PROPOSAL FOR A COUNCIL REGULATION ( EEC ) ON COMMON RULES FOR A DENIED BOARDING COMPENSATION SYSTEM IN SCHEDULED AIR TRANSPORT
Date: 1990-04-24
Institutions: European Commission
Subjects: air transport, carriage of passengers, indemnification

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

C0MC90) 99 final 

Brussels,24  April 1990 

Proposal for a 

COUNCIL REGULATION  (EEC) 

on common  rules for a denied  boarding  compensation  system 

in scheduled  air transport 

(presented  by the  Commission) 

EXPLANATORY  MEMORANDUM 

G^wq<JP 

I.  Introduction 

1.  The  proposed  Council  regulation  aims  at  problems  resulting  from 

overbooked 

scheduled 

flights. 

Apart 

from 

malfunctions 

of 

reservation  systems  and  an  Insufficient  exchange  of  information 

between  travel  agents  and  air  carriers,  overbooking  is  the  result 

of  the  high  degree  of  flexibility  granted  to  passengers  holding 

fully  flexible  tickets,  i.e.  having  paid  the  full  published 

economy,  business  or  first  class  fare:  They  have  the  right  not  to 

present  themselves  for  the  flight  for  which  they  hold  a  confirmed 

reservation  without  losing  the  right  to  use  this  ticket  without 

any  additional  charges on  another  flight  to the same  destination. 

2.  The  high  degree  of  flexibility  has, however,  created  the  so-called 

"no-show"-problem:  For  various  reasons  a  certain  number  of 

passengers  book  seats  and  do  not  claim  them.it 

is  usual 

international  practice  that  airlines  which  understandably  do  not 

want  to risk  finding  empty  seats  as a result  of  "no-shows" accept  a 

certain  degree of overbooking.  This behaviour,  however,  implies  the 

risk  that  the  number  of  passengers  holding  confirmed  reservations 

and  presenting  themselves within  the usual  time-  limit  for  check-in 

will  exceed  occasionally  the  number  of  available  seats  on  that 

flight. 

3.  In  principle,  the  air  carrier's  treatment  of  the  passengers' 

interests  In overbooking  situations  is a part  of  the quality of  the 

service.  One  could  therefore,  in  theory,  argue  that  solutions  to 

this  problem  should  be  left  to  the  market.  However,  the  level  of 

the  protection  of  consumers'  interests  In  this  field  Is  often 

unknown  and,  therefore,  not  open  for  quality  of  the  service 

comparisons  between  different  air  carriers. A  lack  of  transparency 

-  3 -

is  given.  More  competition  will  normally  generate  an  Improved 

quality  of  the  service  and/or  more  attractive  fares.  It  cannot  be 

excluded,  however,  that  certain  air  carriers  might  tend  to  neglect 

quality  of  the  services  considerations  in  areas 

In  which 

transparency  is widely  lacking,  i.e.  the behaviour  of  an  Individual 

carrier  In  overbooking  situations.  Under  these  circumstances  the 

public  intervention  Is required  in order  to safeguard  the  interests 

of  passengers. 

4.  The  need  for  Community  action  in  this  area,  however,  arises  not 

only  from  the  objective  of  establishing  reasonable  minimum 

standards  for  passengers  In an  area  which  Is normally  not  open  for 

quality of  the service  comparisons between  Individual  air  carriers. 

It  has  furthermore  to  be  taken  Into  account  that  the  economic 

environment  In which  air  carriers  have  to operate  has  substantially 

changed  and  will  continue  to change  following  the  Council  measures 

of  December  1987. These  changes  will  lead  to more  competition  and, 

as a part  of  this  development,  to a wider  use of  non  fully  flexible 

tickets. 

5.  in  such  a  situation  two  basic  problems  have  to  be  overcome.  The 

first  one  is to  decide  on  the  criteria  to  be  applied  in  allocating 

priority  for  boarding  amongst  passengers  who  are  denied  boarding. 

