The European Union's top court yesterday upheld new rules requiring compensation for air passengers stranded by delays or cancelled flights, dismissing a challenge by airlines, which argued the rules went too far.
The rules force airlines flying into or out of the 25-country EU to compensate passengers for overbooking, long delays or cancellations with food, lodging, and, in some cases, hundreds of euros.
Airlines had complained about the rules, which took effect last year, saying they could add $700 million of costs a year to the airline industry and unfairly penalised carriers for conditions that were sometimes out of their control.
"The regulation on compensation and assistance for air passengers is valid," the European Court of Justice said in a statement.
Lawmakers and the European Commission, which authored the rules, welcomed the court's decision. But airlines said it would hamper the industry and end up hurting consumers.
"It's good news for air passengers that now enjoy strengthened rights compared with the ones that they had in previous European legislation," Commission spokesman Ferran Tarradellas Espuny told a regular briefing.
"The ruling today by the Court of Justice is going to ensure that the legislation is properly implemented by the member states and by the airlines and national authorities."
The International Air Transport Association (IATA), which represents airlines' interests, said the decision was a "missed opportunity" to strike down a regulation that hurts Europe.
"It's a shame that governments are intent on micromanaging the industry in an area where good commercial forces would do much better," spokesman Anthony Concil said.
"It doesn't support the interest of consumers. At the end of the day, they are adding $700 million worth of costs to the industry that will have to be recouped in some way."
Under the rules, airlines must pay passengers up to E600 if they are denied a seat because of overbooking. In some cases, carriers must give flyers a refund and a trip back to their point of departure.
"The ruling itself is not a surprise. The main issue will be how well airlines use the various clauses in the rules to avoid paying compensation," said Nick van den Brul, analyst at Exane BNP Paribas in London. He said one airline he had spoken to estimated potential losses from such payments at a maximum of £3 million.
The attempt to block the implementation of the new rules was filed by IATA and the European Low Fares Airline Association, both of which represent airlines' interests.
The two groups filed their case in Britain and the High Court in London referred the case to the European Court of Justice because the complaint essentially called the whole set of EU rules into question.