EU approves passenger rights reform, shifting costs to airlines
The EU has approved a major overhaul of air passenger rights that will force carriers to pay out billions in unclaimed compensation and abandon lucrative ancillary fees.
The European Parliament and Council have formally approved a sweeping overhaul of air passenger rights, with the new rules set to take effect in mid-2027. The legislation replaces the 2004 Regulation EC 261, which has been criticised for failing consumers in practice despite strong protections on paper.
For airlines, the reform represents a significant financial and operational reset. The European Consumer Association estimates carriers are currently sitting on roughly €3.2 billion in unclaimed delay compensation, a figure the new procedures are explicitly designed to reduce. The International Air Transport Association (IATA) notes the existing regulation already costs the industry around €8 billion annually, a burden that will now increase.
The legislation shifts the administrative burden of claiming directly onto carriers. Airlines must inform passengers of their rights within four days of a disruption and provide standardised claim forms. Travellers will have nine months to submit claims, and airlines will have just 30 days to pay or formally justify a rejection. “We now make it accessible. This is cash in the hands of those entitled to get compensation [...] this is now a cost for the airlines. They must pay what they avoided somehow in the past,” said MEP Andrey Novakov, the Parliament's rapporteur on the file.
The reform also targets ancillary revenue streams that low-cost carriers rely upon. Airlines must include the cost of a trolley bag in the basic ticket fare displayed at the start of booking. Fees for correcting minor name errors and printing boarding passes after online check-in are banned, and passengers will no longer lose their return flight if they skip the outbound leg. “Airlines can still offer different types of fare, including those without cabin bags, so the impact is primarily on how information is presented to passengers during the booking process, rather than on the underlying business model,” said IATA’s Neva Sadikoglu-Novaky.
Operational constraints
Rerouting obligations will further strain airline operations during disruptions. If a carrier cancels a flight, it must find an alternative route within three hours using any available airline, rail, or bus service. Failure to do so exposes airlines to compensation claims of up to 400 per cent of the original ticket price.
Crucially, the rules introduce an open list of "extraordinary circumstances" that exempt airlines from paying compensation. However, carriers must now prove these circumstances apply. IATA warned that technical defects related to flight safety are not included in these exemptions. “Safety is the industry’s number one priority [...] Yet technical defects that affect flight safety are not considered an extraordinary circumstance,” Sadikoglu-Novaky said.
Until mid-2027, the current framework remains in force. With flight delays having risen by 82.7 per cent over the past decade compared to just 11.5 per cent traffic growth, carriers have a three-year window under the existing, vaguer rules before the stricter enforcement and automatic procedures begin.
