Negotiations over the gridlocked EU air passenger rights regulation need to be put back on track despite the UK-Spanish standoff over Gibraltar – otherwise both airlines and passengers will suffer, warns Laurent Donceel in an interview with euractiv.com
Laurent Donceel is Policy Director at Airlines for Europe (A4E), an association which brings together Europe’s five largest airline groups – Air France-KLM, EasyJet, Lufthansa, Ryanair, and the International Airline Group, the parent company of both British Airways and Iberia.
Donceel spoke to euractiv.com’s Publisher and Editor, Frédéric Simon, before the UK’s referendum on EU membership.
The European Commission has finally obtained a mandate this month to start negotiating comprehensive aviation agreements with Gulf countries, Turkey, and other nations in South-east Asia. What are your expectations regarding this negotiation?
In general, we welcome the idea that the EU is taking over these negotiations with other countries, but we won’t go into details about which countries it is best for or what the guidelines should be. Fair to say that the Commission can spend a lot of resources on the mandates, but from A4E’s point of view, the bulk of the work is getting our own house in order.
What does “Getting your house in order” mean? Solving the social issues which have caused strikes in the airline sector recently?
By that, I mean the European house, in terms of regulation. Most of the individual labour conditions are not for us to comment on. I mean focusing on airports, taxes, security and safety etc. This is the bulk of A4E’s work.
So your members told you not to focus on social issues?
That’s right. Because they are so diverse across carriers, each are looking at social issues differently, like the big legacy carriers. We at A4E agreed not to take a position on this. Our views are too different.
To start a new association, we needed to focus on the issues that unite us. On the political topics, I would say that we are united on 80% of them. We want to continue in this way and leave the social issues on the side. No association is going to be able to unite all its members on all dossiers.
One of A4E’s goals is to push for measures that increase airlines’ competitiveness. Do you agree that social issues are an important element of competitiveness?
Social issues are important, but when you look at the different member states, not just the airline, there are different social activities at play. Competitiveness is about the political framework and the sectors influencing what is going on here in Europe. On our agenda is what the airlines can do and what they can partly do, so we know what to focus on.
Moving on to a different topic, passenger rights: The Commission proposed new rules in 2013 to make it easier for stranded passengers to claim compensation when a flight is cancelled or delayed. Do you agree that current rules need to be strengthened in order to allow more protection for stranded passengers?
What is clear from all sides, if you talk to consumer groups, airlines etc., is that the existing 2004 regulation is too prescriptive in certain places and too vague where it should be clearer. Its biggest problem is that it has been badly drafted. There is a huge amount of definitions that have not been given, for example.
Can you cite one example where the regulation falls down?
When it comes to extraordinary circumstances beyond the control of the airline, the regulation mentions three or four factors that cover very little in practice. Weather events may be covered, but nowhere is the Icelandic ash cloud mentioned or strikes by air traffic controllers.
Airlines receive demands from passengers for compensation that they aren’t responsible for. And that’s because of bad drafting. This state-of-affairs has been recognised on all fronts.
The worst case scenario is that there is no review of the regulation, no agreement on how to clarify circumstances and define factors, for example.
So more detail would be useful there. Could you cite on example where the regulation is too prescriptive?
One example is vouchers, where airlines have to provide care in the form of a €10 voucher or a bottle of water etc. This is an area that could just be left up to the carriers, who know that it is up to them to look after their passengers.
They would offer this without being told to do so by the regulation. So is it really needed?
So do you agree that the Commission’s update proposal, for more passenger protection, is an essential objective?
On the one hand, the rights of the passenger have to be better defined, but there is also recognition that the regulation is too vague. It’s something we definitely support. However, the burden on the airline is too high, so there needs to be a clarification of what carriers are and are not liable for.
Currently there are just 2% of eligible passengers who successfully receive compensation. How do you explain this?
This changes from one company to another. There is a huge difference between, for example, French and British consumers. Anglo-Saxon consumers will care more about monetary compensation for delays, while French consumers are more interested in being allowed two pieces of luggage rather than one. From my experience, I would actually doubt that 2% figure.
According to a report by the European Consumer Centres Network, a lot of people simply don’t bother complaining, as they think they don’t have any chance of getting compensation.
That is one of the aims of the review, to make consumers more aware of their rights. People need to be more aware of what they are entitled to.
The big problem on the industry front is that airlines receive a huge number of claims, even if only a fraction end-up being eligible for compensation under the regulation. This has led to the emergence of an ‘ambulance chasers’ industry, for example. Basically, lawyers with a business model similar to the TV show Better Call Saul surfing on the wave of uncertainty and reaching out to consumers offering to sue airlines, even if it is not justified.
These organisations, and some consumer organisations, say that airlines quite often deliberately don’t inform their passengers of their rights, in order to dissuade claims from being made.
I can’t speak for the whole industry, but if you look at the main actors, the continental airlines, all of them have now a web page dedicated to explaining the rules of EU261. This goes on top of several EU initiatives. For the industry, it’s a no-brainer. This is not something where the airlines disagree. Passengers should be entitled to compensation. It’s the regulation that’s the problem.
Airlines inform their passengers at the check-in counter what they are entitled to. Proactive steps are taken in these cases. It’s standard practice. I can’t guarantee that it’s done for every flight, because airlines share service providers, so it might be out of their hands in some cases. There will always be exceptions – that’s a part of normal business.