The  second  one  is  the  question  of  a  reasonable  compensation  in 

favour  of  passengers  who  are  denied  boarding.  The  current  practice 

on  these  problems  differs  substantially  between  air  carriers.  Some 

apply  recommendations  published  by  international  organisations  like 

iCAO  (International  Civil  Aviation  Organisation),  ECAC  (European 

Civil  Aviation  Conference),  IATA  (International  Air  Transport 

Association)  or  AEA  (Association  of  European  Airlines),  whereas 

v/îiioi à apply  their  own  internal  guidelines  or  do nothing  to  protect 

the  interests of  passengers  who are denied  boarding. 

- 4 -

6.  One  could  argue  that  passengers  not  turning  up  for  the  flight  for 

which  they  hold  a confirmed  reservation  are mainly  responsible  for 

overbooking  situations  and  that  common  rules  should  establish  at 

least a certain kind of  financial  responsabiIity on behalf of  these 

travellers. However,  the  higher  fare  for  fully  flexible  tickets 

already  Is said to take account of  the no-shows by being based on a 

low  (55%) break-even  load  factor. Furthermore, air  carriers  prefer 

to maintain  the  high  degree  of  flexibility  in  favour  of  business 

travellers  and  are  not  prepared  to  establish  measures  aimed  at 

actively  discouraging  no-shows.  Thus,  air  carriers  are  fully 

responsible  If an overbooking  situation  forces  them  to breach  -de 

facto-  in a  number  of  instances  contracts  with  passengers  holding 

confirmed reservations. 

7.  On the other  hand passengers using non-fully-flexible tickets would 

seriously  suffer  from  such  a  situation.  They  would  In  many 

instances forfeit  their  right  for transport  totally or partially  If 

they do not turn up  in time for a connecting  flight  irrespective of 

the  reason  for  their  delay.  The  air  carrier  In  fact  does  get  its 

money  Irrspective  of  whether  the  traveller  turns  up  or  not.  It 

could, therefore, be considered  as a serious breach  of  contract  by 

the air  carrier  concerned  If these passengers  (with  fully  flexible 

tickets) are denied  boarding  as a consequence  of  the behaviour  of 

other  passengers  who  do  not  forfeit  their  right  for  transport  In 

similar situât ions. 

Therefore,  the  Commission  has  reached  the  conclusion  that 

safeguards  in  favour  of  non-fully  flexible  ticket  holders  are 

required  In order  to establish a more  reasonable  balance of  rights 

and obligations between air carriers and these passengers. 

8.  In addition  to  the  need  for  a  special  safeguard  in  favour  of  the 

interests of non-fully  flexible ticket holders rules concerning  the 

level  of  compensations  should  be  introduced  in order  to  establish 

-  5  -

common  standards  for  the  protection  of  the  Interests  of  passengers 

and  to  eliminate  distortion  of  competition  between  air  carriers 

resulting  from  different  behaviours  in with  area  of  widely  lacking 

transparency. 

9.  The proposed  Council  Regulation envisages  exclusively  the  relations 

between  air  carriers and  passengers  holding  confirmed  reservations. 

However,  it  should  not  be  Ignored  that  the  overbooking  problems 

might  occasionally  also  result  from  the  behaviour  of  travel  agents 

who  confirm  reservations  without  explicit  acknowledgement  from  the 

air  carrier.  For  these  and  other  reasons  the  Commission's  services 

are  currently  considering  the  development  of  a  code  of  conduct  for 

travel  agents  which  inter  alia  would  cover  this  aspect  of  the 

overbooking problem  in scheduled  air  transport. 

1'• The  structure  of  the proposed  Council  Regulation 

1.  The  attached  draft  Council  Regulation  mainly  establishes  criteria 

referring  to  the  two  basic  problems  mentioned  above.  Following  a 

description  of  the  scope  of  application  (Article  1)  and  the 

necessary  definitions  (Article  2)  it  specifies  some  priority 

criteria  to  be  applied  by  air  carriers  as  soon  as  it  Is  evident 

that  a  certain  flight  Is  overbooked  (Article  3 ). Apart  from  the 

necessity  to give due consideration  to passengers  being  handicapped 

or  travelling  for  reasons  of  death  and  illness  of  family  members, 

it  is proposed  to  impose  upon  air  carriers  the obligation  to  start 

the selection  procedure with  a call  for  volunteers who  are preparer* 

to  surrender  their  confirmed  reservation  on  the  basis  of  certain 

conditions. 

