Quite a few people have reached out asking me for my opinions on the new flight delay and cancellation law. In short, it’s a step in the right direction. But it misses a lot of the key points for both consumer and airlines alike. It’s also structured rather differently than current regulations elsewhere in the world.

Introducing EU261

The EU261 law has been in effect since 2004, providing customers rights to compensation when an airline fails to meet their obligations. This has been a very popular law and serves as the “gold standard” for travel legislation anywhere in the world.

Airlines are encouraged to minimize cancellations and delays related to issues within their control. A maintenance delay may cost the airlines 600 Euros per person. For a plane of 200+ people, that’s a lot of money!

The terms of the rules are as follows:

The Good

Here’s the good news – this is the first time the US government has defined “significant change”. The timelines are similar to what EU261 calls out in their regulation. Flights are considered significantly changed if they arrive 3 hours later than original domestically, or 6 hours later internationally. Note that for this clause, the departure time is irrelevant. If your flight departs 3 hours late but arrives just 2.5 hours late, this will not apply.

The US Law also goes a step further and includes any flight that DEPARTS 3 hours EARLIER than originally domestically (or 6 hours earlier internationally). This means if your flight schedule changes, you may choose to accept alternative arrangements or request a refund. In practice, most airlines already do this – but it’s still good that they’ve writted it into law.

The Bad

As outlined above, EU261 regulations have similar rules, but with overall lower delay requirements. For international flights, airlines must provide compensation if you arrive late by 2-4 hours (as opposed to six internationally from the US law). You are also entitled to recommodation if your flight leaves just ONE hour earlier than originally scheduled.
The EU law is the clear winner here.

The US law also does not require compensation on top of reaccomodation or refund. Take the following examples:

• Say your flight LAX-NRT cancels when leaving the US. According to the US laws, the airline must reaccomodate you or refund you.
• Say your flight CDG-DXB cancels when leaving France. According to EU laws, airlines must reaccomodate you and provide hotel/meal vouchers. In addition, you are entitled to receive 600 Euros in compensation. Alternatively, you may request a refund for your flight.

As you can see, the EU law wins here too.

The Hmmmmm…

All delays and cancellations must cite a reason for such interruptions. Normally, when a carrier experiences a delay or cancellation due to factors within their control (staffing, maintenance, etc), you are entitled to compensation or refunds. Other factors like ATC issues, weather, etc. are not eligible. This is the same logic that EU261 uses.

But the US law does not make this disctinction. By my current interpretations, airlines must provide refunds or reaccomodations even for weather issues and factors outside their control. This might be better for the consumer, but I fear two downstream negative effects.

First, airlines may become less motivated to cancel flights ahead of a known storm to try and contain the impacts. Today, Delta may cancel 6 of their 8 flights ahead of time to limit the number of planes on the ground. This provides more options for passengers to make plans from the comfort of their own home. In the future, we may see more instances of airlines cancelling flights only once you’ve gone through the hassle of security, spent $30 on an airport salad, and found your gate, only to find you have to try it all over again tomorrow.

Second, to compensate for increased costs related to refunds and changes that now cover things like weather, we may see sharp increases in airfare. By my estimation, airlines must now account for twice as many delay-related costs after going from just maintenance issues to maintenance and weather.

The Convoluted

Here’s where things get really interesting. We may see some jurisdictional conflicts when multiple laws apply for a flight.

Under today’s rules, any EU carrier flying to the EU must provide EU261 protections. But EU261 also applies to ANY carrier flying FROM the EU. If similar logic applies to the US law, then we may face an interesting dilemma.

Consider Lufthansa’s flight from JFK to Frankfurt. This is an EU carrier, so EU261 applies. This flight flies from the US, so perhaps the US law also applies?

Normally, we take the “strictest” approach and apply whicher law has better consumer protection. So for most cases it would be the EU261 law. But if that Lufthansa flight gets cancelled due to weather, it may appear that the US law kicks in too, and Lufthansa may suddenly have to provide refunds.

Time will tell how this gets resolved, but I’m not liking how this is shaping up at the moment.

Final Thoughts

The new US travel law might not be a strong contender to the EU261 law currently in place. However, I would say that it’s still a step in the right direction by providing clear definitions of “significant change”. While the Big 3 airlines might already be providing compensation, maybe it’ll force Spirit and Frontier to do the same 🙂