Earlier this month I wrote about the tense negotiations over reform of the EU Passenger Rights Directive, which has been on the table for years but recently got caught up in the deregulation fever here in Brussels. Last night negotiators reached an agreement, but as I predicted before, the airlines have ended up with a law that is worse for them than what they had before. It should be a cautionary tale for all the business associations in Brussels right now asking for EU laws to be reopened.
The big headline of the deal, which will still need a final vote of approval in the Parliament and Council to become law, is that airlines will no longer be able to charge extra for passengers to bring small rolling carry-on suitcases on the plane. This is something that budget airlines started doing about two years ago and has recently been followed by flag carriers (the usual pattern of budget airlines finding a way to sell cheaper tickets and then flag carriers eventually doing the same).
But before you jump for joy, this may not be as good for consumers as it first appears. The reason why budget airlines started charging for things that used to be free (meals, choosing a seat, rolling carry-ons, etc) was so they could offer budget fares that come up as the cheapest on search engines. They count on people clicking on their fare because it’s lower, then adding the extras in the booking process, possibly ending up with a more expensive fare than the other ones from competitors in the search engine that included those things in their basic fare. Flag carriers were eventually pressured to follow with the same no-frills basic fares to avoid this happening. The issue is that this became a race to the bottom, with Ryanair CEO Michael O’Leary once suggesting (perhaps joking, perhaps not) that his airline was considering charging extra to use the toilets.
What this new law will immediately mean is that the airfares that you see on flight comparison sites are about to get more expensive, because there will no longer be basic backpack-only fares. I travel a lot, and as a Dutch Calvinist trapped in an American Irish-Catholic’s body, I’ve adjusted to only taking a backpack now when I fly. Other passengers who need a rolling carry-on are then subsidising my cheaper ticket. With this law, that ticket will no longer be available to me. And that’s exactly what the airlines warned about.
“By making the hand-baggage-inclusive fare the default offer, consumers may be presented with higher headline prices including the second bag, rather than the most affordable option,” said airline industry association A4E. “Around half of passengers flying, particularly those travelling for short periods or on business trips, prefer to travel with only a small personal item in exchange for a lower fare.”
Under the deal agreed last night, from next year when the rules come into force airlines will have to include in the basic airfare not only a small bag that fits under the front seat, but also a small rolling-carry-on suitcase. To address the airlines’ argument about this disadvantaging customers who want the no-frills option, the law will allow airlines to let customers opt out of the rolling suitcase allowance during the booking process to reduce their fare.
But here’s the problem: budget airlines started offering this cheaper backpack-only option in order to appear as the lowest ticket on flight search engines. If they can no longer display that price (which can only show the lowest default option), then it is not in their interest to offer customers a lower price during the booking process. After all, if the customer has clicked on a price of €200 and is willing to pay it, why would the airline then offer them the choice of lowering that to €150? I don’t expect any airline will actually offer this possibility.
The only motivator would be in order to prevent customers from showing up with more carry-on bags than the plane can hold. That has actually been the big benefit of having the budget airlines charge for carry-on suitcases. On any plane, there is not enough space to accommodate a carry-on suitcase for every passenger. I fly regularly between Brussels and Barcelona and I have three options: Brussels Airlines or the budget airlines Vueling and Ryanair. The cheapest basic fare with Brussels Airlines includes a backpack and a carry-on suitcase. But I stopped taking Brussels Airlines because it was happening so often that the plane would fill up halfway through boarding and they would start making passengers check their carry-ons. With the budget airlines, if you pay for a carry-on suitcase you know you can bring it on, because they stop offering that ticket once the cabin storage is full. Vueling knows exactly how many customers are going to show up with carry-on suitcases. Brussels Airlines does not. (I also choose Vueling because their basic fare allows you to change the flight for a fee while Brussels Airlines does not – something to note in case anyone from Lufthansa Group is reading this!).
