Airlines to pay up after agency pressures them on overdue compensation

8/27/2015

Europe has some of the most consumer friendly airline compensation rules, but many passengers don't get to benefit because some airlines have been very brazen about refusing to pay the money. With a little nudge from regulators, they appear to be coming around.

The "extraordinary circumstances" clause of EU compensation rules has allowed airlines to frequently skirt the mandate to pay passengers for flight cancellations by claiming that circumstances around delays and cancellations have been beyond their control. The clause allows airlines to claim that unforeseen circumstances beyond their control are reason enough to deny payout claims. Often, the reasons are legitimate -- strikes, air traffic control closures and weather events, for example. However, some airlines have been using the "extraordinary circumstances" excuse for technical faults that courts have ruled are indeed within their scope of responsibility. Now, after years of delays and added scrutiny from regulators, some airlines are starting to pay passengers their long-overdue compensation.

The UK Civil Aviation Authority (CAA) has pressured some airlines to change their compensation rules to be in line with recent court rulings on delays and cancellations due to technical faults and the spirit and intent of rule EC261/2004. Ever since the EU law was put into effect, ambiguity over what constitutes an extraordinary circumstance has been debated in the courts with each ruling ending in a more favorable outcome for airline passengers.

Three airlines in particular, Aer Lingus, Jet2 and Wizz Air had been threatened with enforcement action over their lack of compensation payouts over the last several years. In some cases, claims have been in limbo for as many as six years. The CAA flagged carriers for delaying compensation to passengers but also for setting a statute of limitations for accepting and processing claims to as few as two years.

The changes that two of the three carriers have made to their policies satisfies the CAA for the time being and no further action will be taken. The policy updates include processing claims that were due to cancellations and delays caused by mechanical or other technical issues, as well as providing delayed passengers the proper information and care during schedule disruptions. However, Wizz Air has refused to process claims older than two years. As a result, the CAA has referred the matter to the Hungarian Authority for Consumer Protection, the oversight body in Hungary for rule EC261/2004.