Regulation 261 had its origins in 1999, when the then Transport Commissioner Loyola De Palacio decided to do something about the airlines’ habit of bumping overbooked passengers. There was already a Regulation in place, with denied boarding compensation levels about half what they are now, but it had not been particularly effectual.
De Palacio actually wanted to outlaw overbooking, but was persuaded that a significant proportion of overbookings were caused by the practice of guaranteeing passengers who had missed their connection a seat on the next available flight – whether it was full or not. Since ATC delays were endemic at the time and the Single Sky project was gathering political momentum, this argument was taken on board.
However, it didn’t help that De Palacio’s
chef de cabinet was bumped three times in quick succession (by the same airline, once with his family
) so it was decided to ‘teach the airlines a lesson’ by upping the compensation levels massively – the proposal was that they should be double what they are now, i.e. to a maximum of €1200.
The airlines, predictably screamed blue murder, both at the punitive levels and the fact that the proposal had not gone through the usual consultative processes.
Then along came 9/11 and the financial pain the airlines went through in its immediate aftermath. Unable to help materially, the European Commission nevertheless agreed to shelve the DBC regulation, along with some other potentially damaging legislation.
Then at the end of 2001, totally unconnected with DBC, the airlines were making a fuss about the Galileo European GPS project. They didn’t want it and they didn’t need it, but they were the ones who would be paying for it. Trouble was, Galileo was a pet project of the EU and the EU didn’t like their pet project being rubbished. So a senior mandarin in the Transport Directorate decided to ‘punish’ (his own word) the airlines by dusting off the DBC proposal and reintroducing it into the legislative process.
Along the way, the proposal, which originally had been limited to denied boarding due to overbooking, extended the compensation provisions to cancellations for commercial reasons (i.e. lightly booked flights) and also a duty of care in the case of delays. The compensation levels were established at the current €250/400/600.
This was something the airlines (at least the established ones) could live with. It was already standard practice to give out meal vouchers in the case of long delays, and eventually to offer a night’s hotel. Commercial cancellations were not commonplace anyway and the higher DBC levels were rationalised as being in line with inflation compared to the existing ones which had been around for about ten years.
In any case, the proposal had to get past the Member States in order to become law. Some were in favour, some against and some were in the middle. The airlines did their sums and reckoned the proposal would be defeated – just. They didn’t reckon with the realities of EU politics, however. The Portuguese, who were among the waverers, were offered a bridge or some other big engineering project if they would vote Yes. Then when it came to the vote the Austrian minister switched from Yes to No when it dawned on her that she would be standing in upcoming elections and didn’t want any taint of anti-consumerism on her record.
So R261 was enacted in 2004. It cannot be emphasised too strongly that the intentions of its framers were (a) to punish perceived malpractice (overbooking and commercial cancellation) and (b) to institutionalise what the best airlines did anyway, in terms of duty of care. There was never any intention to ‘illegalise’ aircraft unserviceability or to extend the concept of Denied Boarding to delays.
But the drafting of 261 was terrible, and so was the hype that the EU spun around it. They allowed passengers to believe they would get ‘compensation’ for delays and there was understandable frustration when they discovered they couldn't. The definition of exceptional/unforeseeable/unavoidable circumstances was vague. And the potential rewards for successful claims (a planeload at a time) was a magnet for quasi-legal middlemen looking to make easy money. Hence the string of cases referred to ECJ, who know squat about the way airlines operate and do not apply consultative processes to arrive at their decisions.
Returning to the original intention of R261; if an airline got its overbooking profile wrong it might have, say, three bumped passengers on a full flight – total compensation €1800 for longhaul. Or, let’s say, ten passengers on a cancelled 737 - €2500. What we are looking at now is the prospect of a quarter-million euro liability for a cancelled or heavily delayed 747 or A380 (double that if the return leg is affected). The reasons for the event could me many and varied – a catering truck could impact a trailing edge, an accumulation of little factors could lead to a crew going out of hours. No airline is going to stump up a quarter of a million if they think somebody else is to blame. I oredict that the majority of such cases will go to litigation – there is only going to be one winner in this – the lawyers.