crowd-in-airport

Airlines Owe Passengers Over 3 Billion Dollars in Compensation (and Counting)

Passengers bumped on overbooked flights has been in the news ALOT recently.

Many flyers on EU airlines (or from EU countries) are becoming privy to the fact they could be eligible to claim compensation for delayed flight in Europe. Airhelp, a company that helps passengers claim compensation from airlines, advises delays over 3 hours are typically eligible for compensation.

If you live in the UK you’ll be aware of the huge liability banks have had for PPI payouts in the last 10 years. With many airlines operating on the brink of bankruptcy according to some sources; how much are airlines potentially liable for in compensation payouts?

Methodology

Airhelp, a company that helps passengers claim compensation for delayed flights, provided me with a dataset of airports around the world, number of delayed flights (and seats) eligible for compensation, and a calculated estimate of what the total potential liability was for each airport for compensation during 2016 (based on regulation EC261 which covers delayed, cancelled and overbooked flights). Note, compensation is paid by airlines, not airports. Therefore, this post highlights the airports with the highest number of delays, over-bookings, etc, but is not split out to consider individual airlines.

Whilst the dataset covers a large number of airports around the world (5000), only a subset of airports have data for delayed eligibly (574). This is for 2 reasons; 1) compensation rules differ around the world (see EU vs. US, for example) therefore it is difficult to produce accurate estimates for each geography. 2) Airhelphas a commercial interest in the EU market.

Airhelp provided monetary data in Euro’s (EUR). To keep currency consistency with my other posts on this blog I have converted all figures to US Dollars (USD) using the exchange rate of 1 EUR = 1.09 USD (correct 30th April 2017 via xe.com).

Additional datasets used were from the FAA (US) and CAA (UK) for total aircraft movements at each airport (to calculate the percentage of delayed flights within the US and UK). This data did not differentiate between arriving and departing flights (only departing flights are considered for compensation eligibility), I therefore assumed 50% of operation were departures (roughly in line with LHR figures).

Results

Spread of liability by airport

Flight-delay-compensation-liability-by-airport-2016

Download chart.

The majority of airports were liable for less than 10 million in compensation during 2016 (241 airports), though 61 airports were liable for more than this.

241 airports were liable for more than 1 million USD, and 455 liable for over 100K USD, and 566 liable for over 10K USD. Only 9 were liable for less, with VST Stockholm Vasteras Apt bottom of the list with a liability to 14 passengers totalling $3815 USD (avg. $272.50 USD each).

The compensation liability for all airports considered (574) is 3 billion USD ($3,001,339,552.25 USD).

Top 10 airports by liability

rank liability airport code seats eligible for liability liability USD 2016 30Apr17 Seats per flight eligible for liability Avg. Compensation per seat USD 2016 30Apr17
1 LHR 544,343 265,998,150 167 488
2 CDG 370,152 168,216,158 157 455
3 FRA 284,619 118,030,459 143 414
4 MAD 256,543 98,339,909 144 384
5 AMS 250,153 95,679,110 121 383
6 LGW 239,801 87,262,730 143 364
7 JFK 120,174 78,582,024 192 654
8 MUC 235,045 78,321,378 111 334
9 CPH 200,177 70,264,152 121 351
10 BCN 187,368 61,357,899 147 327

Full list.

The top 3 airports (by liability) accounted for 0.5 billion USD of total liability for ll airports ($552,244,766.75 USD). The top 10 airports accounted for 1.1 billion USD of total liability ($1,122,051,967.75 USD), or one-third of total liability.

Airlines who flew out of Heathrow LHR during 2016 were liable for passenger compensation claims to the tune of $0.25 billion USD ($265,998,150.00 USD) — unsurprising given capacity issues at the airport.

Spread of delays

If you booked a flight that departed from Europe or was with a European airline, you might have rights under EU law if your flight is delayed to claim the following compensation:

Delay to your arrival Flight distance Compensation USD 30Apr17
3 hours or more Less than 1,500km 272.50
Between 1,500km and 3,500km 436.00
More than 1,500km and within the EU 436.00
3-4 hours More than 3,500km, between an EU and non-EU airport 327.00
4 hours or more More than 3,500km, between an EU and non-EU airport 654.00

via: Citizens Advice (UK)

Compensation-liability-USD-per-seat-2016

Download chart.

Average compensation per seat groups at both end of the spectrum, 175 airports owe an average of $270 – $300 USD per seat (lowest claim possible is $272.50 USD), 174 owe an average of $630 – $660 USD (max claim possible is $654 USD). Note, values are per seat (not passenger) this is because a passenger can be delayed multiple times per year and thus eligible for more than one compensation claim.

Worst performing airports for on-time departures (US /  UK only)

rank liability airport code departures est flights eligible for liability % flights liable seats eligible for liability liability USD 2016 30Apr17
1 LCY 42,585 953 2.24% 55,838 15,336,355
2 LHR 237,482 3262 1.37% 544,343 265,998,150
3 LGW 140,333 1677 1.20% 239,801 87,262,730
4 ABZ 48,078 541 1.13% 23,151 6,319,139
5 SOU 21,412 224 1.05% 8,018 2,205,343
6 EDI 61,110 609 1.00% 48,585 14,382,632
7 GLA 49,064 459 0.94% 24,779 7,058,731
8 BHX 56,592 506 0.89% 41,785 12,705,858
9 LBA 22,152 183 0.83% 7,727 2,348,432
10 NCL 28,132 231 0.82% 11,767 3,738,673

Full list.

UK airports make up all 10 of the worst airports for departure operations by compensation liability. 2.24% of flights taking of from LCY London City Airport were liable for compensation claims from passengers.

Note, this dataset only contains US and UK airports for comparison.

Improvements

There are two clear improvements that can be made to allow for a more comprehensive analysis.

Firstly, having access to addition compensation data for more airports with local compensation rules (vs. just EU) could provide interesting analysis into best regions for compensation, worst regions for liability, etc.

Secondly, accurate operations departure data for all major worldwide airports would improve calculations. Due to the datasets used, the above workings only consider some US airports and UK airports, whilst also use estimated commercial departure figures (departures=total commercial operations / 2).

tl;dr

Airlines who flew out of Heathrow LHR during 2016 were liable for passenger compensation claims to the tune of $0.25 billion USD ($265,998,150.00 USD). The compensation liability for all airports considered (574) is 3 billion USD ($3,001,339,552.25 USD).

Footnotes

  1. Data sources + data used in this post.

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