consultation also will look at whether legislation introduced in 2004 to compensate and assist passengers for cancellations, involuntary denied boarding and delays also need to be tightened. In addition, it will consider whether to introduce EU legislation for the first time on compensation for lost and damaged luggage.

The consultation on airline protection failure follows publication of a European Commission-commissioned study in March 2009 that identified such options as creating a guarantee fund through a levy or insurance schemes. European commissioner for transport Antonion Tajani on Oct. 7 told the European Parliament he is giving the matter more urgency, following the collapse of the Slovakia-based low-cost carrier SkyEurope this summer, which left thousands of business and leisure travelers out of pocket.

According to the European Travel Agents' and Tour Operators' Association, 79 European airlines went bankrupt between 2000 and 2008, and another 14 have gone under so far this year. ECTAA since 2002 has been calling for a scheduled airline bankruptcy protection plan. At present, leisure travelers who buy holiday packages that bundle together more than one element, such as a flight and hotel room, are protected, but there is no equivalent for unpackaged flights bought through agents or directly from airlines. However, passengers who pay by credit card usually receive some compensation from their card company.

In 2002, ECTAA calculated that a levy of 50 cents to 75 cents per ticket would be sufficient to set up a sizeable compensation fund. Asked whether travel management companies' corporate clients would welcome the extra financial burden, ECTAA legal adviser Isabelle Leroy said: "We think a small amount would be worth it. The European Commission would not want to put in place anything too burdensome on airlines at this time. However, some larger airlines may consider they would be contributing disproportionately to a protection fund."

The Commission also is looking again at its 2004 directive on delays and cancellations following numerous complaints of airlines refusing to pay compensation in line with their obligations. One common problem has been carriers avoiding payment by citing "extraordinary circumstances," intended to exempt them in such instances as bad weather or security alerts. Passenger groups have cited examples of airlines using the exemption to avoid payment owing to technical problems with aircraft.