The second item for consideration is an amended proposal for a regulation of the European Parliament and the Council of Ministers establishing common rules on compensation and assistance to air passengers in the event of being denied boarding and of cancellation or long delay of flights - COM (2002) 717.
Air Passengers Compensation: Presentation.
Mr. McKay
Committee members should be in possession of a text of the regulation. Document COM (2002) 717 was published on 4 December, but there was a meeting of the Transport Council on 5 December which considered its development following discussions in the aviation working group and at COREPER over the summer. The document dated 16 December reflects the position on that document following those discussions.
The opening up of the European aviation market to competition has meant that passengers benefit from lower prices, a wider choice of carriers and access to more routes. The regulation proposes to update and broaden the requirement for airlines to compensate passengers in cases of denied boarding, cancellation of flights and long delays which could have been avoided by air carriers and tour operators. Common rules on compensation and assistance to passengers denied boarding were originally introduced in 1991 in Regulation (EEC) No. 295/91 which is still in force. It gives passengers rights to financial compensation and to alternative flights, re-routing or reimbursement of the cost of the ticket in cases of denied boarding.
In 1998, the European Commission proposed a new regulation to extend the provisions of Regulation (EEC) No. 295/91, but the proposal failed because of difficulties between the UK and Spain regarding the status of the airport at Gibraltar. Agreement has been reached on that matter, which has led to the proposal of the resolution before the committee today. It is essentially unchanged from the 1998 version.
That this matter dates back to 1998 is relevant in the context of the progress that has been made in the expansion of the low fare airline market. Changes that have been made to the regulation since 1998 include provision for non-scheduled flights, including package tours and paperless tickets. Airlines must call for volunteers before denying boarding to a passenger and higher levels of compensation are required, up from €150 and €300 to €250, €400 and €600. The resolution obliges member states to set sanctions for non-compliance with the regulation and to designate bodies to enforce them. These bodies will also investigate complaints from passengers. The Commission will report to the European Parliament with regard to the operation of the regulation by January 2006 at which time further legislative proposals may be forthcoming. Appendix A of the documentation before the committee contains a brief outline of the main points of the regulation. Appendix B features a table comparing the new proposal to the original regulation.
It might be helpful to the committee to run through the changes made to the text of 16 December, which was adopted at the Transport Council. Discussions at the aviation working group made it clear that the financial burden on airlines of paying compensation in the case of cancellations would be far greater than in the case of denied boarding. Denied boarding entails refusing access to a few passengers in the context of a full aircraft whereas a cancellation affects all passengers. In the case of low-cost carriers levels of compensation would be many multiples of the revenue collected in ticket sales. As a result these airlines would be deterred from servicing less profitable routes. The aviation working group also spent a considerable amount of time reorganising the text to avoid confusion between what rules applied in different circumstances. Unfortunately, that means both texts are rather difficult to compare because the presentation of matters has changed considerably, even though the substance may not have changed.
The final result was to choose lower levels of compensation compared to what was proposed in COM (2002) 0717. The levels now envisaged are close to those proposed by the European Parliament and they apply both in the case of denied boarding and cancellation, but cancellations which are outside the control of the airline do not give rise to an entitlement to compensation. I have included a brief attempt to compare the text that was adopted by the Transport Council with the text of COM (2002) 717 in appendix C.
The committee may be interested to know that we carried out an extensive public consultation process this time last year. We placed an advertisement in the newspapers inviting people to submit their views on the proposal, and we consulted directly with airlines and consumer bodies. The consumer bodies were generally in favour of the proposal but, as might be expected, some of the airlines expressed concern over the high levels of compensation and, because that was the concept of the text at the time, the possibility that they would be obliged to pay compensation when delays or cancellations were caused by matters beyond their control, particularly by air traffic control difficulties.
As far as the overall impact of the regulation is concerned, EU carriers, tour operators and non-Union carriers operating out of EU airports will all have to comply with the proposal. It may mean in some cases that they will have to change their conditions of carriage. The regulation will not apply in cases of delays or cancellations that are beyond the control of the airlines. Having said that, I think there is general agreement that the cost of compensating and assisting passengers is not expected to be an unreasonable burden on airlines, even though the levels of compensation would be higher than they are under the current regulations. For illustration, only about one passenger in every 1,000 is denied boarding.
Denied boarding tends not to be a problem with low-cost carriers. It is more an issue which arises with full-service, business-class passengers, where the nature of the ticket allows passengers who do not turn up at the airport to obtain a refund. Consequently, there is an incentive for airlines to overbook on a statistical expectation that only 95% to 98% of passengers will turn up and there will be room for everybody. Occasionally, that does not happen, of course, and then somebody has to be refused. As low-cost carriers sell tickets on a non-refundable basis they do not have the same concerns with recovering revenue if passengers do not turn up.
They take the money anyway.
