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IATA condemns absurd European Court ruling

The International Air Transport Association (IATA) is disappointed by the complete…

The International Air Transport Association (IATA) is disappointed by the complete failure of the European Court of Justice (ECJ) to strike down deeply flawed European regulations on passenger compensation for denied boarding, delays and cancellations. It is a sad day for Europe, for consumers, for international law and for the airline industry, said Giovanni Bisignani, IATA`s Director General and CEO.

IATA launched legal action on EC Regulation 261/04 in April 2004. IATA maintains that the regulation conflicts with the Montreal Convention, the global standard for passenger compensation, by making airlines liable to provide assistance to passengers even in cases that are completely outside airline control—such as delays due to inclement weather or air traffic control strikes or capacity limitations.

Penalising airlines in such cases does nothing to address these important issues. It only adds US$700 million in costs that will have to be recuperated. Higher costs for air transport with no added value does not pass the good regulation test, let alone the common-sense test. Moreover, by ignoring the Montreal Convention, Europe`s shortsighted regional approach leaves the door open for other jurisdictions to do the same. Instead of a global standard universally applied, we could end up with nothing more than chaos, said Bisignani.

Competition is the strongest incentive for airlines to assist passengers when things go wrong and the Montreal convention provides a global standard for compensation. Unfortunately Regulation 261/04 only expands a tradition of industry mis-regulation with ineffective micro-management by the previous Commission. The result limits Europe`s competitiveness and does nothing to make the travel experience better. Legal arguments aside, it is unfortunate that the ECJ missed this opportunity to send a strong message to the new Commission that this is simply not acceptable, said Bisignani.

IATA will continue to lobby for a common-sense approach by regulators to the air transport industry. This was the final piece of the previous European Commission`s legacy of failure with respect to air transport policy. We will approach the current Commission to seek remedies to the regulation`s many flaws. And we will continue to call for benchmarking of all European regulations against their economic impact. We have a broad agenda for the Commission to take leadership to reform outdated regulations, implement an effective single sky policy, and regulate monopoly suppliers—airports and air navigation service providers. Action in these areas will help build a competitive industry and sustain affordable air travel, Bisignani added.

Theodore Koumelis
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