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Denied Boarding Compensation: Overbooking A guide to air passenger rights in Europe, USA, Canada and Australia

October 9, 2013 Headline News, Travel Law 1 Comment Email Email

egtmedia59If an air passenger had the choice, they would choose to be denied boarding on an overbooked flight in Europe, because European Law has the most generous compensation available. In the USA and Canada also, airlines are required by law to properly compensate air passengers who are denied boarding.

But in Australia, there is no law for overbooking, and so the best the air passenger can expect from their carrier is something like –

Sorry, we can’t board you on this flight. It’s full. Can we book you on a later flight? And here is a voucher for your trouble.

What are the rules airlines must follow if they oversell flights in Europe, USA, Canada and Australia?

Preconditions for passenger rights for denied boarding (overbooking)

Air passengers must not be at fault. There are the preconditions:

1)     The air passenger has a confirmed reservation.

2)     The air passenger has presented themselves for check-in on time (before the published departure time) with all travel documentation (e.g. valid passports, visas).EGT_Artical Banner A 250x250

3)     The air passenger has either volunteered, or has been required, to give up their reservation.

4)     The flight is not cancelled.

5)     The air passenger has not been denied boarding for another reason, such as security.

6)     The flight is a scheduled flight. Flights on helicopters and non-fixed wing aircraft are excluded.

Benefits / compensation for passengers denied boarding in Europe

European Law – Regulation (EC) No 261/2004 gives passengers rights where –

  • The flight is to depart from an EU Member State (applies to all airlines); or
  • The flight is to arrive in an EU Member State on an airline based in an EU Member State.

The procedure is –

  • The airline seeks volunteers to give up their reservation, in return for a benefit negotiated between the passenger and the airline. The benefit must be better than the Reg 261/2004 minimum benefits.
  • If there are insufficient volunteers, the airline has the right to involuntarily deny passengers the right to board the flight. The Reg 261/2004 benefits are to be provided.
  • The airline must inform each passenger affected of their rights by written notice displayed at the check-in or boarding gate. 

These are the benefits / types of compensation and assistance, all of which the airline must provide:

1)     Cash Payment €250 for flights of up to and including 1,500 kms; €400 for flights above 1,500 kms up to and including 3,500 kms; and if the destination is outside Europe, €600 for flights above 3,500 kms.

A 50% discount is applicable if the passenger is offered re-routing or an alternative flight, if the time of arrival is less than 2 hours before the scheduled time, for flights up to 1,500 kms; less than 3 hours between 1,500 and 3,500 kms; and less than 4 hours above 3,500 kms.

The payment must be in cash, bank transfer or bank cheque. And not a travel voucher or in frequent flyer points, unless the passenger agrees.

2)     Re-routing or Fare Refund – The re-routing is at the passenger’s choice, either at the earliest opportunity, or at leisure, subject to seat availability in the same class. The fare refund covers the cost of unused tickets, and also used tickets. Where the flight(s) taken no longer serve any purpose in relation to the passenger’s original travel plan, and where applicable, a flight back to the original point of departure at the earliest opportunity is to be provided. These services are at no additional cost to the passenger.

3)     Refreshments, communication and accommodation – All of these must be offered free of charge: Meals and refreshments in relation to the waiting time (as a rule of thumb, every 2 hours); Two telephone calls, fax or telex messages, or emails; and if it is not the passenger’s home port, hotel accommodation and transport between the airport and the hotel, if a stay of one or more nights, or if a stay additional to that intended by the passenger becomes necessary.

Regulation (EC) No 261/2004, provides these same benefits to passengers whose flights are cancelled.

For completeness, Reg 261/2004 does not allow an airline to charge for upgrades, and requires it to give a partial refund of the fare for downgrades – the amount depending on the distance.

Overbooking benefits extend to passengers who are offloaded for operational reasons.

Illustration

An easyJet pilot offered volunteers cash to leave the aircraft after he realised that the aircraft was over its maximum take-off weight. The flight was over 1,500 kms (Gatwick UK to Bari Italy). At first the pilot offered €250 per passenger plus an overnight hotel, without acceptances. When he upped the cash offer to €400 (as Reg 261/2004 requires), four passengers volunteered to leave the aircraft.  (September 2013)

Rights for bumped passengers in the USA

The U.S. Department of Transportation (known as the DOT) explains consumer rights for two forms of overbooking in its Fly-Rights Consumer Guide to Air Travel. These rights apply to flights within and departing from the United States. They are –

  • Voluntary Bumping – if the flight has been oversold: at the check-in or boarding gate area, airlines are required to look for volunteers who are willing to give up their seats for compensation. The DOT has not mandated the compensation, and so it is for negotiation between passenger and airline in terms of re-booking, provision of amenities such free meals, a hotel room, transfers and a phone card, cash compensation (which can be paid by cheque), dollar-amount vouchers and free tickets. 
  • Involuntary Bumping – each airline has its own policy: some bump passengers with budget fares first, others bump the last passengers to check in (in the same fare class), while others bump single passengers. The DOT requires airlines to provide denied boarding compensation to those passengers who don’t get to fly.  