2.  If  the  number  of  passengers  who  have  not  responded  to  the  air 

carrier's  call  for  volunteers  still  exceeds  the number  of  available 

seats people  such  as  the air  carrier's own  employees  travel Iing  for 

- 6 -

private  purposes  on  a  fare  basis  which  is  not  available  to  the 

public  should  step  down  first  If they  have  not  already  been  asked 

to  step  down.  Passengers  holding  non-fully  flexible  tickets  shall 

be given boarding priority. 

3.  The  second  problem  to  overcome  Is  the  compensation  to  be  paid  if 

passengers  holding  confirmed  reservations  are denied  boarding.  The 

proposed  compensation  amounts  are  linked  to  the  delay  caused  by 

denied  boarding  (25% or  50% of  the  value  of  a  fully  flexible  one 

way  ticket  -  Article 4 ). In  view  of  the  serious  potential  damage 

for  passengers  losing  -because  of  overbooking-  their  right  to  an 

onward  flight  to their  final  destination an obligatory  compensation 

of  100%  of  the  value  of  a  fully  flexible  one  way  ticket  is 

envisaged. 

In  addition  to  these  compensation  amounts  air  carriers  shall  be 

obliged  to provide  further  services  In a reasonable  relation  to the 

additional  waiting  time  (Article 5 ). 

4.  Article  6 deals with  situations  in which  the air  carrier  shall  not 

be  obliged  to  pay  compensations.  This  shall  in  particular  be  the 

case  if  passengers  fail  to  fulfil  their  obligations  or  prefer  to 

seek,  instead  of  accepting  cash  compensations,  a  compensation  of 

the damage by using established  laws on damage  compensation. 

5.  Article  7 contains obligations upon  air  carriers  and Member  States 

aimed  at  ensuring  an  effective  and  transparent  implementation  of 

the proposed Council  Regulation. 

Article  8  contains  provisions  aimed  to  ensure  the  necessary 

transparency  on  the common  rules  to be established  by  the  proposed 

Regulation. Article 9 contains  the usual  clauses with  regard  to the 

date of entry  Into force. 

- 7 -

Proposal  for a 

COUNCIL REGULATION  (EEC) 

on common  rules for a denied boarding  compensation system 

in scheduled  air  transport 

THE COUNCIL OF THE EUROPEAN  COMMUNITIES, 

Having  regard  to  the  Treaty  establishing  the  European  Economic 

Community,  and  in particular  Article 84(2) thereof, 

Having  regard  to the proposal  of  the Commission^1), 

Having  regard  to the opinion of  the European Par I lament<2), 

Having  regard  to the opinion of  the Economic and Social  Commlttee^3), 

Whereas  the  Council  measures  taken  in December  1987  represent  a  first 

step  towards  the  establishment  of  a  fully  developed  common  air 

transport  polIcy; 

Whereas  Community  action  in  the  field  of  the  protection  of  the 

interests of  air  transport  users  is required  in order  to ensure  a well 

balanced  development  following  the  changes  of  the  general  environment 

in which air carriers  have to operate; 

(1). 

(2) 

(3) 

8  -

Whereas  current  practice  in  the  field  of  denied  boarding  compensation 

differs substantially between air carriers; 

Whereas  certain  common  minimum  standards  in  the  field  of  denied 

boarding  compensations will  contribute  to ensure  that  more  competition 

in air  transport  will  not  result  in a deterioration  in the  quality  of 

the air carriers' services; 

Whereas  clear  and  transparent  criteria  for  boarding  In  the  event  of 

overbooked  flights are  required; 

Whereas  in particular  such  criteria  should  Improve  the  rights  of  non-

fully flexible  ticket  holders; 

Whereas  air  carriers  have  to  be  obliged  to  pay  certain  compensation 

amounts and  to provide additional  services  to passengers who are denied 

boarding; 

Whereas passengers have  to be clearly  informed  about  applicable rules; 

Whereas  it  is appropriate  that  the Member  States provide  for  a special 

procedure  In dealing with complaints  in case of denied  boarding, 

HAS ADOPTED THIS REGULATION: 

Article 1 

This  Regulation  establishes  common  minimum  rules  applicable  where 

passengers  are denied  access  to a scheduled  flight  for which  they  have 

a  valid  ticket  and  a  confirmed  reservation  departing  from  an  airport 

located  In the territory of  a Member  State of  the European Community  to 

which  the  Treaty  applies  irrespective  of  the  State  where  the  air 

carrier  is established,  the nationality of  the passenger  and  the point 

of  destination. 

