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Higher Compensation for International Flight Delays and Lost Bags: A Call for EU261 Adjustments

Higher Compensation for International Flight Delays and Lost Bags: A Call for EU261 Adjustments
2 minutes read

Beginning December 28, 2024, air passengers could get more compensation for flight delays, lost luggage, and injuries on international flights. The International Civil Aviation Organization (ICAO) has just announced that they have increased compensation limits for the Montreal Convention, a move highlighting the need for similar adjustments in EU261 regulations, which have remained stagnant for two decades.

What is the Montreal Convention?

An international treaty, the Montreal Convention (MC99), went into effect in 2003. It was created to better protect air passengers on international flights by setting certain compensation limits for baggage mishandling, injury, cargo, and flight delays and cancellations.

Rather than setting a liability limit in a particular currency, the Montreal Convention uses Special Drawing Rights (SDRs) which are international reserve assets created by the International Monetary Fund (IMF) whose value is based on a collection of major global currencies. As of October 2024, 1 SDR is equal to about $1.37 USD.

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Unlike Regulation EU261/2004, the Montreal Convention adjusts its liability limits every 5 years to keep up with inflation rates.

What’s Changing

The new compensation limits are as follows:

  1. Death or injury: The max limit will rise to 151,880 SDRs (about $202,500 USD).
  2. Flight delays: The limit will increase to 6,303 SDRs (around $8,630 USD).
  3. Lost, damaged, or delayed baggage: You could claim up to 1,519 SDRs (about $2,080 USD).
  4. Lost or damaged cargo: The limit goes up to 26 SDRs per kilogram (around $35 USD per kg).

MC1900 New limits

What it Means for Air Passengers

These new compensation limits mean that if your international flight is delayed, your bag is lost, damaged, or delayed, or you sustain bodily harm, you could get more money back from the airline than ever before. 

The Need for EU261 to Follow Suit

While these new limits have no direct impact on EU261 regulations, they underscore a glaring issue: EU261 compensation rates have not been adjusted for inflation since the regulation was introduced in 2004. This means that passengers traveling within Europe still receive roughly $250-$650 for delays—amounts that have lost substantial value over the last 20 years.

Anton Radchenko, CEO of AirAdvisor, argues that EU261 should adopt SDR-based compensation with regular increases like the Montreal Convention

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EU261 compensation has been stagnant for two decades, and inflation has eroded its value. If EU regulators don't adjust these rates, they will fail to incentivize airlines or provide meaningful compensation to passengers. Right now, passengers may not even bother claiming compensation for amounts as low as €250.

How Compensation Rates Have Changed Since 2003

Despite fluctuations, the overall increase in compensation limits under the Montreal Convention (which uses SDR) has seen adjustments for inflation every five years, leading to significant increases over time. For instance:

  • In 2004, the delay compensation limit was 4,150 SDR.
  • By 2024, the limit has increased to 6,303 SDR, reflecting a cumulative increase of about 52% over 20 years.

Case

2003

2009

2019

2024

Delays/Cancellations

4,150 SDR

($5,685.50*)

4,694 SDR

($6,430.78) 

5,346 SDR  

($7,324.02) 

6,303 SDR

($8,635.11) 

Baggage Mishandling

1,000 SDR

($1,370.00) 

1,131 SDR

($1,549.47)

1,288 SDR

($1,764.56)

1,519 SDR

($2,081.03)

* If 1 SDR = $1.37

22.10.2024

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