New EU261: passengers won, airlines would already be footing the bill

After thirteen years of debate, one of the most important regulatory reforms in European aviation has been born

In this article, we not only summarize the most important changes of the new EU261 and the reactions of airlines, but also make key EU documents, industry announcements and executive statements directly available. This way, the reader can check for themselves exactly what the reform contains and how the relevant actors argue for or against it.

The three-hour compensation threshold will remain, rebooking rules will be tightened, prices that include hand luggage will need to be made more transparent, and airlines will be forced to speed up their processes. IATA talks about reform in name only, A4E talks about a missed opportunity, Ryanair talks about “bureaucratic clutter,” and regional airlines talk about connections being jeopardized. But will passengers really pay the price for their stronger rights?

The Council of the European Union gave its final approval to the amendment of the system governing air passenger rights on 13 July 2026. This concluded a thirteen-year legislative process that began in 2013.

However, the regulation is not yet applicable. According to the Council's communication of final approval, the new system will become applicable twelve months and twenty days after its publication in the Official Journal of the European Union. The exact date will therefore depend on the date of publication.

Airlines campaigned intensively against certain elements of the reform even before the final agreement. However, their reactions are a mix of real operational problems, protection of the business model, and classic industry lobbying.

The most important battle: the three-hour threshold remains

One of the airlines' main goals was to increase the delay limit for compensation from three hours to longer. - This was not achieved.

According to the final text of the law, passengers are still entitled to compensation if they arrive at their final destination with a delay of more than three hours and the airline cannot prove extraordinary circumstances, a direct causal link, and that all reasonable measures were taken.

The compensation amounts will also remain:

• Up to 1,500 kilometers 250 euros;

• EUR 400 for intra-EU journeys of more than 1,500 kilometres and for other journeys between 1,500 and 3,500 kilometres;

• for all other, longer trips, 600 euros.

  
  

The amount of €600 can be reduced by 50 percent in certain cases if the arrival delay does not exceed four hours.

This is a political defeat for airlines. The Council's previous position envisaged longer delay thresholds, but the European Parliament insisted on maintaining the three-hour limit.

IATA: “reform in name only”

The International Air Transport Association, IATA, in its official response published on June 15, claimed that the EU had missed an opportunity to fix the fundamental problems in the system.

A concise assessment of the organization:

"It's a reform in name only."

In other words: this is reform in name only.

According to IATA, the EU261 currently has an annual regulatory burden of around €8 billion, while the regulation has not significantly improved delays and cancellations. The organisation also points out that a significant proportion of disruptions are linked to shortcomings in European air traffic management.

IATA argues that a longer delay threshold would have given airlines more time to provide replacement aircraft, spare crew or alternative travel options. They argue that passengers' primary goal is not compensation but getting to their destination.

There is a reason for this. At a smaller base, where there are no spare aircraft or standby personnel, a major technical problem may not necessarily be resolved within three hours. However, the conclusion is debatable. Raising the threshold in itself would not create more spare aircraft, solve the fragmentation of European airspace, or increase air traffic control capacity. It would only leave passengers with the time and financial risk of disruption for a longer period of time.

However, in a later analysis, Thomas Reynaert, IATA's head of external relations, called it a positive that airports should also take part in emergency tasks in the event of mass disruption. IATA viewed this as a first, modest step towards sharing industry responsibility.

A4E: the reform does not address the real causes of delays

Airlines for Europe – the largest lobbying organization for European airlines – also called the agreement a missed opportunity.

In 2025, A4E members carried more than 798 million passengers, operated more than 3,800 aircraft, and served more than 2,700 destinations in Europe and worldwide.

According to the organization's official statement , the agreement:

"a missed opportunity for a balanced reform".

In other words, it is a missed opportunity to create a balanced reform.

According to A4E, maintaining the current delay and compensation rules will not reduce the number of delays and cancellations, many of which are not under the direct control of airlines.

The organization also objects to the fact that the price including larger hand luggage will have to be displayed by default. In its opinion, this artificially promotes higher prices and weakens the ability of passengers to pay only for the services they actually use.

However, A4E's most important argument is not about the amount of compensation. According to the organization, the most important thing for a passenger is to arrive at their destination on time. It is difficult to argue with them on this. The question is rather why one should have to choose between reaching their destination and adequate passenger protection. The new regulation is precisely by tightening the rerouting obligation to ensure that the airline does not just pay money, but also provides a real solution.

After three hours, the passenger can take over the booking themselves.

One of the most significant changes is the clarification of the rules for transfer.

The airline must get the passenger to their final destination at the earliest possible time. If necessary, it must offer another airline, another airport or another mode of transport, such as rail or road.

