CELEX: 51990PC0099
Language: en
Date: 1990-04-24
Title: PROPOSAL FOR A COUNCIL REGULATION ( EEC ) ON COMMON RULES FOR A DENIED BOARDING COMPENSATION SYSTEM IN SCHEDULED AIR TRANSPORT

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)
 ---pagebreak---                                                                              G^wq<JP
                            EXPLANATORY MEMORANDUM
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
 ---pagebreak---                                       - 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.
 ---pagebreak---                                      - 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
 ---pagebreak---                                     - 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
 ---pagebreak---                                    - 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.
 ---pagebreak---                                      - 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)
 ---pagebreak---                                       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.
 ---pagebreak---                                    - 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.
 ---pagebreak---                                       - 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;
 ---pagebreak---                                      - 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.
 ---pagebreak---                                       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;
 ---pagebreak---                                       - 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.
 ---pagebreak---                                      - 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.
 ---pagebreak---                                         - 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.
 ---pagebreak---                                      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
 ---pagebreak---                                                                      ISSN 0254-1475
                                                               COM(90) 99 final
                                                      DOCUMENTS
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                                                             ISBN 92-77-59387-3
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