Mr. McKay
The proposal should not impact on competitiveness between air carriers because all carriers operating out of EU airports will have to comply with it. As I indicated, the Transport Council adopted a political agreement on this on 5 December 2002 and part 2 of the co-decision procedure with the European Parliament is under way. We believe it will take about two to three months for that procedure to be completed. The regulation should come into force about three months after it has been published in the official journal.
Is the proposal binding on all EU states and when is the earliest date on which it is likely to come into force? According to the appendix, compensation is payable except in the case of extraordinary circumstances. Those circumstances are spelt out under the new text as political instability, weather, security, safety, strikes or long air traffic control delays. That seems to cover just about every eventuality so in what circumstances would compensation be payable?
The reason for this regulation coming before the committee is the new era of low-cost airlines about which a number of concerns has been expressed. To be implemented in this country, does the regulation require primary legislation or can it be done through secondary legislation? What is the timescale envisaged by the Department in light of the fact that the Commission will have to report to the European Parliament and Council by January 2006?
Does denied boarding include unfitness to be taken on board a plane due to alcohol consumption? Is that considered under the regulations governing denied boarding? When an intending passenger is denied boarding, category (a) of appendix A provides for agreed compensation plus reimbursement. Will Mr. McKay elaborate on what type of compensation is involved? The schedule seems to set out compensation in relation to category (b) but is it the same level of compensation as in category (a)?
I note that under the heading "delays" there is a separate box regarding people with reduced mobility, accompanying persons and unaccompanied children. Is this specifically to do with that or is it more all-encompassing in relation to people who have to hire wheelchairs to board and disembark from aircraft? Perhaps Mr. McKay will elaborate on that point.
Category C deals with the provision of meals and refreshments in reasonable relation to the waiting time and hotel accommodation in some cases. That provision seems to be quite loose where, for example, someone has to stay overnight due to a delay. Will Mr. McKay clarify and elaborate upon those points?
I agree with Deputy Shortall that the measure is fairly weak because almost every eventuality is excluded in the small print. I wish to cite a case from my own experience when I travelled to Britain with a yellow pack airline and had to change planes to travel on to another destination. There was a difficulty because the incoming flight to Dublin Airport did not arrive and announcements were made to that effect. When I made inquires I was reassured that the connecting plane would be held and I would be perfectly all right. When I got to a city in the north of England, however, I found that the connecting flight had left about an hour previously. The desk was closed but I eventually managed to yank somebody from the yellow pack crowd and after having huge rows I succeeded in getting them to pay for a bed for the night, although breakfast was not included. I could just as easily have stayed in Dublin overnight and taken the plane the next day. If one is given reassurances about flight connections why should I have to bear the expense of staying in a hotel? I would like to think that these kinds of events were covered in the regulations.
I also wish to raise the matter of people being denied boarding. My colleague, Deputy Naughten, asked a very reasonable and interesting question about people who are incapacitated through drink. It is perfectly appropriate that they should not be allowed to board the aircraft and I do not believe they should be compensated. On the other hand, there was a case recently of a woman who turned up with a valid passport but it was a little battered. This particular yellow pack airline decided that it was not up to their standards and that it might be rejected in some continental city so they denied her boarding. I imagine that she deserves to be compensated in those circumstances.
I fly a great deal and in my experience I have never come across people in business class being put off flights, particularly in America. It is noticeable that there is a queue of people to upgrade from the rear of the plane because they can do so cheaply just before take-off. There is a tendency, however - principally in America, but it is growing here - to overload the rear of the plane and overbook the aircraft.
As a passenger I say it is tough luck if a plane is oversold. Compensation must be paid and I do not care if it creates economic pressure on the airline because that is the one thing to which it listens. If it is put under economic pressure in the interests of passengers it will then respect the passengers a bit more and will not overbook planes. If airlines overbook, that is their problem and they should be required to resolve it. There is a very considerable difference between the cancellation of a flight because of freak weather circumstances, which is outside the control of the airlines, and deliberate overbooking of a flight to maximise margins. Passengers should not be penalised, they should be compensated.
I do not believe that reimbursing the price of a ticket is any use, particularly in the case of yellow pack airlines who sell seats for six pence and give you three ounces of baggage allowance. Compensation has a very clear meaning - that the situation of inconvenience is rectified. Giving back the price of the ticket is no use. The person should be offered a taxi, hotel costs and a flight the next day. That might put some manners on airlines.
This follows from what Senator Norris described. To what extent does this regulation impinge or affect people's common law rights to compensation? As Senator Norris said, if someone is on a yellow pack flight, pays a minimal amount for the ticket but misses the flight through the fault of the airline, then misses connecting flights and perhaps suffers enormous economic loss, what is the status of this regulation in that case?
Mr. McKay
This regulation will be binding on member states. It will come into force three months after it is published in the official journal. From discussions with the people in the Commission my understanding is that the procedure of consultation with the European Parliament should take two to three months from now, which would imply that this would come into force in about six months' time.
