New reforms will raise airline cost, IATA warns

The International Air Transport Association has raised fresh concerns over proposed amendments by the European Parliament

to the EU261 passenger rights regulation, warning that the changes will “entrench and worsen its flaws” and drive up costs for airlines and consumers without addressing passengers’ real needs.

In a statement issued by IATA, it noted that the shortcomings of EU261 have been “known for years”, noting that a June decision by European governments proposed more balanced corrections aimed at safeguarding connectivity and strengthening European aviation competitiveness.

The European Council’s version sought to extend compensation thresholds from three hours to four hours for short-haul flights and to nine hours for long-haul flights, changes the association says would discourage unnecessary cancellations of delayed flights and align with passengers’ preference “to arrive late rather than not at all.”

However, IATA warned that the European Parliament not only wants to discard these key threshold improvements but also plans to introduce additional requirements, such as guaranteeing passengers the right to carry a cabin bag for free, which the association says lacks public demand and would ultimately increase fares.

According to IATA, a passenger survey conducted in May showed that “72 per cent prefer to have the lowest fare and pay for additional services as required,” while 97 per cent reported being “somewhat or very satisfied” with their most recent flight. Citing Eurocontrol data, the group noted that “less than 1 per cent of flights are delayed beyond three hours,” meaning “99 per cent of passengers is paying for a compensation scheme which only 1 per cent of travellers benefit from.”

IATA Director-General, Willie Walsh, criticised the Parliament’s approach, saying, “Everyone knows there’s no such thing as a free lunch. Similarly, there is no such thing as a ‘free’ bag or ‘free’ compensation threshold. The EU Parliament’s new provisions to EU261 work as a ‘reverse Robin Hood’, putting further costs on the 99 per cent of passengers who don’t benefit from it. They are imposing things people haven’t asked for and don’t want to pay for unless they choose to. Given the choice, passengers would prefer to pay for a less gold-plated compensation scheme in exchange for lower fares. MEPs are meddling in business and operational issues they don’t understand. It’s essential that the Parliament’s proposals are modified and thV Ve Council position is upheld.

“The best guarantee of great customer service is choice and competition delivered by a thriving air transport market. Correct reform of EU261 can be the starting point for a meaningful competitiveness strategy for European aviation and show that European politicians are serious about the lessons of last year’s Draghi report and the need for fewer and smarter regulations,” said Willie Walsh, IATA’s Director General.

IATA added that the urgency for reform has grown as connectivity in major European markets has slowed significantly. According to IATA Economics, between 2014 and 2024, connectivity grew by just 2.2 per cent annually in France, 2.9 per cent in the Netherlands, and 0.4 per cent in Germany.

To reverse this trend, the association urged European governments to take additional measures beyond the proper reform of EU261. These include removing passenger taxes that “damage connectivity”, with IATA noting that Sweden scrapped its passenger tax in July and Germany has announced plans to do the same.

The group also called for changes to the ReFuelEU Green Deal Regulation and the EU Emissions Trading Scheme, arguing that fuel producers should be incentivised to supply affordable Sustainable Aviation Fuel.

IATA noted that airlines currently face a $2.9bn penalty for purchasing SAF instead of conventional jet fuel, “on top of payments into the ETS.” While acknowledging the European Commission’s recent STIP proposal as “a step in the right direction”, the association said results remain to be seen “when words will turn into action”.