Opinion of the Economic and Social Committee on the 'Proposal for a Council Regulation (EC) amending Regulation (EEC) No 295/91 establishing common rules for a denied-boarding compensation system in scheduled air transport` (98/C 284/05)

On 16 February 1998 the Council decided to consult the Economic and Social Committee, under Article 84(2) of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Transport and Communications, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 10 June 1998. The rapporteur was Mr Moreland.

At its 356th plenary session (meeting of 1 July 1998) the Economic and Social Committee adopted the following opinion by 139 votes for, five votes against and four abstentions.

1. Introduction

1.1. The Commission proposes to amend Regulation (EEC) No 295/91, which lays down rules for the payment of compensation in the event of a passenger being denied boarding by an airline because of overbooking. The current Regulation was adopted in 1991. It was widely welcomed when first introduced, especially by user groups and others, although many airlines argued that it was unnecessary given the voluntary schemes already in existence. Since its introduction certain problems have emerged in the Regulation's application, and there have been calls for improvements to the compensation scheme.

1.2. The changes proposed by the Commission are as follows:

a) abolish the distinction between scheduled and non-scheduled flights, so that compensation must be paid to passengers travelling on a seat-only charter who are not entitled to compensation under Directive 90/314/EEC on package travel;

b) define 'check-in` time as 30 minutes before the announced departure time, unless the passenger is otherwise informed in writing;

c) require that the 'legal entity` responsible for passenger check-in displays notices at check-in counters;

d) include electronic ticketing in the definition of a ticket;

e) strengthens rules laying down the priorities for passenger embarkation in addition to the existing requirement to establish rules to be followed in the event of an overbooked flight;

f) require that the embarkation and denied boarding rules become part of the air carrier's conditions of carriage;

g) ensure that carriers use the full capacity available on the aircraft before denying boarding (with no supplementary payment in case of upgrading and with reimbursement in case of downgrading); also strengthen the emphasis on calling for volunteers;

h) redefine an 'overbooked flight` to include those cases where the aircraft intended for the flight has been replaced by another aircraft of lesser capacity;

i) make clear that, in case of reimbursement, the passenger will be reimbursed for the cost of the ticket for parts of the journey not made;

j) increase the compensation levels established in 1991 to account for inflation:

- from ECU 150 to ECU 185 for flights of up to 3 500 km;

- from ECU 300 to ECU 370 for flights of more than 3 500 km;

k) make clear that reconfirmation of the booking may not be requested by the carrier as a condition to obtain DBC;

l) specify that the carrier denying boarding (i.e. the actual operator in the case of code share arrangements) must pay the DBC to the passenger;

m) create an advisory Committee of representatives of States;

n) require that States compile a summary report of all cases of denied boarding that occur at airports in their territory.

2. General Comments

2.1. The Committee welcomes the initiative by the Commission to revise this Regulation and the fact that the Commission has accepted certain improvements proposed by the Committee in its Opinion on the initial Denied Boarding Compensation (DBC) Regulation. On the whole the revisions are improvements, although we do have comments and suggested changes to some of the detailed proposals. The Committee notes that the airlines feel that adequate consultation has not taken place in preparing the new Regulation. The Committee emphasises the need for consultation with interested parties on the practical implementation of the Regulation, and hopes that the Commission will meet with such parties as a matter of urgency.

2.2. The Committee regrets that compensation for cancellations for commercial reasons are excluded and urges the Commission to present proposals on this issue.

3. Specific Comments

3.1. Article 2 (a) (and Relevant Whereas Clauses)

3.1.1. The Commission proposes that in order to avoid any disagreement about the minimum check-in time, 'denied boarding` should be defined as a refusal to accommodate a passenger on a flight despite the fact that the passenger has a confirmed reservation on that flight and has presented himself for check-in 'as stipulated and 30 minutes before the announced departure time or, where more time is prescribed, by the time indicated to the passenger in advance in writing by the air carrier or by its authorised travel agent`. The Committee welcomes this proposal, but believes the text could be improved to avoid misunderstanding and assist interpretation.

3.1.2. In particular, passengers should present themselves for check-in at least 30 minutes before departure or more when told in advance in writing to do so by the airline or its agent. In addition, the Commission should clarify in the Regulation that passengers are deemed to have presented themselves for check-in on joining the check-in line, and not on reaching the check-in counter.

3.1.3. Further, the Committee is not confident that advice about check-in times given to passengers by their travel agents is always accurate. It would be most beneficial if the check-in time could be shown on or with the ticket in addition to the departure time. The Committee recommends that the Commission should consider making this a requirement in a future revision of the Regulation when sufficient time has been allowed for the re-designing of ticket layouts.

3.1.4. Recommendation

Article 2(a) should be redrafted to say that passengers should present themselves for check-in at least 30 minutes before departure or more when told in advance in writing to do so by the airline or its agent. 'Presented for check-in` should be defined as the time a passenger joins a check-in line. The Commission should consider making it a requirement in a future revision that the check-in time should be shown on the ticket.