- 9 -

Article 2 

For  the purposes of  this Regulation: 

a)  "denied boarding" means a refusal  for passengers  to be  accommodated 

on a flight  although  they have: 

-  a val id t icket, 

-  a confirmed  reservation on that  flight, and 

- presented  themselves within  the required  time-Mm it for 

check-In. 

b)  "confirmed  reservation" means that  a ticket  sold by  the air  carrier 

or  its authorised  travel  agent  contains 

a specification of  the number, date and  time of  the 

fIight, and 

the  notation  of  "OK"  In  the  appropriate  space  on  the  ticket 

signifying  the  registration  by  the  air  carrier  as well  as  the 

express acknowledgement  of  the air  carrier of  the  reservation; 

c)  "scheduled  flight"  means  a  flight  possessing  all  of  the  following 

character 1st les: 

it  is performed  by aircraft  for  the  transport  of  passengers or 

passengers  and  cargo  and/or  mail  for  remuneration,  In  such  a 

manner  that  seats are available  for  purchase  by members  of  the 

public, either  directly  from  the carrier or  from  Its authorised 

agents and 

It  is  operated  so  as  to  serve  traffic  between  two  or  more 

points, either: 

(1) according  to a published  timetable, or 

(2) with  flights so regular  or  frequent  that  they  constitute a 

recognlsably systematic series. 

- 10 -

d)  "overbooked  flight"  means  a  flight  where  the  number  of  passengers 

holding  a  confirmed  reservation  and  presenting  themselves  within 

the  required  time-limit  before  departure  time  of  the  flight  exceeds 

the  number  of  available  seats  on  that  flight;  a  flight  cancelled 

for  commercial  reasons  shall  be  considered  as  an  overbooked  flight; 

e)  "volunteer"  means  a person  who  has: 

-  a  val id  ticket, 

-  a  confirmed  reservation  and 

presented  himself  within  the  required  time  limit  for  check-In 

and  who  responds  positively  to  the  air  carrier's  call  for 

passengers 

being 

prepared 

to  surrender 

their 

confirmed 

reservation 

in 

exchange 

for 

the 

carrier's 

offer 

of 

compensât Ion; 

f)  "compensation"  means  a  valuable  return  In  the  form  of  money,  a 

travel  voucher  and/or  other  services  in  favour  of  passengers 

holding  a  confirmed  reservation  for  a  scheduled  flight  and  being 

voluntarily  or  involuntarily  denied  from  boarding  an  overbooked 

flight; 

g)  "non-fully  flexible  ticket"  means  any  ticket  to  which  conditions 

are  attached  which  limit  the  flights  and/or  air  carriers  on  which 

travel  is  permitted  and  which  limits  the  passengers'  rights  to 

cancel  or  vary  the  reservations  with  or  without  consequential 

financial  penalties  published  by  the  air  carrier  as  a  standard 

condition  of  purchase; 

h)  "fully  flexible  ticket"  means  any  ticket  which  allows  travel  at  any 

time  and  concellation  and/or  variation  of  bookings  and  reservations 

at  any  time  within  a  12  month  period  from  date  of  purchase  and 

refund  without  financial  penalty  of  the  price  paid  for  any  unused 

element  of  carriage; 

-  11 -

I)  "final  destination"  means  the  destination  on  the  flight  coupon 

presented  at  the  check-in  counter  or,  in  the  case  of  subsequent 

flights,  on  the  last  flight  coupon  of  the  ticket.  Connecting 

flights  which  can  be  carried  out  without  difficulties  although  a 

delay  has  been  caused  by  denied  boarding  are  not  taken  into 

account. 

j)  "intra-Community  flight" means  a scheduled  flight  between  airports 

located within  the European  Community; 

k)  "extra-Community  flight" means a scheduled  flight  departing  from an 

airport  located  In a Member  State  and  arriving  at  an  airport  In a 

third  country; 

Article 3 

1.  In  the  event  of  an  overbooked  flight  air  carriers  shall  in  the 

first  Instance  call  for  volunteers  who  are  prepared  to  surrender 

their  confirmed  reservation  In exchange  for a confirmed reservation 

on  an  alternative  flight  to  the  final  destination  and  refunds 

according  to  Article 4.  Nevertheless  the  airline  may,  before  the 

call  for volunteers, refuse boarding  for  the passenger  mentioned  In 

paragraph  (3)(a). 