A number of members have mentioned the various extraordinary circumstances that can give rise to, shall we say, the exclusion of compensation. The purpose of the regulation as it is drawn up is to distinguish between those cases where the difficulties that the passenger finds themselves in is a result of decisions made by the airline as compared with situations which were outside the airline's control. For example, if there were bad weather conditions such as fog at an airport or mechanical difficulties with the aircraft which would impact on its safety, the airline is not obliged to pay compensation in those circumstances.
The regulation will not require primary legislation. The requirement here will be to create or define a body that will enforce the regulation and describe penalties. My understanding is that is possible under the provisions for secondary legislation.
The question of a person who is unfit to fly because, for example, he or she has taken too much drink, will not give rise to compensation for denied boarding. The reference to agreed compensation is in the case where the airline invites volunteers and offers them some money and if the person is willing to accept, that is what is meant by the word "agreed". If a sufficient number of people are not prepared to accept whatever the airline is offering, the formal compensation figures that are set down in the regulation will apply.
The paragraph at the bottom of appendix A about people with reduced mobility applies to the entire range of the regulation. It does not impinge on matters such as, for example, the cost of hiring a wheelchair that would be a cost faced by passengers whether the flight was delayed or cancelled. The question of hotel accommodation applies where the delays result in overnight stay for the passenger who has to wait for a flight the next morning.
I would like to speak about the point made by Senator Norris in that context. In some cases I believe the airlines sell a ticket which is effectively an end-to-end product on trips on several different aircraft and through several different airports. In those circumstances the airline is taking on a responsibility to complete all parts of that trip. In other cases my understanding is that the airline sells a ticket for a particular trip from A to B and in a completely separate contract sells a ticket from B to C. It is not making any contract of connection between the two flights at point B. It is a matter for the committee as to whether that is a good or a bad thing. My understanding is that is the contractual position that arises. This regulation does not deal with the situation where the passenger is not able to present himself for boarding at the second aircraft because the first aircraft arrived late.
What happens if one is advised by agents of the airline that one will be able to make the connection?
Mr. McKay
I will deal with that in the context of the question Deputy Power raised. This regulation does not impact on people's general rights at common law to pursue compensation, neither does it deal with the question of people who are denied boarding because they do not have the appropriate papers. Senator Norris raised the question of someone whose passport might not have been as perfect as was required——
It might have been a bit tattered but it was legally valid.
Mr. McKay
That is an issue which is outside the scope of this regulation. The primary purpose of this regulation and of the one currently in force is to dissuade airlines from overselling seats and to provide compensation for cases where that happens.
I have two brief questions. If for some reason an airline's flight is delayed due to a decision taken by management of the company, what is to stop it saying that it was either bad weather that was the cause of the delay or that the plane was grounded for essential repairs? How can these reasons be verified? Some airlines will look for loopholes in the directive. In relation to the definition of "overnight", an airline may say that it has a plane coming at 8 p.m. or 9 p.m. at night or at midnight, to keep the passengers in the airport even though they know well that no plane is coming and the passengers will be stuck overnight in the airport. That has happened on numerous occasions.
One can look out the window for the weather.
If it is a flight to north Africa and the problem is the weather in France, you cannot tell that in Dublin airport.
Our colleague from the Department, Mr. McKay, has been very helpful and courteous and I thank him. If this measure operates in the manner he says and it discourages airlines from overbooking, it will be very good. He made a revealing statement, a little sinister perhaps, about mechanical problems in aeroplanes. He said the measures had to be looked at in a particular way because of the danger of encouraging airlines to cut corners. That is a worrying prospect but it accurately reflects the attitude of some airlines which may be subject to penalty because of mechanical failure. It is right that they should be penalised. Why should passengers suffer if planes are not maintained properly? It is interesting that if the measure was stringently imposed they would be tempted to cut corners in terms of safety. I hope the Department monitors this aspect carefully and ensures that planes are properly serviced and maintained and that no corners are cut in the interest of money alone.
Is it intended these regulations will deal with the situation where there is overbooking by an airline and are these the only circumstances covered by them?
Mr. McKay
Perhaps I can refer to what Senator Norris said. I apologise for not being clear enough in the first instance. My intention was to reassure the committee that the regulation would not be used to encourage people to cut corners. The implementation and achievement of high standards of safety in aviation is of paramount importance. The primary purpose of the regulation is to do with overbooking. It is now extending the protection to cover other circumstances in which passengers are disadvantaged because of decisions by airlines as compared with situations which arise outside the control of the airlines.
Deputy Naughten raised the question of the management producing excuses to do with mechanical problems or the weather to avoid paying compensation. The aviation sector is one of the most heavily regulated of all activities we enjoy on a regular basis. If an airline claims that there is a mechanical problem with an aircraft there will be a formal record of repairs and so on to do with that. The air traffic people will have clear records of weather conditions so there should be a trail of evidence which would allow a passenger to claim his or her rights if they felt the airline management was trying to take advantage of the situation.
We do not have a specific recommendation. Is it agreed that there is no formal recommendation to make in regard to this document? Agreed. I thank Mr. McKay for his contribution.