'Bureaucratic' EU rules set to fuel big rise in air fares

3 March 2005
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03 March 2005 | Cara Whitehouse

Corporate travel buyers could face "a substantial price hike" in air fares following new EU rules on passenger compensation.

Regulations introduced last month mean that both scheduled and budget airlines could have to pay passengers whose flights are delayed or cancelled.

Travellers who fall victim to cancellations or long flight delays will be able to demand ?250-600 (£172-415) depending on the length of flight.

The average one-way fare offered by easyJet is £42, but under the new regulations, the airline will face compensation payments starting at £172 for flights under 1,500 kilometres.

Business travellers are likely to be the first to suffer, according to Colin Brain, managing director of travel consultancy Management Solutions UK.

He told SM: "I would not be surprised to see a substantial price hike.

"Buyers of corporate travel will simply have to grin and bear it."

He expects price rises will filter through during the year.

Tom Stone, chairman of the Institute of Travel Management (ITM) and director of travel buying company Sirius Management, agreed: "The business class fare will be the first to go up as it is easier to load those fares," he said.

Of the airlines contacted by SM, British Airways and easyJet said their intention was to not increase fares. But easyJet branded the rules "probably the most flawed piece of European legislation in recent years".

The new rules have also been attacked by bodies including the International Air Transport Association (IATA) which has lodged a legal challenge.

An IATA spokesman told SM: "This is a bureaucratic solution that is too complex. Airlines can only increase their efficiencies so far before costs get passed on to the customer."

Tom Stone will be speaking at Business Travel Unpacked, a one-day Supply Management forum in London on 10 March. For more information visit www.supplymanagement.com/unpacked or call 020 7880 6249


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