IATA chief says EU doing 'very little' to address airlines' competitiveness

BRUSSELS, Nov 18 (Reuters) - The European Union has taken "very little action" to address airlines' competitiveness, International Air Transport Association Director General Willie Walsh said on Tuesday, in remarks criticising the bloc's passenger compensation policy.

European airlines have had numerous challenges in recent years from air traffic control strikes, especially in France, engine manufacturer issues and delays in new, fuel-efficient aircraft from Boeing. They also have to compete with foreign airlines that do not need to meet costly EU emission rules.

EU institutions are negotiating a reform of the bloc's 20-year-old passenger rights regulation, called EU261, which Walsh said was long outdated.

Walsh said the compensation scheme for flight delays punishes 99% of passengers as fewer than 1% of flights are delayed past the three-hour threshold.

'PERVERSE INCENTIVE' TO CANCEL DELAYED FLIGHTS

Member states agreed in June to extend the flight delay threshold to four hours from three for short-haul flights and six hours for long haul, subject to agreement with the European Parliament.

"This would reduce the perverse incentive for airlines to cancel delayed flights, and be consistent with passengers’ preference to arrive late rather than not at all," IATA said in a statement earlier on Tuesday. IATA had been calling for thresholds of five hours and nine hours respectively.

The European Parliament, however, wants to keep the existing thresholds and add the ability to bring a free cabin bag. The parliament, Commission and council are due to meet on Wednesday and in early December to continue negotiations.

Airlines have long pushed the European Commission to set up a common EU airspace above a certain level, saying this would prevent flights from being diverted or cancelled if air controllers in one member state were to go on strike. However, Walsh blamed a lack of political will to back the solution.

"There is no technological impediment to keeping that airspace open for aircraft that want to overfly France," he said at a conference hosted by IATA in Brussels.

"Airlines are willing to overfly with service provided by another unit, providing the clearance, so we don't have a safety or an operational impediment."

European airlines are under pressure to cut emissions under the bloc's emissions rules but new aircraft delivery delays and recent engine troubles have meant airlines are spending more on fuel, maintenance and sustainable aviation fuel.

Last month, IATA said the backlog reached a historic high of more than 17,000 aircraft last year, up from the average 13,000 yearly backlog between 2010 and 2019.

Walsh said the delays in delivery of new fuel-efficient planes and resolution of engine defects were expected to cost the industry about $11 billion this year. In October, IATA said extra inventory costs would account for about $1.4 billion as airlines hold onto extra spare parts to mitigate supply chain uncertainties, caused chiefly by U.S. tariffs.

This story originally appeared on Reuters.