The DOT provides this guide where the airline arranges substitute transportation –

Delay Domestic flights                          International flights
No compensation 0 to 1 hour arrival delay            0 to 1 hour arrival delay
200% of one-way fare (up to US$650) 1 to 2 hour arrival delay            1 to 4 hour arrival delay
400% of one-way fare (up to US$1,300) Over 2 hours arrival delay         Over 4 hours arrival delay

The DOT requires airlines to advise bumped passengers of the compensation due, before they are bumped. The DOT will investigate passenger complaints, if the airline fails to resolve the complaint.

In the USA, airlines prefer to give credit vouchers to be used to purchase another airline ticket or airline service, rather than provide cash compensation. In the USA, the check-in deadlines are strictly adhered to – typically 60 minutes for international flights and 45 minutes for domestic flights, at the boarding gate.

Denied Boarding Compensation rights in Canada for overbooking

Across the border in Canada, the Canadian Transportation Agency enforces a Code of Conduct of Canada’s Airlines. It has introduced new rules with effect on 18 September, 2013.

Passengers can insist upon receiving cash instead of travel vouchers, on a one-to-three exchange rate – for example $1 cash is equal to $ 3 travel vouchers.

If the passenger is involuntarily bumped, passengers are entitled to cash payments of $200 (less than 2 hours), $400 (between 2 and 6 hours) or $800 (more than 6 hours) per passenger.

It is the passenger’s choice for a full fare refund or re-booking on the first available flight.

Denied Boarding Compensation rights in Australia for overbooking

There is no law in Australia which lays down specific rules for airlines to follow for overbooking, or indeed for delays and cancellations. The Australian Consumer Law which was introduced on 1 January 2011 is the applicable law. The ACCC (which administers that law) has issued an industry guide to Travel and accommodation, which focuses on the deceptive selling of the travel and accommodation and on unfair terms.

The ACCC sets no guidelines for airlines to follow for compensation for overbooking, delays or cancellations, in contrast to its counterparts in Europe, the USA and Canada.

Australia airlines cover passenger rights for overbooking in their Conditions of Carriage and the Customer Charters (for domestic travel). The coverage follows IATA Recommended Practice No 1799. The coverage protects the airline from accusations that they are acting unfairly or arbitrarily in denying boarding for overbooking under Australian Consumer Law.

Australian airlines downplay the possibility of overbooking in their conditions. This is what they state: Qantas – there is a slight chance; REX – there could be rare occasions; Virgin Australia – on rare occasions; Jetstar – on rare occasions. The Airline Customer Advocate does not keep statistics for complaints received for denied boarding by reason of overbooking, so it is not known how ‘rare’ it is for a flight to be oversold.

Australian airlines will rebook the passenger on the next available flight on its services at no additional cost. In addition, there are vouchers: REX will offer a one-way flight voucher; Virgin Australia a credit voucher (with a credit value to be determined); Tigerair a flight travel voucher for AUD 85 (domestic flights) and SGD 100 (international flights). Jetstar will offer a flight on another airline, if it is unable to provide a same day flight with Jetstar.

Alternatively, if the passenger no longer wishes to travel, the airline will refund the fare.

Overnight accommodation, transfers and a meal allowance will be provided if the denied boarding is not at the passenger’s home port.

Illustration of overnight accommodation for offloaded passengers

Lack of wind at Wellington airport (NZ) delayed a Virgin Australia departure. VA asked 20 passengers to voluntarily give up their seats and catch a later flight to lighten the aircraft for take-off. They were given a free night’s accommodation and a meal in a hotel. (August 2013)

Australian airlines do not offer cash compensation for overbooking for flights in Australia or departing from Australia.  Nor are they required to provide a written notice to air passengers of their rights at the airport.

Conclusion

Airlines overbook flights to maximise their passenger load factor, and therefore revenues, on the basis that there will be no-shows for every flight. Some American airlines overbook flights by a factor of 10%. Australian airlines overbook flights by much smaller factors. Some airlines rarely overbook.

Airlines are becoming more sophisticated in their overbooking practices. For example, there are less no-shows for leisure travel because non-transferable ticketing means that ‘you use it or lose it’.

At the present time, the ACCC in Australia has not seen fit to provide guidelines to Australian airlines to provide the kinds of benefits to passengers who are denied boarding that we see in Europe, USA and Canada. This attitude will change if and when there is a surge of complaints about overbooked flights.

Written by : Anthony J. Cordato & Henriette Dobler

Currently there is "1 comment" on this Article:

  1. What happens if when doctors overbook patients for operations thinking that 10% of them will die before the appointment? Do they offer them a free night and food in the hospital and put them on a waitlist?

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