2.  In  the  event  of  an  overbooked  class  air  carriers  may  request 

passengers  holding  first  class or  business  class  tickets  to accept 

to be placed  in a  lower class.  If they accept  the air  carrier  shall 

be  obliged  to  pay  a  refund  at  least  amounting  to  the  difference 

between  the  ticket  value  of  the  class  originally  booked  and  the 

ticket  value of  the class actually used.  If they  do not  accept  the 

provisions of paragraphs 3 and 4 shall  apply. 

12  -

3.  If  the  number  of  passengers  who  have  not  followed  the  carrier's 

call  for  volunteers  still  exceeds  the  number  of  total  available 

seats  on  an overbooked  flight,  the  air  carrier  may  deny  boarding  to 

passengers  but  only  provided  It  Is not  possible  to offer  them  empty 

seats  in another  class,  in accordance  with  the  following  criteria  : 

a)  Passengers  such  as airline or  travel  industry  related  employees 

travelling  for  private  reasons  on  their  own  account  on  a 

reduced  fare  basis which  is not  available  to  the  public  and  who 

have  not  been  requested  to  step  down  before  the  call  for 

volunteers  shall  be  denied  boarding  first; 

b)  Boarding  priority  shall  be  given  to  passengers  travelling  on  a 

non-fully  flexible  ticket  provided: 

they  hold  a  valid  ticket  and  a  confirmed  reservation  for 

the  flight  in  question, 

they  have  presented  themselves  within  the  required  time-

limit  for  check-In  and 

the  air  carrier  Is unable  to offer  an  alternative  flight  on 

the  same  or  another  routing  to  the  final  destination  which 

Is  scheduled  to  arrive  less  than  two  hours  later  at  the 

final  destination. 

4.  Notwithstanding  the  criteria  laid  down  in paragraph  3,  air  carriers 

should  give  due  consideration  to  the  interests  of: 

passengers  who  have  demonstrated  the  need  to  travel  due  to 

death  or  illness of  a  family  member, 

aged  or  handicapped  passengers  and  unaccompanied  children, 

when  allocating  seats  on  an overbooked  flight; 

-  13  -

Article  4 

1.  The  air  carrier  shall  be  obliged  to  pay  to  passengers  holding  a 

confirmed  reservation  and  having  presented  themselves  within  the 

required  time-limits  for  check-In, who  were  prevented  from  boarding 

an  overbooked  flight  and  who  have  received  and  accepted  a  confirmed 

reservation  for  an  alternative  flight: 

minimum  compensation  of  25%  of  the  value  of  the  lowest  fully 

flexible  ticket  to  their  final  destination  In  cases  in  which 

the  alternative  flight  is  scheduled  to  arrive  at  the  final 

destination  at  least  30 minutes  later  than  the  original  flight 

but  less  than  two  hours  later  on  an  intra-Community  flight  or 

less  than  four  hours  later  on  an  extra-Community  flight. 

minimum  compensation  of  50%  of  the  value  of  the  lowest  fully 

flexible  ticket  to  their  final  destination  in  cases  in  which 

the  alternative  flight  is  scheduled  to  arrive  at  the  final 

destination  at  least  two  hours  later  on  an  intra-Communlty 

flight  or  four  hours  later  on  an  extra-Community  flight. 

The  payment  of  denied  boarding  compensation  shall  not  affect  the 

passenger's  right  to  use  his  ticket  on  another  flight  to  the 

original  point  of  destination  or  to  seek  a  complete  refund  of  the 

ticket  value  If he  does  not  want  to  accept  the  alternative  flight. 

