Why new compensation rules for some delayed flights might not be as good as they sound

If you're one of the Americans who has been able to claim compensation for delayed or canceled flights in Europe, this story of the U.K. version may interest you.

More airline passengers than ever before could get compensation if their domestic flights in the United Kingdom are delayed, the government has said. That could include Americans traveling inside the U.K.

The U.K. Department for Transport is proposing to offer travelers the chance to claim refunds on flights inside the U.K. that are late by as little as one hour rather than three hours, as it currently stands, under the EU261 rules.

For more TPG news delivered each morning to your inbox, sign up for TPG's daily newsletter.

Related: How to handle a flight delay

What could this mean for delayed passengers?

In essence, more people could get their money back, or at least some of it, for relatively minor delays. It also means, however, that many of those who are refunded for much longer delays will get significantly less under the new rules.

Here's why:

If enacted, the new legislation would scrap the UK261 lump-sum approach — based on the European Union's similar EU261 rule — that offers passengers on flights shorter than 932 miles (1,500 km) a minimum of $296 (220 pounds) for delays of more than two hours. Then, for flights of between 932 miles (1,500 km) and 2,175 miles (3,500 km) that are more than three hours late, it offers $444 (330 pounds). And it's $672 (500 pounds) for four-hour holdups to flights more than 2,175 miles (3,500 km).

Related: The best travel insurance policies and providers

But crucially, there is nothing in the UK261 rule that covers shorter delays.

However, if the Department for Transport’s plan is approved, here’s what you could get instead:

• For delays of between one and two hours: A 25% refund of the ticket price.
• For delays of two to three hours: A 50% refund of the ticket price.
• A delay of more than three hours: A 100% refund of the ticket price.

Here’s the snag: Unlike with the previous system, such compensation would theoretically not cover knock-on losses incurred by a delayed flight, like missed trains, late check-in fees or plans canceled as a result.

Related: When to buy travel insurance vs. when to rely on credit card protections

In other words, if a flight from London to Belfast, Northern Ireland, worth $40 (30 pounds) is delayed by three hours, you can currently claim up to $296 (220 pounds) in compensation. Under the new rules, however, you could only claim a maximum of $40 (30 pounds), which would be $255 (190 pounds) less than under the current legislation.

Why is the government proposing changes to the current UK261 legislation?

Budget airlines have long argued that the current levels of compensation often outstrip the fare, and they often refuse compensation for delays that are out of their control, like bad weather or security alerts.

So, in a bid to balance things, the U.K. Department for Transport wants to take an approach that aligns compensation with the cost of travel.

Under the new proposals, U.K. airlines will also be obliged to sign up to an alternative dispute resolution scheme, which allows people to escalate claims they feel have not been settled without having to go to court. Currently, membership is voluntary. Ryanair quit the scheme in 2019.

“People deserve a service that puts passengers first when things go wrong, so today I’ve launched proposals which aim to bolster airline consumer protections and rights,” said Transport Secretary Grant Shapps. “We’re making the most of our Brexit dividend with our new freedoms outside of the EU, and this review will help build a trustworthy, reputable sector.”

Also on the table are powers that will allow the Civil Aviation Authority to fine airlines which breach rules.

CAA chief executive Richard Moriarty said the consultation is a "clear indication of the need to enhance our enforcement powers and bring us in line with other regulators."

He added: "The proposals will improve passenger rights and equip the Civil Aviation Authority with the appropriate tools to act swiftly and effectively for the benefit of consumers."

Rocio Concha, director of policy and advocacy at consumer group Which?, said trust in travel firms “plummeted” when the coronavirus pandemic began as some airlines “ignored their legal obligations and refused to pay refunds for canceled flights.”

She went on: “This consultation is a welcome first step that must improve and strengthen consumer rights and protections so that complaints are dealt with fairly and promptly, and that passengers receive the money they are due quickly and without unnecessary hassle.”

How common are flight delays in the UK?

In 2020, 17.4% of flights out of London's Heathrow Airport were delayed, according to Statista. Meanwhile, across all U.K. airports that year, Aer Lingus was the most punctual, with 93.8% of flights arriving on time. The Irish carrier was followed by Blue Islands (95.2%), Ryanair (93.6%) and British Airways (92.1%).

Related: What causes summer flight delays?

Meanwhile, in 2019, figures from the Civil Aviation Authority revealed London Stansted to be the worst airport for delays, with departures at the U.K's fourth-busiest airport being 25 minutes late on average.

In joint second were Birmingham and London Luton, where flights left 19 minutes late on average. George Best Belfast City Airport was the best performer with average delays of just eight minutes.

Bottom line

In short, whether it is good news or bad news depends entirely on your circumstances.

On the one hand, not only will it be easier to claim compensation if your flight is delayed, you’re much more likely to get it for even a minor disruption. Previously you wouldn't have been covered for this. But if you’re the type of person who only books budget flights, the compensation you will get may not even come close to the costs you’ll incur as a result of a delayed flight, such as canceled plans or accommodation changes.