3.2. Article 2 (b)

3.2.1. A 'ticket` is defined as a document sold by an air carrier or its authorised travel agent. No mention is made of a tour operator which might sell a ticket to a passenger, especially for travel only, but is not always regarded as an agent of the airline.

3.2.2. Recommendation

The definition of 'ticket` should be extended to include tickets sold by tour operators.

3.3. Article 3 (1)

3.3.1. It is proposed that if a passenger agrees to be placed in a class lower than that for which a ticket has been purchased, he should be entitled to be reimbursed the difference in price in addition to being paid denied boarding compensation. The Committee supports this proposal. However, it should be made clear that a passenger travelling in a lower class should not be denied boarding solely in order to carry a passenger booked into a higher class.

3.3.2. Recommendation

A passenger booked into a lower class should not be denied boarding solely in order to carry a passenger booked into a higher class who would otherwise be denied boarding.

3.4. Article 3 (2)

3.4.1. Airlines are required to produce rules for the payment of denied boarding compensation. These rules and any changes to them must be notified to the relevant Member State and to the Commission, which will then make them available to all other Member States. Primarily it should be the responsibility of a Member State to ensure that each airline flying to/from its territory has rules in place which are consistent with the Regulation. The Commission should be informed by the Member State that an airline has filed its denied boarding rules, and given a copy of the rules if requested, but there is no need for the rules to then be circulated to all other Member States.

3.4.2. Recommendation

Each airline should submit a copy of its denied board compensation rules to the aeronautical authorities of each Member State to/from which it operates. Each Member State should inform the Commission that the rules have been filed and forward copies to the Commission.

3.5. Article 3 (3)

3.5.1. Airlines are required to make their DBC rules available to the public. In particular check-in desks must have a clear sign informing passengers of the existence of compensation in the event of denied boarding. The Regulation prescribes the wording to be used and the sizes of the notice and lettering.

3.5.2. The Committee believes that full information of the passengers rights should be displayed on check-in counter. However check-in counters are often cluttered with notices about - inter alia - safety, security and hand baggage. Airlines should have the opportunity to place displays elsewhere - provided passengers can be ensured that this will not reduce the likelihood of being made aware of their rights. Furthermore, the precise wording proposed by the Commission may need to be adapted depending on the location of the signs. This is clearly an issue on which the Commission and Member States should consult the airlines, airports and consumer groups.

3.5.3. Recommendation

The need to ensure that passengers are aware of their legal rights is important, but the specific proposal by the Commission may need to be adapted following consultation.

3.6. Article 4 (2) and 4 (3)

3.6.1. The Commission proposes that the compensation levels established in 1991 should be increased from ECU 150 to ECU 185 for flights of up to 3 500 kms and from ECU 300 to ECU 370 for flights of more than 3 500 kms.

3.6.2. Since 1991, inflation has increased by significantly different amounts in individual Member States. The amounts of compensation payable in the case of denied boarding may be adjusted by the Commission when necessary because of 'economic trends`. It is not obvious what 'economic trends` means. The Committee would welcome a clear formula for future increases in compensation levels. While the Committee does not believe that there is a need to go through the full legislative process in making future changes, clearly consultation with Member States and interested parties would be beneficial.

3.6.3. Recommendation

The Commission should propose a clear formula for increasing DBC payments, together with a procedure for consulting Member States and interested parties before increases are adopted.

3.7. Article 4 (4)

3.7.1. Where a passenger denied boarding on the flight of his choice is re-routed and arrives at his intended destination within two hours of the scheduled arrival time for flights of up to 3 500 km or four hours for longer flights, compensation payments are reduced by 50 %. The Committee supports this approach in principle. However, it would seem more reasonable that the permitted delays in reaching the intended destinations should be limited to one hour rather than two for short flights and two hours rather than four for longer flights.

3.7.2. Recommendation

Where a passenger denied boarding on the flight of his choice is re-routed and arrives at his intended destination within one hour of the scheduled arrival time for flights up to 3 500 km: or two hours for longer flights, compensation payments should be reduced by 50 %.

3.8. Article 4 (6)

3.8.1. Compensation is required to be paid in cash or, with the written agreement of the passenger, in travel vouchers and/or other services. In certain circumstances the need to obtain a passenger's written agreement could create problems and the Committee welcomes the clarification by the Commission that the proposal does not go beyond the current Regulation in requiring a written receipt for compensation. Not all airlines will want or be able to offer an alternative to cash payments; the option should be available at the discretion of the airline concerned.

3.8.2. Recommendation

An airline should be allowed to offer travel vouchers and/or other services as an alternative to cash payments, but the passenger should not be required to accept such an alternative.

3.9. Article 9 (b)

3.9.1. Member States are required to determine the penalties applicable to infringements of the Regulation and take all measures necessary to ensure that it is implemented. This will inevitably mean that penalties for the same offence will vary between Member States and risk a lack of uniformity in the enforcement of the Regulation.

3.9.2. Recommendation

The Commission should evaluate the extent to which enforcement varies between Member States and if necessary bring forward further proposals designed to ensure greater consistency.

