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EU attacks budget airlines

The EU will shortly announce its plans to more strictly regulate the Budget Airline industry. After decades of nationalised “flag carriers”, which in Europe priced out ordinary consumers from regular air travel, world-wide Thatcherite reforms of this important transportation industry drove prices down, and greatly increased the numbers of destinations and budget price options; this brought a stagnant European industry more into line with a vibrant US.

But those heady days seem numbered under the forthcoming EU regulations. These, of course, will be written by many in a corrupt organisation regularly claiming 1st class weekend airfare expenses, from Brussels to home, without the need to produce either receipts, or even without the need to take the flight.

Instead of the consumer placing their custom where they will, with different competitors, and companies building up individual loyalty and trust in their brands, the EU has decided, in its wisdom, to crack down its regulatory whip.

For those passengers bumped off over-booked flights, compensation levels will be doubled; some claims for compensation may even be several times the original low-budget fare. The new measures will also introduce enforced compensation for delays, whether the fault of the airline or not; indeed the industry claims 75% per cent of delays are caused by the failures of the various European air traffic control systems.

Many of the companies involved, such as Ryan Air and Easyjet, have complained bitterly about this planned interference in their market. They argue that if travellers want both low fares and compensation, they should protect themselves through the purchase their own travel insurance. But it seems the EU will have its way.

Once again consumers are to be treated as mindless cattle, with an inability to make their own travel choices, change their purchasing decisions, or risk the uncertainties that low-fare travel inevitably brings with it. What’s really sad, is that many consumers in this dirigiste continent will agree with the plan; what many of these supporters won’t realise however, until it’s too late, is that they will also pay for it.

It seems certain that fares will rise sharply, to cover the airline insurance necessary to fulfil compensation claims, and the courts will be swamped with form-waving compensation-culture vultures trying to bleed the industry dry. Marginal destinations, such as the many which have recently sprung up in France and Spain, servicing holiday-home Britons, may also be dropped altogether, as their slim potential profits will fail to cover the possible compensation costs or necessary insurance.

So, thanks Big Brother EU. Where would we be without you?

23 comments to EU attacks budget airlines

  • Dave

    this brought a stagnant European industry more into line with a vibrant US.

    You do mean this ironically right?

    How about we look at the “vibrant US” – where you aware, for example, that no US airline can have more than 20% foreign ownership? Or that no non-US airline can take on passengers on stopovers? So if BA have a scheduled stop in NYC on route to LA, they cannot take on more passengers?

    There are lots of issues here. In general Carpe Diem – if you travel low cost, be careful. However:

    Once again consumers are to be treated as mindless cattle, with an inability to make their own travel choices, change their purchasing decisions, or risk the uncertainties that low-fare travel inevitably brings with it.

    When you last flew, did you check the conditions of travel in detail?

    Or did you assume the airline had a duty of care to deliver the service you had purchased?

    Rather than regulation perhaps the low costs should make clear the restrictions on travel, rather than hiding them in the small print and then let the consumer make an “informed” decision like you suggest.

  • snide

    In other words, Dave’s point is that if people cannot be bothered to read the small print, they are not informed. So yes, people are indeed simple cattle that the wise socialists must look after, right Dave?

  • Johnathan Pearce

    On a slightly happier note, Reuters in late June reported that the U.S. and EU had pledged to forge an “open skies” deal to liberalise transatlantic flights. Okay, I hear folk cry, we have heard this sort of stuff before, but not all the tendencies are one-way.

    Andy Duncan is dead right, though, to hammer the compensation vultures. If folk want to be protected against delays, that is what insurance is for. Delays are, of course, very annoying. I have not been bumped off a flight so far but I could imagine that this would be a real pain. But state-enforced compensation is not the way to go.

    Another reason why the EU sucks. That said, national governments are no better.

  • Dave

    In other words, Dave’s point is that if people cannot be bothered to read the small print, they are not informed.

    Snide, have you read the travel conditions of every airline ticket you booked before you tavelled, or would you be happy to be stranded at your own cost?

    I’m careful about it myself, but then I fly 3 or 4 times a month on business and have been caught out a lot. I’ve had 3 month battles to get money from flag carriers with a published compensation agreement so I dread to think what Ryan Air are like. The only time I’ve flown with them we had to do an emergency landing at Oslo when the flaps jammed.

    Much Travel insurance often doesn’t compensate for delays, which makes that suggestion a bit of a red herring.

  • Shaun Bourke

    Ryan Air is,by far,the leader in “Low Cost” air fares in Europe…..not too long ago they signed-up with Boeing for a couple of hundred aircraft.

    These up-coming regulations can only bode well for an earlier collapse of the EU. Shall we look and see ??…..Further reductions in EU export earnings from tourism,reduced local and export sales of flying Renaults…errr Airbus…much reduced receipts from direct and indirect taxes….strong increases in EU unemployment!!!

