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IATA Challenges EU on Flawed Regulation

IATA today filed an application for judicial review at the UK High Court to challenge a new EU regulation on penalties for delays and cancellations. “Airlines accept the need to compensate passengers for denied boarding, but we cannot accept to pay compensation for areas beyond our control. With this regulation, the EU regulators have endangered the consumer interest they seek to protect,” said Giovanni Bisignani, IATA Director General and CEO.
“It is high time that EU regulators took the trouble to learn about the industry they are busy mis-regulating. If governments really want to reduce delays, rather than unfairly targeting airlines, they should place their effort in making The European Single Sky initiative effective,” said Bisignani.
Misguided. “This regulation is misguided and poorly conceived,” said Bisignani. “The economic incentive to operate to schedule already existsdelays and cancellations are costly. But according to Eurocontrol over 50% of delays are completely outside of the control of airlines. This is why airlines have worked with our ATC partners to reduce delays in Europe by 37% over the last three years.”
Irresponsible. Delays or cancellations due to inclement weather, ATC strikes or government security requirements are not within airline control, yet the new ruling penalizes the airline for all situations equally. “It is irresponsible for governments to effectively punish airlines for maintaining safe operations. We cannot make the sun shine and we will not take risks with safety or security,” said Bisignani.
Impractical. The regulation jeopardizes the future of short haul connector service to long haul flights. If a passenger on a long-haul flight misses a connection to a regional flight due to weather conditions, a strike or new security procedures, it is the short-haul operator that must compensate for the value of the entire journey. “Faced with this financial risk, many carriers will be reluctant to offer connections or will require longer connecting times. Along with consumers and airlines, regional destinations in Europe will suffer from higher costs and reduced service levels,” said Bisignani.
Inconsistent: The EU is a signatory to the Montreal Convention which limits a carrier’s liability for delays and cancellations in extraordinary circumstances like inclement weather. “How can airlines run a business when the regulator gives us two conflicting guidelines? The wisdom of the internationally agreed Montreal convention should form the basis of the EU’s thinking as the accepted global standard,” said Bisignani.
IATA and other airline associations tried to engage the regulators in a dialogue to arrive at an effective solution to the issues surrounding denied boarding.ÊÊ On 25 February 2004 IATA wrote to Commissioner for Transport, Loyola de Palacio, to discuss these concerns in a last ditch effort to avoid litigation. “Regrettably, we did not receive a reply,” said Bisignani. “Turning to the courts was our last resort but we are confident that a positive outcome will be reached.”