IATA Warns EU261 Changes Will Raise Airline, Traveler Costs

The International Air Transport Association (IATA) is opposing the European Parliament’s recent proposals to modify EU261 passenger-rights rules, warning that the changes would increase costs for airlines and for the vast majority of travelers who would not benefit from them. The group argues that the proposals roll back reforms approved in June by European governments, which aligned compensation thresholds with operational realities and passenger preferences.

“Everyone knows there is no such thing as a free lunch. In the same way, there is no ‘free’ carry-on bag or ‘free’ compensation threshold. The new provisions operate as a ‘reverse Robin Hood,’ imposing more costs on the 99% of passengers who do not benefit,” stated Willie Walsh, Director General, IATA.

The European Council adopted reforms in June that extended compensation thresholds from three to four hours for short-haul flights and to six or nine hours (depending on the text referenced by institutions) for long-haul flights. IATA said these changes reduced the “perverse incentive” for airlines to cancel delayed flights and aligned with passengers’ stated preference to “arrive late rather than not arrive.”

IATA argues that the Parliament’s position seeks to eliminate these changes and add additional obligations, including mandatory free cabin baggage. The organization states there is no evidence that passengers demand such measures or that they are willing to pay the higher fares required to support them.

According to an IATA passenger survey conducted in May, 72% of respondents prefer a lower base fare and the option to pay for additional services when needed. IATA also cites Eurocontrol statistics indicating that fewer than 1% of flights are delayed more than three hours. “This means that 99% of passengers would pay for a compensation scheme that only benefits the remaining 1%,” the association said.

Walsh argued that members of the European Parliament are “interfering in commercial and operational matters they do not understand.” He added that “the best guarantee of customer service is choice and competition,” not additional regulatory burdens.

Beyond the compensation framework, IATA is linking the debate to a broader concern over Europe’s declining air-connectivity competitiveness. Research from IATA Economics shows average annual connectivity growth between 2014 and 2024 of 2.2% for France, 2.9% for the Netherlands and 0.4% for Germany. The association said this slowdown underscores the need for regulatory decisions that support long-term market strength.

IATA is calling for “less and smarter regulation” consistent with recommendations in last year’s Draghi report. The association urges governments not only to preserve the Council’s EU261 reform proposal but also to undertake broader measures to improve competitiveness, such as eliminating passenger taxes. IATA referenced Sweden’s decision to remove its tax in July and Germany’s stated intention to follow.