    Now,I wonder what new fare pricing structures can be put in place for the “TransAtlantic” routes ??

  • Edmund Burke

    Airlines regularly overbook to compensate for the regular percentage of no shows. On occasion this system results in people having to be bumped off flights.
    The obvious way to decide who to bump is to hold an auction, with say an ever increasing financial compensation until some passenger agrees to accept. This system will clearly distinguish between the priorities different people place on getting on the flight in question.

  • Dave

    The obvious way to decide who to bump is to hold an auction, with say an ever increasing financial compensation until some passenger agrees to accept. This system will clearly distinguish between the priorities different people place on getting on the flight in question.

    This is pretty much the flag carrier approach and you can get some really really marvellous deals. I’ve never been able to take advantage myself because of business reasons. But I’ve seen people “bumped” to Concorde and given money too.

    The airlines over book for the no shows, but then also they don’t do that intelligently. Last time it happened to me was with BMI flying out of Nice after a trade show. Regardless of the fact every Telecom’s person in the UK was in Cannes that week, they still overbooked.

  • Dave

    Ryan Air is,by far,the leader in “Low Cost” air fares in Europe…..not too long ago they signed-up with Boeing for a couple of hundred aircraft.

    And to balance it Easy Jet bought Airbus for the first time.

    Given Boeing was #1 manufacturer by a 30% margin 10 years ago and they are now on joint market share, reports of the demise of Airbus might be premature.

    Of course, the A380 might be a white elephant, but Emirites don’t seem to think so.

  • The trouble with US led “Open Skies” deals is that they are badly one sided. The US demands the right to land in the UK, and then pick up passengers to fly on to to further destinations. So, for instance, the US airline would be able to fly New York – London – Frankfurt, and pick up British passengers and fly them on to Frankfurt. On the other hand, British airlines would not be allowed to fly London – New York – Los Angeles and pick up American passengers in New York and fly them on to LA because this is a “domestic” flight and is treated differently.

    It would actually be better for consumers to simply accept the open skies deal on this basis, as it would at least be more liberal than what we have now (although one sided). However, the Americans are not negotiating in terribly good faith here.

    The British are not negotiating in good faith either, mainly over access of US airlines to Heathrow airport. There are no real good guys here. Only degrees of bad. Every couple of years US and UK negotiators sit down with the intention of “liberalising” landing rights, and the talks break down without getting anywhere a few days later.

    On a slightly different subject, my experience of customer service with Easyjet and Ryanair is okay. I have not been bumped, but I have missed flights due to being late. (One thing about the discount airlines is that when they say “You must check in by such and such a time” they actually mean it, whereas conventional airlines generally don’t, and it’s an easy mistake to make if you are used to conventional airlines). Although the fine print says that if you are late they have no obligation to carry you, they have simply booked me onto the next flight without any financial penalty. (They also offered to fly me to an alternative destination instead). Presumably their reason for being helpful is because they would actually like me to fly with them again. The fact that airlines who provide bad service are not going to get repeat customers seems to me to be a perfectly adequate protection. Bureacratic rules are not needed.

  • Ted Schuerzinger

    I was listening to a discussion of this on the BBC World Service this morning, and an industry analyst relatively opposed to these regulations likened RyanAir to a bus service saying that if you show up late for one plane, you simply get put on the next, and that people more or less knew this going into their transactions with RyanAir. He went on to call the EU regulators a nanny state, but as soon as he said the word “nanny”, the BBC reporter interrupted him to get an opinion from the government advocate, who had no problem with the idea that travellers should get compensation greater than the cost of the tickets they purchase.

  • Shaun Bourke


    You missed the point entirely…..AirBus sales ARE subsidized by the French government…..It costs Airbus more to build an A319 than Boeing does with its equivalent 737,yet AirBus often sells for 10% less.
    Reductions in flights made in Europe WILL reduce further already weak demand for new aircraft,which will impact AirBus directly.BTW,how many new orders for any AirBus were written up at the recent Paris Air Show???? And do not be surprized to see a turnaround with The Emirates Group,the Emir is not a happy camper these days.

    Very few commercial airports in the world can cater to the expected size and weight of an A3XX,for a yardstick…..find which ones can cater to a C5A Galaxy……..loaded

    Travel insurance has been available for decades from your agents or even at the airports……if travellers choose not to buy,then that is their choice and not for some “Loonybin Government Type” to decide reinbursement.

  • Hi Dave,

    You do mean this ironically right?

    Back in the good old days of the European airline industry, it was a familiar story that for a route such as London-Rome, there would be only two carriers, both the respective government-owned flag carriers, operating a cartel duopoly.

