(Posted 20th June 20260
By Thomas Reynaert, IATA Senior Vice President, External Affairs
The agreement at the start of the week by the EU for the reform of EU261 air passenger rights rules has failed to improve things either for passengers, or for the competitiveness of Europe’s aviation industry.
Thomas Reynaert, IATA Senior Vice President External Affairs, sets out “the good, the bad and the ugly” of the changes agreed to EU261, particularly in the context of the failure to address the Draghi Report recommendations to simplify the regulatory burden in EU.
KEY QUOTE:
“The EU261 result is the latest proof that Europe is not prepared to move from political platitudes to action…Ultimately, the “reform” does nothing to control the ballooning costs of EU261, and solves none of the problems holding back European air transport, most particularly the performance of air traffic management.“
And so, after 13 years of delay and debate, the reform of EU261—the European air passenger rights rules—has ended up in two losses. The revised regulation lost the opportunity to help passengers caught in disruptions. And it fails to meet the Draghi Report challenge to reboot European competitiveness by cutting costly and inefficient regulation.
Plus ça change…
The first thing to state is that no-one is suggesting we don’t need consumer protection rules. Airlines have an obligation to get passengers to their destination. Disruptions happen—often for reasons beyond the control of an airline—and it’s reasonable to expect appropriate care when that occurs.
So, it’s little surprise that the “new” EU261 looks much the same as the old. Passengers have access to the same care and assistance when delays occur and the compensation regime in case of cancellation is unchanged.
The Good
There was an important and positive evolution. For the first time, airports will have the responsibility to provide contingency support if disruptions overwhelm local accommodation. That’s a small but important first step in the direction of shared accountability in the event of a mass disruption.
Another improvement concerns defining extraordinary circumstances. A longstanding problem with EU261 has been European courts making airlines responsible for compensation, even for disruptions over which they have absolutely no control—including the sudden death of a co-pilot, which incredibly, was ruled to not be an extraordinary circumstance. The European Court of Justice has issued over 90 rulings related to EU261, which must be a record for a single piece of European legislation.
The revision introduces a non-exhaustive list of extraordinary circumstances which would be exempt from compensation. It’s unlikely to solve the issue completely as ‘claim farms’ are experts at gaming the system and leaching off passengers. But at least it is a move to provide some definitions.
The Bad
The ‘bad’ comes in what the revision did not address. One of our most fundamental requests was to extend the timing thresholds for triggering compensation. Following the Sturgeon legal ruling (2009), this was set—arbitrarily—at three hours. Airlines have consistently argued that this is insufficient time to get a relief aircraft where it’s needed and get the passengers to their destination. Often, it means the airline cancels the flight and pays the compensation to avoid mounting costs from longer delays. The problem is that most travelers would prefer a delay to a cancellation—late is better than never. EU261 is therefore perversely encouraging behavior that is against passenger wishes.
The original Commission proposal to extend the threshold to five hours became a cause célèbre for the Parliament and after the messy compromise of the negotiations it remains at three hours.
The Ugly
The ‘ugly’, and by far the most disappointing aspect of the debate around EU261, was the failure to understand the point of a passenger compensation mechanism: if it works, it should incentivize good performance to the point where payments almost never happen.
This fundamental principle is completely violated by EU261. Airlines already have every incentive to get passengers where they need to be on time. Firstly, passengers have plenty of choice and airlines don’t want to lose loyal customers because of service failures. Secondly, the clockwork precision and tight timescales of airline schedules mean that airlines hate to have aircraft delayed and out of position. That’s why less than 1% of passengers a year take advantage of EU261.
The revision ignores that fact that the biggest barrier to cutting the delays inherent in European air transport is air traffic control (ATC). Over the last decade, European ATC delays have doubled. There is no robust scheme in place to incentivize better performance. EU261 utterly fails to link liability to operational responsibility. Until it does, airlines and 99% of their passengers will continue to pay (EUR 8 billion a year and rising) for the 1% who get to benefit.
Failing to Put Draghi into Practice
That’s where the Draghi disappointment comes into play. The Draghi report on European competitiveness, published to great fanfare in 2024, led to a chorus of leaders all agreeing that Europe urgently needed to simplify regulations and cut costs to become more competitive.
The EU261 result is the latest proof that Europe is not prepared to move from political platitudes to action. At the very least, it appears that the EU institutions—especially the EU Parliament did not get the memo on time. Astonishingly, on the very day that the revised regulation was agreed, the European Commission invited airline associations in to discuss opportunities for regulatory simplification. Ultimately, the “reform” does nothing to control the ballooning costs of EU261, and solves none of the problems holding back European air transport, most particularly the performance of air traffic management.
The result is that European air transport competitiveness will continue to suffer. It is not just from the ill-conceived and poorly revised EU261, but from a host of accumulated inefficiencies which limit the economic tailwind with which airlines could be supporting the continent’s prosperity. On this trajectory, regional air connectivity, already precarious, will flatline. And the consequences will become more broadly evident if opportunities for change continue to be missed.
After Draghi, European Commission President Ursula von der Leyen talked about ending “gold-plated” regulation and of “tearing down barriers”. EU261 was the chance for Europe to show our sector it was serious about doing this. It flunked the task.
