Copying Europe's Airline Regulations Won't Fly

Americans who have visited Europe or looked into European vacation flights will often have gotten personalized ads about applying for compensation for delayed flights.

They often sound something to the tune off "Your flight was delayed? Apply for compensation up to $700!"

The companies in question are law firms handling compensation claims covered by European Union legislation on behalf of the passenger, and in the case the claim gets approved, they pocket a commission.

The law in question is known as "EU261".

If a passenger arrives three hours or more late at the final destination they may receive fixed monetary compensation depending on flight distance: $290 for flights up to 930 miles, $460 for flights between 930- 2,100 miles, and $695 for flights over 2,100 miles.

The same compensation generally applies to cancellations unless passengers were informed well in advance or offered a suitable re-routing.

The law was hailed by many as a groundbreaking improvement in consumer rights, however it has imposed additional costs on airlines that are being passed onto consumers.

The monetary compensation is baked into the cake of the total fare price, meaning consumers ultimately pay for a government-mandated cancellation/delay insurance, without a choice of opting out.

This has contributed to a rise in prices for intra-European flights. Europe, a continent long known for low air fares, is slowly making it harder for people to travel. But the problems go further.

Flight operators have pointed out that the compensation scheme increases the cancellation of flights, and that if they became laxer, 70% of cancelled flights could be saved.

Here's the breakdown: if your flight is delayed due to the airline's own operational error (crew overtime or others), you are entitled to receive compensation, but the story doesn't end there for the operator.

The same aircraft is most likely due to pick up the passengers at your arrival destination and bring them somewhere else, where again, passengers are waiting for an aircraft.

This is a carefully crafted maze of flight schedules and moving aircraft to where they need to be. Once disrupted, it makes sense for airlines to cancel flights ahead of time, to avoid more passengers being entitled to compensation.

The regulation therefore makes flying less convenient, not more.

When passengers take out external flight delay insurance, the provider of that insurance covers the risk of compensation payout.

However, when the government mandates a compensation plan, those costs must be swallowed by the same company that also decides on cancellations: the airline itself.

This has become a great example of the seen and the unseen in public policy making, what passengers see is the payout of compensations sometimes surpassing multiple times the initial base fare or even ticket price.

What they don't see is how flight schedules gradually get worse, because of the same scheme.What they don't see is how flight schedules gradually get worse, because of the same scheme.

Incidentally, it is another example in which good-meaning and sounding European legislation should not be replicated by American lawmakers.

In 2023, then-U.S. Transportation Secretary Pete Buttigieg proposed new regulations that would have modeled European rules forcing airline compensation for flight delays and it was rightfully withdrawn last year by the Trump Administration.

That hasn’t stopped several Democrats in the House and Senate from introducing similar bills to enforce an EU-style system imposed by the federal government, ignoring the real evidence we have from airfares and travel experiences in Europe plus the growing market of travel insurance products available at a fraction of the cost.

Every traveler or tourist wants a better experience when they fly and rules and regulations should aim to make that easier rather than just more expensive.

Adopting Europe-flavored regulations in D.C. won’t bring you closer to Rome or Paris, but it will promise a world of inflated ticket prices that will have you thinking twice of taking that trip.

Don't say you haven't been warned.

Bill Wirtz is the senior policy analyst at the Consumer Choice Center, focusing on new technology, agriculture, trade and lifestyle regulations. He recently published "No Copy-paste: What Not to Emulate from Europe's Agriculture Regulations." Read Bill Wirtz's Reports — More Here.