Since 2005, passengers on a flight operated by an EU airline (plus non-EU airlines departing from an EU airport) that are delayed more than three hours are entitled to €250 for short-haul flights, €400 for flights between 1,500 and 3,500 kilometres, and €600 for long-haul flights. Airlines have for years complained that the time thresholds are too low. Based on those complaints, in 2013 the European Commission proposed a reform to increase the timeframe. But in the Parliament and Council, legislators got nervous about taking away a consumer right once it’s been established, and the proposal was abandoned – dormant for a decade. Flash forward to 2025, when the “simplification” (deregulation) agenda became the main focus in Brussels, pushed by Germany’s new chancellor Friedrich Merz and the new right-wing majority in the European Parliament. It was in that spirit that the proposal got taken up again.
National governments in the Council adopted a position last year that would have lowered the burden for airlines, limiting compensation to only delays of more than six hours for flights up to 3,500 kilometres (or four hours for shorter flights). The Parliament, infuriated by the Council position and accusing national governments of siding with airlines over citizens, not only opposed any changes to the time thresholds but also started adding new demands for extra passenger rights that weren’t originally in the scope of the legislation. And this is how we got the carry-on baggage changes.
In the end, the deal struck last night keeps the time thresholds the same. The Parliament won this battle by wielding a powerful weapon: they said they would only agree to the increase in the thresholds if airlines were required explicitly to inform their passengers when they are entitled to compensation and give them a form to fill out. Currently only 38% of passengers entitled to compensation actually claim it, because most don’t know about it. That made the airlines very nervous. If they ended up with a law that lowered the amount of times they need to pay compensation but increased the proportion of passengers claiming compensation to something like 80%, they would actually end up paying out more. So they started urging the national governments not to adopt any version of the law that included this proviso and to back off on the time threshold changes if need be. It became very difficult for the Council to justify a position that insisted on keeping consumers ignorant of their rights, and the airlines knew that.
The Parliament provision requiring airlines to include a link to a pre-filled compensation form has been deleted from the agreed text, as has the Council’s increase to the thresholds. There is now only a vague instruction for airlines to send passengers “clear instructions on how to submit a request” for compensation.
This was a hugely contentious file that took up months of the EU legislature’s time, and even had to go into reconciliation third reading which is almost unheard of these days (legislation is usually settled between the Council and the Parliament in second reading trilogues). But in the end we’ve ended up with the same flight compensation as before, with the addition of new requirements that will, in my opinion, be worse for passengers because it will deprive them of that cheapest fare option. Nobody is happy. Not the airlines, not the passengers and not the legislators. Maybe the only ones happy are the MEPs in the Parliament, who have scored a rare victory against the Council here.
With the Commission throwing out omnibus after omnibus these days to satisfy the deregulation demands of big companies (and the US government), the case of EU passenger rights reform should serve as a cautionary tale. The airlines demanded a reopening of existing legislation in order to ease a supposed burden on them (in reality there is little evidence that these requirements are causing them economic difficulty), but ended up with a revision that is worse for them and adds new complications. That’s what’s happening with the omnibus proposals in other areas as well, with all kinds of amendments being added in that could actually end up making things more complicated.
Given that the passenger rights law dates from 2005, it’s understandable that it may have needed updating. But what’s crazy is that the other “simplification” omnibus proposals relate to climate and digital laws that were only passed in the previous 2019-2024 term, many of which haven’t even taken effect yet. If this were a national government we would thing this was extremely bizarre. Imagine, you have a centre-right government in power with a conservative prime minister which passes a series of digital and climate laws. Then you have an election in which the governing centre-right party maintains power (albeit it with a parliament that is further to the right) and the exact same prime minister is in place. That prime minister and her party then set about undoing the legislation they just passed in the previous term before it’s even taken effect. But why? If the legislation is so bad, EPP, why did you propose and pass it in the first place? This would be no way to run a country, and it’s no way to run a union.
So after watching the passenger rights law debacle, to business associations in Brussels I would say this: be careful what you wish for.