If the airline does not offer suitable re-routing under comparable conditions within three hours, the passenger may arrange their own onward travel. Necessary, reasonable and proportionate costs shall be reimbursed up to a maximum of four times the original ticket price and any intermediary fees.

This could indeed pose a serious operational and financial risk to airlines.

At the same time, it could end a long-standing, anti-passenger practice: when a passenger on a cancelled flight is offered only the company's own flight, perhaps one or two days later, while another airline still has space for the same day.

Ryanair: "bureaucratic mess"

The loudest reaction this time came from Ryanair.

In a statement from the airline on June 16, Michael O'Leary described the new regulations as follows:

"more bureaucratic bunkum".

In other words, another bureaucratic mess.

Ryanair says the EU is forcing airlines to show higher prices that include a second piece of hand luggage first, while it claims that more than half of its passengers choose the cheaper fare without a larger piece of hand luggage.

O'Leary also claimed that air traffic control is responsible for more than 90 percent of delays in Europe. However, this should be treated as Ryanair's own industry claim, not as independently verified fact.

The tone of the announcement is spectacular, as befits Ryanair. However, its content is only partially accurate.

Not all rolling hand luggage will be automatically free

The hand luggage part of the reform has been interpreted in many places as meaning that the EU will make all rolling hand luggage free. The final rule is more nuanced than that.

Each passenger can carry one personal item free of charge, up to 40 × 30 × 15 centimeters, or one that fits under the seat in front of them.

Larger carry-on bags, such as classic rolling cabin bags, are not automatically free. However, airlines must display a price that includes one piece of carry-on bag by default before you start the booking process.

This means that they can still offer cheaper fares to those who voluntarily agree to travel without larger hand luggage. In other words, the EU is not abolishing hand luggage fees, but is reversing the logic of price communication.

The more easily comparable price that includes larger hand luggage will be prioritized, while the fare without luggage may remain as a cheaper alternative.

Ryanair is therefore correct that the first price displayed may be higher than the current lowest fare. However, this does not mean that the airline cannot then offer the cheaper ticket without a larger hand luggage.

This is primarily not a free baggage reform, but a price transparency reform.

Cabin capacity is a real problem

However, the airlines' operational arguments should not be dismissed.

The overhead bins of a densely-seated Airbus A320 or Boeing 737 may not be able to accommodate all passengers’ rolling carry-on bags. If too many cabin bags arrive at the boarding gate, some of them must be tagged at the gate and placed in the hold. This can slow down boarding, increase turnaround times, and create further conflicts between passengers, the airline, and the ground handler.

The regulation responds to this by allowing the airline to place hand luggage in the hold for safety, capacity or aircraft type change reasons, but not charge an additional fee. The rule therefore improves price transparency and protects passengers from unexpected costs at the gate, but does not in itself create more space on board the aircraft.

Regional airlines' fears are more serious

Large low-cost carriers primarily protect their tariff freedom and additional revenues. The problem for smaller regional airlines is more complex.

According to the European Regions Airline Association, ERA, fixed compensation amounts do not take into account the operational and economic specificities of regional flights.

On a short, low-fare route, the €250 compensation could be several times the ticket price. Companies with smaller fleets have fewer spare aircraft, fewer rebooking options, and often a single technical problem can affect the entire day's schedule.

Montserrat Barriga, Director General of ERA, assessed the agreement as follows:

"There are no winners with this deal."

In other words, there are no winners in this agreement.

According to the ERA, it is not possible to apply the obligations imposed on long-haul airlines with large fleets without modification to regional companies with a single base, a few aircraft and few alternative routes.

In May 2026, the heads of 35 European regional airlines wrote a joint letter calling for the reform to be stopped and a new impact assessment to be carried out. According to the signatories, the uniform regulation ignores the specificities of serving low-traffic routes, islands and peripheral areas.

However, it cannot yet be stated as a proven fact that the reform will lead to the mass cancellation of regional flights. The ERA warning is based on existing business risks, but the actual impact on routes will only be measurable after the new system is implemented.

What did the airlines get in return?

The reform does not only meet the demands of passengers.

A more detailed, but not exhaustive, list of extraordinary circumstances could provide greater legal certainty. The airline may be exempt from compensation if it can prove that the disruption was caused by extraordinary circumstances, there was a direct causal link, and the problem could not have been avoided despite all reasonable measures.

The new regulation also strengthens the airline's right to later attempt to recover the costs of payments or services provided to the passenger from the responsible airport or other third party.

IATA also sees it as positive that major airports are required to prepare contingency plans for mass disruptions. This could at least partially shift the system away from sole responsibility focused on airlines towards shared responsibility across the entire aviation ecosystem.

From the passenger's point of view, it is still logical to first contact the airline: it is with them that the transport contract is concluded. From an industry perspective, however, it is a legitimate expectation that the airline can later effectively pass on the proven costs to the party that actually caused the disruption.