2.  The  air  carrier  shall  be  obliged  to  pay  compensation  of  100  %  of 

the  value  of  the  lowest  fully  flexible  ticket  to  his  final 

destination  in  cases  where  the  passenger  loses  his  right  for  a 

flight  to  his  final  destination  because  of  denied  boarding  and  the 

air  carrier  Is unable  to offer  an  alternative  flight. 

-  14 -

Article 5 

In the  case of  the organization of  a package  tour  by  a  tour  operator, 

the  air  carrier  shall  be obliged  to compensate  the  tour  operator  with 

the  amount  which  would  have  to  be  paid  by  the  latter  in  favour  of 

passengers  as  compensation  for  failing  to  provide  services  and  for 

which  the  tour  operator  is  liable  on  the  basis  of  Directive  .../... 

(package  travel). 

Article 6 

1.  Apart  from  the minimum  compensât ion amounts as set out  in Article 4 

the  air  carrier  shall  offer  free  of  charge  to  passengers  who  are 

denied  boarding: 

a)  In  the  event  that  any  luggage  has  been  sent  on  the  original 

flight,  at  the  choice  of  the  passenger,  col lect ion  and  safe 

keeping  at  the point of destination or  its return; 

b)  the expenses  for  a  telephone  call  and/or  telex/telefax  message 

to the point of  destination; 

c)  meals and  refreshments  in a reasonable  relation  to  the waiting 

time; 

d)  hotel  accommodation  in cases where an additional overnight  stay 

is necessary. 

2.  When  a  town,  city  or  region  is served  by  several  airports,  and  an 

air  carrier  offers  a  passenger  who  has  been  denied  boarding,  a 

flight  to  an  alternative  airport  to  the  destination  airport  that 

the  passenger  had  booked,  the  passenger  should  be  offered  full 

compensation  to  cover  the  cost  of  travelling  between  the 

alternative  airports  or  to  an  alternative  close-by  destination, 

whichever  is the most  convenient  to the passenger. 

-  15 

Article  7 

1.  The  carrier  shall  not  be  obliged  to  pay  denied 

boarding 

compensation  If  the passenger  fails 

a)  to comply  with  the air  carrier's  conditions of  carriage; 

b)  to comply  with  the  air  carrier's  or  the  airport's  ticketing  and 

check-in  requirements; 

c)  to  undergo  a  security  check  or  other  usual 

departure 

formal It les. 

2.  The  air  carrier  shall  not  be  obliged  to  pay  denied  boarding 

compensation  in cases  where 

a)  the passenger  is travelling  free or  at  a discount  fare  which  Is 

neither  directly  nor  Indirectly  available  to  the  general 

pub lie; 

b)  the  passenger 

explicitly  maintains  his  right 

to  seek 

compensation  of  the  damage  in reliance on  the  laws  relating  to 

damage  compensation  established  in the Member  State  concerned. 

Article  8 

Member  States  shall  ensure  that  in  their  territories  there  is 

available,  whether  provided  by  public  or  private  bodies,  a  rapid, 

efficient  and  inexpensive  procedure  for  use  by  the  consumer  In  dealing 

with  his  complaints  concerning  his  rights  In  the  case  of  denied 

boarding,  where  these  are  not  resolved  amicably.  They  shall  inform  the 

Commission  of  these  procedural  rules. 

16 -

Article 9 

Air  carriers  shall,  at  the  request  of  passengers  affected  by  denied 

boarding,  inform  them  of  the  responsible  bodies  to  which  complaints 

against  the  non-observance  of  this  Regulation  have  to  be  addressed  in 

the  Member  State  where  the  ticket  has  been  purchased.  They  shall 

provide  each  passenger  affected  by  denied  boarding  with  a  claim  form 

setting out  the denied  boarding  compensation rules. 

Article 10 

This Regulation shall  enter  into force on  1 December  1990, 

This  Regulation  shall  be  binding  in  its  entirety  and  directly 

applicable  in all Member  States. 

Done at  Brussels, 

For  the Council 

ISSN 0254-1475 

COM(90) 99 final 

DOCUMENTS 

EN 

07 

Catalogue number : CB-CO-90-154-EN-C 

ISBN 92-77-59387-3 

Office for Official  Publications of the European Communities 
1^2985 Luxembourg