European airlines were dealt a potentially significant blow this week when the European Court of First Instance ruled that all air passengers are entitled to compensation for flight delays and cancellations.

The court threw out a complaint by the European Low Fares Airline Association (ELFAA) that this disadvantaged low cost carriers where the compensation levels are potentially significantly higher than the cost of their air tickets.
The court added that the rules were fair and the ELFAA had no case for its complaint, since all flight delays are deemed to be equally painful to all passengers and there could be no special treatment for low cost airlines in this respect, whatever the cost of the ticket.
The bottom line is that from February 2006 new European Union rules will require airlines to pay passengers up to E600 ($725) if they are bumped off a flight. This is double the previous ceiling and the same amount is also payable if an airline is held responsible for cancelling a flight.
In addition, delays of between two to four hours require airlines to serve snacks or full meals and delays of over five hours entitle passengers to a refund and a hotel room if necessary.
The court said that passengers delayed at airports often located outside of city centres, with checked baggage were committed to the system and were effectively stranded. It also said that because of these and other factors, the inconvenience suffered by delayed air passengers was not comparable to the delays suffered by others on trains and ferries.
Predictably, the International Air Transport Association (IATA) reacted strongly to the ruling with Director General Giovanni Bisignani commenting that the court had missed an opportunity to overturn an ‘absurd’ regulation. It now estimates that the new rules will cost the industry more than E600m ($725m) a year. Bisignani said: ‘It is a sad day for Europe, for consumers, for international law and for the airline industry.’