The new system is not just about compensation

One of the biggest challenges for airlines will likely not be the €250-600 compensation itself, but rather the transformation of the entire customer management, IT and disruption management system.

Under the new rules:

• the passenger potentially entitled to compensation must be informed electronically within 96 hours of the end of the journey;

• the passenger will have nine months to file a claim for compensation;

• the airline must immediately confirm receipt of the claim;

• You must pay within 30 days or provide detailed reasons for the refusal;

• compensation must, as a general rule, be paid by electronic bank transfer;

• the passenger cannot be excluded from the return flight because he/she did not use the outbound leg;

• name spellings or administrative name changes can be corrected at least once free of charge if the request is submitted at least 48 hours before departure;

• A passenger who has already checked in cannot be charged a fee for printing a boarding pass;

• A child and their companion, as well as passengers with certain special needs and their companions, must be provided with adjacent seats free of charge.

All of this requires new automated notifications, faster administration, more accurate documentation, and more uniform decision-making mechanisms than currently available.

Airlines therefore have to reckon not only with higher direct costs, but also with significant IT and organizational transitions.

What does all this have to do with the hotel industry?

More than you might think. In the event of a flight cancellation or long delay, the airline must still provide accommodation if a one-night layover is necessary. In addition to accommodation, it must also provide transportation to and from the airport and hotel.

If the airline fails to meet this obligation, the passenger may book accommodation themselves and request reimbursement of necessary, reasonable and proportionate costs.

In exceptional circumstances, the airline may limit hotel accommodation to a maximum of three nights. However, this restriction does not apply to passengers with certain special needs and their companions.

For airport hotels, transfer providers and larger city hotels, disruption contracts with airlines, ground handlers and airports may therefore become more valuable.

However, it is not enough to reserve a few rooms. In the event of mass flight cancellations, it may be necessary to:

• for immediate group room reservations, even for overnight stays;

• for fast and flexible transfers;

• for late-night or special meals;

• multilingual passenger information;

• for quick authorization checks;

• accurate and preferably automated invoicing;

• for real-time communication between the airline, ground handler, airport and hotel.

The mobility chain does not end at the plane door. During a flight disruption, the hotel becomes as much a part of the passenger experience as the check-in counter, the call center or the rebooking system. The perception of an airline is often determined not by the cancellation itself, but by the organization or disorganization of the few hours that follow.

Will the passengers really pay for it?

One of the most frequently repeated claims by airlines is that the additional costs of regulation will ultimately be paid by passengers in the form of higher ticket prices.

Some costs may indeed be reflected in prices. In particular, fare adjustments are expected for companies whose business models rely heavily on baggage, seat and other ancillary revenues. However, this does not automatically lead to a general and uniform increase in ticket prices on all routes.

Airline prices are determined by demand, competition, fuel prices, airport charges, taxes, capacity, fleet costs and network strategy. An airline cannot raise prices indefinitely on a route where it has several strong competitors.

It is more likely that companies will restructure their tariff families, repackage their services, and try to recover some of the lost revenue in other additional fees.

The statement "the passenger pays for everything" is therefore partly an economic reality and partly a negotiating and communication tool.

Libra

The new EU261 is not a revolution, but it is not a mere nominal amendment either.

It will not solve the problems of European air traffic control, create spare aircraft, or eliminate the shortage of capacity during peak summer periods, but it will make rebooking clearer, force airlines to handle their operations more quickly, improve price comparability, and may eliminate some explicitly anti-passenger practices.

IATA, A4E and regional airlines point to several real operational problems. There is also a business logic behind Ryanair's communication. However, the statement that strengthening passenger rights in itself will destroy the competitiveness of European aviation is too convenient an explanation.

The competitiveness problems of European aviation run much deeper than this: fragmented airspace, lack of air traffic control capacity, high taxes and fees, airport bottlenecks, expensive fuel, late aircraft deliveries and often overstretched schedules.

These should not be resolved by weakening passengers' rights to compensation.

Because the passenger's primary goal is really not 250 or 600 euros, but for the airline to take them to where they bought a ticket - and if that fails, they shouldn't leave them alone with the problem.

The most important documents and statements

• Communication from the Council of the European Union on final approval – 13 July 2026.

• The adopted legal text - PE-CONS 39/26

• Political agreement between the Council and the European Parliament - 15 June 2026.

• Council summary of new air passenger rights

• IATA: EU261 Reform Misses the Mark on Delays and Competitiveness

• IATA: The Good, the Bad, and the Ugly of European Air Passenger Rights Reform

• A4E: Passenger rights reform is also a missed opportunity

• Ryanair's official response

• ERA's reaction to the final agreement

• Joint call from 35 regional airline leaders