And this Q&A is very easy to read and remarkably explicit regarding the intent:
http://ec.europa.eu/transport/themes...g_2004_261.pdf
BOAC: I'm thinking that you may be refering to the Dan Air contract with the Travel Company. In those days, you paid little, got little and were happy. Today we pay little, expect a lot and get very annoyed if everything is not perfect. And Europe, bless their socks, has ensured that things will cost more as provisions need to be made for delay costs, or, and this is important, the industry understands that if you think you can call yourself an airline with 3 clapped out aircraft flying 24-hours per day, you're dead. And that is probably what the average modern European actually now wants. Even holiday time is precious.