    Indeed on this particular route, so bad was the cartel, they used to charge for the flying time it took to fly around the Alps, even though they flew over them, because the fares were based on pre-war pricing structures. So the taxpayers who were subsidising these airlines, mainly to the benefit of the government officials who rode on them, couldn’t afford the flights.

    As I live and work in and around London, I don’t travel on business flights in the US, so therefore your experience here is infinitely greater than mine, but compared to the situation I’ve described, I would pretty much say, in comparison, that the US air travel market was vibrant. Not perfect, a long way from perfect as you describe it, but an awful lot better than it used to be here, with a lot more competitors, and a lot more choice. And probably it still has a lot more competitors, and a lot more choice, than here.

    Even from what you say of the need to strip out your malingering government regulation, and from my immense knowledge of day-to-day US airline business, gained from the novels of Mr Tom Clancy, give me the US situation every time, rather than the EU.

    We’re so used to government incompetence, and lack of choice over here, due to the government protecting its big corporate friends, that even being given a selection of three different colours of Mickey Mouse watch, we think we’re living in a Murray N. Rothbardian anarcho-capitalist paradise! 🙂

    When you last flew, did you check the conditions of travel in detail?

    If I buy a ticket for £29 pounds, on a return ticket to Barcelona, I don’t expect free champagne on the trip, as you would expect. If I fail to read the small-print, well, that’s my problem.

    And in a free market without government restriction, I still have the ultimate sanction, even if I was too stupid to read the small-print, and they dump me miles from where I thought I was going. If I don’t like the trip, I go with another airline next time, until I can find someone who values my custom, whom I’m prepared to pay for, who has built up a brand I can trust and respect.

    If there’s nobody I ever like, for the amount of money I’m prepared to pay, again, that’s my problem. I have no right to transportation. If I really don’t like the situation, and think I can do better, then I should start my own airline.

    If I was right, and the service could be done better, for less, I’d make a fortune.


  • Hi Dave,

    A quick PS, sorry.

    I hope you, and all your family, and any other American reading this, have a great holiday tomorrow. Remember, without us British, it would be just another day! 🙂

    All the best,

  • A_t

    Man… stupid, stupid regulation!

    Everyone knows, through word of mouth if nothing else (or watching the latest BA ad!), that compensation for delay etc. ain’t great on the budget airlines. It’s like any other purchase; if you choose the low budget option, you’re usually sacrificing a few luxuries. It should be up to the consumer to choose what level of service they like. It’s the equivalent of saying that only high-end hifi separates can now be sold, as some people found the sound from their mini systems wasn’t quite as good as they expected.

    And please, I’ve had enough US/Europe bashing here (well, usually Europe bashing on these boards) can we lay off the name-calling about Airbus? The entire US aerospace industry effectively gets, and has received for many years, heavy subsidies off the government… only they’re called ‘defense contracts’.

  • Liberty Belle

    With this new load of EU regulations controlling our freedom of choice and controlling well run companies’ ability to make money, is there any suggestion at all, anywhere, that the public asked for all this? Can the regulators, whoever they may be, point to anyone (other than the major carriers) who has demanded these changes? How dare they make rules/laws – in Europe, same thing – that not a single voter has asked for?

  • Chris Josephson

    Wasn’t anyone paying attention when this sort of ‘fixing and control’ was tried by the Russians?

    The EU will regulate itself into the ground. Too bad. I was hoping the EU would enable Europe to become vibrant competitors in the world market.

    If the EU keeps going in this direction, the Asian countries will eclipse the EU.

  • MayDay72

    Andy Duncan:

    Wow…it doesn’t seem that long ago that you were banished by Adriana to Blogspot
    for posting lengthy comments…Then you were a “Guest Writer”…and now you are a full “Contributor”…Cool!

    …Congratulations…I look forward to reading more of your stuff here at Samizdata in the future.

