EC Seeks Higher Bumping Pay

European carriers are threatening to raise fares and reduce flexibility of tickets if a European Commission proposal to increase by 500 percent compensation for involuntary denied boarding becomes law.

Transport commissioner Loyola de Palacio plans to raise compensation to bumped passengers to a maximum of $1,340 according to the length of the delay and duration of the flight. At present, the ceiling is one-fifth of that sum. She also wants to make it obligatory for airlines to call for volunteers in the first instance, something most carriers already do in practice. Those who are bumped forcibly also will have to be offered a choice between an alternative flight and reimbursement of their ticket, plus care while they are waiting.

The proposals require approval from a majority of European transport ministers and also the directly elected European Parliament to become law, and would be binding in all European Union states. This would be expected to take 12 to 18 months if they received a smooth passage, but that is not likely as airlines have expressed deep hostility toward the plans.

Other groups are not so sure either. "We welcome the proposed compensation payments but we would not want it to impact fares," said Loraine Holdcroft, executive director of the Institute of Travel Management of the U.K. and Ireland. "If that were to be the case, we would rather maintain the status quo."

Simon Evans, CEO of U.K. passengers watchdog the Air Transport Users Council, said, "We should be careful in listening to the airlines about whether it will be counterproductive."

Airlines argue that they are obliged to overbook, sometimes by as much as 30 percent, because of the high number of no-shows they receive, especially on business routes. These usually are corporate travelers who have bought fully flexible tickets that they can amend or cancel without charge.

Carrier officials said the level of involuntary denied boarding is already acceptably low. The most recent figures from the Association of European Airlines, for 1999, showed the ratio to be 1.1 bumpings for every 1,000 passengers. A more detailed analysis would show the frequency to be greater in southern Europe and correspondingly less for British Airways, Lufthansa and other carriers in northern Europe. The proposed regulations could lead all carriers to reduce their level of overbooking, which would increase the likelihood of seats flying unsold.

"These are punitive levels of compensation," said a senior source at one major European carrier. "The effect is that prices will go up and it will also threaten the flexibility of our fare structure."

Gilles Gantelet, spokesman for de Palacio, said, "Of course this could push fares up, but we think that is more a threat."