Montreal Convention Raises Baggage Compensation Limits: Should EU261 Increase Payout Limits for Flight Disruptions?
As of 28 December 2024, new, higher liability limits under the Montreal Convention will come into effect for international flights, covering compensation for delayed, damaged, or lost baggage, and bodily injury. The International Civil Aviation Organization (ICAO) announced the adjustments under the treaty’s five-year review mechanism.
While these new limits apply to international carriage and not to EU261 directly, they underscore the case for updating EU261’s compensation rules, which have not been significantly revised since 2004.
What is the Montreal Convention?
An international treaty, the Montreal Convention (MC99), went into effect in 2003. It was created to protect air passengers on international flights by setting certain compensation limits for baggage mishandling, injury, and cargo mishandling.
The treaty 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. The Montreal Convention’s liability limits are adjusted every 5 years to stay current with inflation rates.
What’s Changing
The new compensation limits are as follows:
- Death or injury: The max limit will rise to 151,880 SDRs (about £164,000 / €182,000).
- Flight delays: The limit will increase to 6,303 SDRs (around £6,800 / €7,560).
- Lost, damaged, or delayed baggage: You could claim up to 1,519 SDRs (about £1,640 / €1,820).
- Lost or damaged cargo: The limit goes up to 26 SDRs per kilogram (around £28 / €31 per kg).
What it Means for Air Passengers
These new compensation limits mean that if you need to claim compensation for a delayed, damaged, or lost bag or you sustain bodily harm during an international flight, 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 the need for EU261 compensation rates to be adjusted for inflation. To date, the rates have never been increased since the regulation was introduced in 2004. Passengers travelling within Europe and the UK can only get between £220-£520 (€250 to €600) for flight disruptions.
Anton Radchenko, CEO of AirAdvisor, argues that EU261 should adopt SDR-based compensation with regular increases like the Montreal Convention.
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
To Sum Up
The Montreal Convention’s decision to raise liability limits is a reminder that passenger rights frameworks must evolve with the times. While international travellers will soon benefit from higher compensation for baggage mishandling, passengers flying within Europe and the UK remain bound by EU261’s outdated payout limits. Unless regulators take action to align EU261 with today’s realities, airlines will continue to face little pressure to improve and passengers will keep receiving compensation that no longer reflects the real cost of disrupted travel.
22.10.2024