3.10. Article 9 (c)

3.10.1. Each year Member States are required to produce summary reports of denied boarding cases due to overbooking which occur at airports in their territories. The Commission should, however, produce a report on the effectiveness of the Regulation every three years, based on its own research and enquiries made to Member States.

3.10.2. Recommendation

The Commission should report every three years on the effectiveness of the Regulation, on the basis of reports made by Member States.

4. Other Considerations

4.1. Explanatory Memorandum

4.1.1. In its Explanatory Memorandum accompanying the revised Regulation the Commission states that there have been numerous cases where passengers have not been informed of their right to compensation when denied boarding. The Commission says that it will launch an information campaign with the object of familiarising the public with its rights, along similar lines to that already provided by the Citizen of Europe campaign.

4.1.2. The Committee agrees that more publicity should be given to the Regulation. The Commission should ensure that the airlines, consumers and Member States are involved as appropriate in publicising the necessary information.

4.1.3. Recommendation

The Commission should consult Member States, the airline industry and consumer groups about how the rights available under the Regulation might best be brought to the attention of the travelling public.

4.2. Impact Assessment Form

4.2.1. It is regrettable that the Impact Assessment Form does not contain a real assessment of the costs likely to be incurred by those parties who will have to implement the Regulation. The Commission has had ample time to calculate the costs involved and assess whether they are justified by the likely benefits for consumers. The Committee would welcome regular reviews of the Regulation and in particular of the compensation levels. The reviews should take into account the costs incurred by those responsible for implementing the Regulation as well as the benefits for consumers.

4.2.2. Recommendation

The Commission should carry out a full assessment of the Regulation's costs and benefits, in consultation with interested parties, before the Regulation is reviewed again. This assessment should include the costs of the reporting and collating of the data required under the Regulation. More frequent reviews might be appropriate prior to changes in compensation levels.

5. Conclusion

5.1. The Committee agrees that, subject to the results of a full assessment of the costs and benefits involved, there continues to be a need for a Regulation governing the payment of denied boarding compensation in the case of overbooking. The present Regulation has been effective, but is in need of revision to deal with problems which have arisen since it was first adopted.

6. Further considerations

6.1. The United States had denied boarding compensation rules in place before the European Union. They appear to have been effective, yet are significantly less complex than those proposed by the Commission. It is not obvious why this should be so. In the Committee's view it would be helpful if the Commission carried out a comparative analysis of the US and proposed EU rules to see whether the latter can be simplified. Particular attention should be paid to the requirement in the US for volunteers for denied boarding to be sought in the event that not all booked passengers can be carried and to whether such a requirement should be given more prominence in the European rules.

7. Summary of recommendations

7.1. The Commission should make a proposal on compensation for cancellations for commercial reasons. Article 2(a) should be redrafted to say that passengers should present themselves for check-in at least 30 minutes before departure or more when told in advance in writing to do so by the airline or its agent. 'Presented for check-in` should be defined as the time a passenger joins a check-in line. The Commission should consider making it a requirement in a future revision that the check-in time should be shown on the ticket.

7.2. The definition of 'ticket` should be extended to include tickets sold by tour operators.

7.3. A passenger booked into a lower class should not be denied boarding solely in order to carry a passenger booked into a higher class who would otherwise be denied boarding.

7.4. Each airline should submit a copy of its denied board compensation rules to the aeronautical authorities of each Member State to/from which it operates. Each Member State should inform the Commission that the rules have been filed and forward copies to the Commission.

7.5. The need to ensure that passengers are aware of their legal rights is important, but the specific proposal by the Commission may need to be adapted following consultation.

7.6. The Commission should propose a clear formula for increasing DBC payments, together with a procedure for consulting Member States and interested parties before increases are adopted.

7.7. Where a passenger denied boarding on the flight of his choice is re-routed and arrives at his intended destination within one hour of the scheduled arrival time for flights up to 3 500 km: or two hours for longer flights, compensation payments should be reduced by 50 %.

7.8. An airline should be allowed to offer travel vouchers and/or other services as an alternative to cash payments, but the passenger should not be required to accept such an alternative.

7.9. The Commission should evaluate the extent to which enforcement varies between Member States and if necessary bring forward further proposals designed to ensure greater consistency.

7.10. The Commission is should report every three years on the effectiveness of the Regulation, on the basis of reports made by Member States.

7.11. The Commission should consult Member States, the airline industry and consumer groups about how the rights available under the Regulation might best be brought to the attention of the travelling public.

7.12. The Commission should carry out a full assessment of the Regulation's costs and benefits, in consultation with interested parties, before the Regulation is reviewed again. This assessment should include the costs of the reporting and collating of the data required under the Regulation. More frequent reviews might be appropriate prior to changes in compensation levels.

7.13. The Commission should undertake a comparative analysis of EU and US denied compensation payment rules to check whether there is scope for simplifying the EU rules.

Brussels, 1 July 1998.

The President of the Economic and Social Committee

Tom JENKINS