Airlines are no longer debating this issue, because there’s nothing to be gained from it. Customers are smarter and more connected. What would be the point?
The same report by the European Consumer Centres Network looked into more than 6,000 consumer complaints in the airline sector and their reasons for filing a complaint. They concluded that “The main problem is that some airlines are not applying the law as they do not agree with it.” It also adds: “It is surprising to encounter an industry where several traders openly decide to not apply the law or the case-law from the EU court.” What is your reaction?
On the point of information, which has already been agreed upon with the Parliament’s report, it’s a given that passenger rights should be printed on the back of the ticket. That’s a non-debate.
Otherwise, the reason why there is this current wave of complaints is, and I come back to it again, because the regulation was drafted badly. It is too vague.
My third point is that you end up with a patchwork of different case laws at national level, which is incredibly problematic from a legal point of view, as well as from a commercial point of view. UK case law now foresees that compensation can be claimed up to six years after the delayed flight. If you multiply that amount of time by the number of passengers and delayed flights, you’re going to get a sizeable figure.
In the case of a massive strike or ash cloud, the amount of money that airlines have to put aside is huge. That’s not going to be used to open new routes or buy new planes. The link here between regulation and tourism and job creation is very direct. There are cases of airlines that haven’t opened new routes or bases, because of the money they have had to put aside.
The new regulation, for example, would put the figure at two years. Which is much better. But in the meantime, courts left and right across Europe are building up case laws. It’s becoming a nightmare.
How much would compensation cost for airlines? Have you made an evaluation of the new regulation?
At this stage, the regulation is in its final phase. There’s been a huge improvement in clarity. So at the moment, A4E’s work is shifting towards other areas of consumer rights and consumers in general. We aren’t reinventing the wheel with this. From our perspective, having only been formed six months ago, we are coming in at the end of the review process of the Regulation.
One issue that came up during the negotiations on the new regulation was to decide when a delay becomes a cancellation, in regards to compensation. The European Commission and Parliament have proposed three hours. What’s your take on this figure?
It’s right that this is an important issue, but the three hour figure isn’t what is important. The distance has to be taken into account too. If you talk about one without the other, you remove the possibility of an airline being able to fly-in a second aircraft, for example, if there’s a delay.
This is a bit technical, but an airline has to be given the opportunity to provide a replacement flight before compensation claims are made. In the end, our perspective is that the passenger wants to get to their final destination. It is more important for them to reach their destination late, within four hours, than to receive compensation.
The possibility for a carrier to provide a replacement flight in case of technical defect needs to be given. If unrealistic thresholds are imposed, some airlines are not going to bother even trying to put on a replacement aircraft. Paying compensation and abandoning the passengers in the airport will become the option, albeit the worst case scenario.
So what would be your solution to the issue?
Vary it by distance. The principle is that the trigger point for compensation has to reflect the distance that was initially to be covered.
How do you feel the airline sector is being treated in comparison to other modes of transport? Is it a fair situation?
Looking at passenger rights in other transport sectors is beyond our remit. The only thing that I would say is that air transport is extremely regulated. The operational constraints in comparison to coaches and trains are very different, particularly because of security.
It is a very complex environment, you need slots, security levels are high, crew are subject to strict working time regulations. Of course, we are more limited by bad weather as well. We are more dependent on the track record of our planes than coaches and trains too.
Some consumer organisations claim that technical problems were being invoked too easily by airlines as “extraordinary circumstances” for delay, without providing more information. What is your reaction?
When we look back at the decade in which this regulation has been in place, I remember that people used to be surprised that technical defect were listed as a reason not to compensate.
But if you look closer, there are massive operations on aircraft upkeep and maintenance being carried out on a daily basis at airports. That means technical reasons are not just put out there for no reason, they are often linked to safety.
We are not asking for a different regime. Aviation is a low-margin business, but highly regulated. More than most sectors.
Negotiations on the new regulation have been stuck in the Council because of the standoff between Spain and the UK over Gibraltar. What kind of time frame do you see for it to be finally adopted? Can the incoming Slovak presidency make a difference?
For us the worst case scenario is that it doesn’t move on. The current situation is not satisfactory for either the airlines or the customers. Passenger rights are good for customers and business. They need to be focused and clear.
In the best case scenario, things will move on when Britain and Spain sort out their respective elections. We could even hope to see progress this year. There’s no indication that we can expect more than that though.
In the meantime, the Commission is working on its guidelines, which seem to be in vogue at the Berlaymont these days. I’m not sure how helpful they will be, but okay.
It would be in no-one’s interest if the entire proposal was withdrawn, in line with the rest of the REFIT programme.
Airlines have a bit of an image problem at the moment, precisely because of the compensation issue. Are you worried by this?
That’s true, but people often don’t know how complex the system is and how much work is being done behind the scenes. Airlines don’t want delays, they don’t want to inconvenience people and we have to communicate that better.
While we don’t necessarily agree with the ECJ ruling and the numerous case laws, our main view is that passenger rights have to be protected. That’s first and foremost.
But passenger rights are only a part of consumer concerns on air transport. Consumers have a lot to gain if there is movement at a European level on things like airport charges, which have increased by two-thirds over the last decade. ATC strikes have a huge impact too. Money and compensation are important, yes, but there is a lot to gain from work on other dossiers.