  • Jan Krusat

    I´ve got several comments to make. Actually I´m working in the airline industry, mostly in the cargo business, as Aircraft Maintenance Engineer and Airframe & Powerplant Mechanic.
    Fiirst, about Airbusses being cheaper than Boeings, Airbus makes a lot of money from selling spare parts which are usually more expensive than their Boeing equivalent. Ok, unlike with cars, as an operator of aircraft you have absolutely no choice in buying alternate parts, you´ll have to use the parts the Illustrated Parts Cataloque tells you, or you´ll void the airworthiness of the aircraft and put the certifying engineer into deep sh*t with the aviation authorities. Of course you can go the way of applying for a Supplemental Type Certificate, which is a long and expensive process again with the authorities, you´ve got to prove that your deviation from the manufacturer´s design doesn´t affect the airworthiness and that all design regulations applying are being observed.
    Also, in the long run I can´t understand how the low fares airlines will continue to work. There are fixed costs the airline can´t avoid: Air traffic control fees, obligatory insurance fees, fuel prices, and to a lesser extend depending on the choice of airports, landing and ground handling fees. But I think the days when Mike O´Leary of Ryanair could approach an airport director and ask him how much he was paying him to fly to his airport are over.
    As a result, the low cost carriers are cutting back on staff, for example at Ryanair the flight hostesses will have to clean the plane on ground, when the hostesses of other airlines have their break ( don´t assume it is an easy job, they must be walking miles every day, and don´t forget, the main reason for these women is not to serve food to the passengers, but to get everybody to safety in case of an emergency, another regulation, which sets the number of flight attendants per plane). Then the low cost airlines are usually paying their pilots less than the regular carriers, I know several pilots in deep depts after having had to pay for their training. Before you would get at least your type rating (which is around $20.000,- for a Boeing 737) paid by the company, today you´ve got to provide everything yourself.
    Finally you´ll get to maintenance. I think there is an interest with the passengers to have their planes safe and airworthy. Today often maintenance gets outsourced to the cheapest provider. Actually the willingness in accepting risks of the engineering staff sometimes gets stretched to the limit by the airline management, who demand quick, cheap and often sloppy fixes of technical problems to save money. I´ve heard of C-checks ( though fortunatley never participated in, even though I had some arguments with bosses before about quality of work), where access panels were never opened, and where the engineer just signed off the work that was never done. Don´t forget, the mechanic or engineer, who signs off the log book, and therefore the airworthiness of the aircraft before each flight, carries about as much responsibility as the captain. He will go to jail if something happens, not his boss. Unlike pilots, engineers don´t have a limit on working hours. I´ve done lots of 24 hours shifts to get a plane flying again, just because it is too expensive for the owner to have it standing on ground. Try to imagine if you are still able to do concentrated work after being awake and on the job for more than 24 hours. Of course, compared to the pilots we are ridiculously underpaid. Well there is the old proverb: Pay peanuts get monkeys. Just would you wish to fly in a plane like this



  • Lol, just another example of evidence that bureaucrats really don’t like people to move around alot. If they stay in one place citizens are much easier to keep track of and won’t wander of somewhere.

  • Hi MayDay72,

    It’s a bit of a shock to me, too! 🙂

    Cutting myself down to 10% of my usual post length, is a bit hard, but it’s keeping me off the streets 😎


  • Dave

    Thanks Andy, but I’m a Brit, I just lived in the US and spend about half my time there 😉

    I will fly all sorts of routes to avoid domestic air travel in the US. Most recently flying via Canada and driving rather than have to change in O’Hare or JFK. Part of the problem is poor airport design which plagues the US and requires non-citizens to allow 2-3 hours for changes. The other problem is poor airlines trying to work like a bus system. I flew San Francisco, Vegas, LA, SF 3 days before 9-11. The condition of the American Airlines planes was frightening, the level of service non-existant.

    The US low costs are helping, but a lot of connections make travelling hard work. You often find yourself flying “odd” routes to get to where you want to go. On that score, Europe isn’t much better. The hub approach from many US carriers leaves you stranded in weird places at weird times which isn’t pleasant either.

    I do tend to agree with the idea that if you pay £29 for a flight to Barcelona then Carpe Diem. The problem I have refers back to the conditions of travel and whether people flying to Malaga on a cheap holiday know what they are getting themselves into. My experience of having somebody else book my travel for me, is that people don’t realise the problems of airlines and flying – my secretary flies once a year, generally to Spain for a holiday. Therefore, she bases her assumptions on that sort of thing. If you fly low cost you need to know that they have no obligation to carry you, and that you need to be able to pay if things go wrong. With short(ish) delays your travel insurance will generally be utterly useless. I’ll use Easyjet for some trips, but generally restrictions on hand luggage, limits on the ticket etc… make it a false economy for a business traveller – esepcially with Easyjet, the costs often aren’t much less than BA anyway.

    If the “low cost” airlines were forced to let people know what happens then I’d have less sympathy with enforced compensation.

  • Dave

    Yes Airbus are subsidized.

    So are Boeing. The Washington State legislature recently trying to vote through billions of dollars in tax breaks to ensure that the new 7E7 is manufacturered in Seattle and not elsewhere in the US.

  • Nick Aggelopoulos

    Lower cost flights.

    Many of you have read the small print and seem to know the pros and cons, which the vast majority of ordinary folks have no time in their life to do I hold down a regular job and spend nearly all my time working and have little time to research the market and ticket conditions. I need to fly to the USA in November, to New Orleans. All US carriers charge less than European carriers. The cheapest European carrier (KLM) I understand flies only with a minimum 7 day return. Lufthansa is the next cheapest but some 50 pounds more expensive than the cheapest flight on a US airline. As a European, all being equal, I would have rather flown on an EU airline. What do they offer more than the US airlines that makes their prices higher?