European airlines demand EU rethink passenger compensation rules as jet fuel costs soar

Smaller European airlines have urged EU officials to reconsider planned reforms to passenger compensation rights, citing a significant spike in jet fuel prices due to the conflict in Iran.

They argue that current economic pressures leave them with no capacity to take on additional financial burdens.

The plea comes as EU institutions are in the process of negotiating an overhaul of the bloc's decades-old passenger rights regulation, known as EU261.

Under the existing rules, which have been in place since 2004, air passengers are entitled to claim compensation for flights delayed by more than three hours, starting from 250 euros and increasing based on flight length.

The next round of discussions is scheduled for 2 June.

Executives from 35 airlines, including Air Serbia, SkyExpress, Luxair, Atlantic Airways, SprintAir, KLM Cityhopper, and Air Corsica, collectively sent a letter to EU officials on Tuesday, seen by Reuters.

"We urge European policymakers to pause and reassess," the letter stated. A key point of contention between the European Parliament and EU countries is the proposed increase to the flight delay threshold for compensation, as well as the maximum refund amount.

Parliament wants to keep the threshold unchanged at three hours for short-haul flights while member states want it raised to four hours.

The smaller European airlines are calling for the threshold to be longer or no compensation at all but did not set out explicit demands.

The co-legislators are also at odds over a Parliament proposal to include the right to a free cabin bag of up to 7 kilograms (15lb) in the new rules, which the airlines also oppose.

"Conduct a full impact assessment, in the new geopolitical scenario, recognise the unique role of regional aviation, adjust the compensation regime to reflect operational realities, discourage flight cancellations and avoid pushing essential air links out of existence," airline executives said in their letter.

They added that small European carriers have been hit particularly hard by the spike in the price of jet fuel, and are more vulnerable due to operating thin routes "with very low profit margins", making it harder for them to pay out if disruptions occur.

As it stands, jet fuel costs have practically doubled around the world, with some airlines warning of long-term negative effects on their profit margins.

"Europe’s strength lies in its connectivity, not only between major capitals, but across every region and community. Regional aviation is what makes that connectivity possible. Do not let this be the last straw," the letter said.

Other rules, which are not in dispute, include free seating for an accompanying adult next to a child or person with reduced mobility.