THE REFORM OF REGULATION (EC) NO 261/2004: ANATOMY OF A FAILED REVOLUTION

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More than twenty years after the adoption of Regulation (EC) No 261/2004, the European Union, acting on a proposal from the European Commission, is preparing to redefine passenger rights in case of denied boarding, flight delay, or cancellation. The aim is to introduce a more balanced system of common rules, considering not only consumers’ positions—legitimate and deserving of protection—but also the difficulties faced by air carriers in providing assistance, information, and financial compensation.

The compromise reached by the EU Member States on 12 June 2026 is not yet the final text to be published in the Official Journal. Nevertheless, it represents the most significant political step in the reform process, particularly because of its surprisingly “conservative” approach when compared to the Commission’s original proposal.

But why did the Commission seek to revolutionize a system that had been consolidated for two decades? And why, conversely, did the Member States opt for a partial reversal of this innovative trend?

I. The CJEU’s “Creative Jurisprudence”: The Sturgeon and Wallentin-Hermann Judgments. A System Excessively Tilted in Favour of Passengers?

There is little doubt that, during the two decades separating the entry into force of Regulation 261/2004 from its proposed reform, the Court of Justice of the European Union (CJEU) has played a pivotal role in defining and solidifying the protections afforded to passengers.

Over the years, the European Court has issued numerous judgments intended to supplement—if not openly create—not only the interests worthy of protection, but also the actual levels of protection guaranteed.

In this context, practitioners will undoubtedly recall the Sturgeon judgment (Joined Cases C‑402/07 and C‑432/07), through which the Court held that passengers arriving at their destination with a delay of three hours or more must, for the purposes of financial compensation, be treated in the same manner as passengers whose flights have been cancelled.

By filling a regulatory gap inherent in the Regulation, the Court emphasized the principle of equal treatment and the Regulation’s objective of ensuring a high level of passenger protection, concluding that the inconvenience caused by a long delay is substantially equivalent to that resulting from a cancellation.

The Court subsequently intervened with regard to carriers’ exemptions from liability. In Wallentin-Hermann (Case C‑549/07), the CJEU adopted a restrictive interpretation of the concept of “extraordinary circumstances”, which, pursuant to Article 5(3) of the Regulation, exempt carriers from the obligation to pay compensation.

The Court clarified that such circumstances must consist of events which, by their nature or origin, are not inherent in the normal exercise of an air carrier’s activity and are beyond its actual control.

While the gradual expansion of passenger protections undoubtedly deserves a positive assessment, it has also opened a veritable “Pandora’s box”, the effects of which continue to expand, encouraging the mass filing of claims before courts across the various jurisdictions of the Union.

This phenomenon is reflected in the proliferation of so-called claim management companies (CMCs), specialized firms established for the purpose of handling claims—both out of court and through litigation—aimed at obtaining financial compensation and enforcing other passenger rights.

Today, these companies represent the primary point of reference for passengers seeking recognition of their rights and, consequently, the principal counterparties of airlines in disputes.

But at what cost?

II. The Counterbalance wanted by the EU Commission: A More Airline-Friendly Approach?

At this stage, it is necessary to understand the revisions originally proposed by the Commission.

Regarding compensation claims arising from long flight delays, the first significant novelty consisted in the introduction of new eligibility thresholds based on two parameters: the orthodromic distance of the flight and the minimum delay threshold.

But in what terms?

As regards the first parameter—the flight distance—the EU legislator intended to distinguish between short- and medium-haul flights of up to 3,500 km and long-haul flights exceeding that threshold.

As regards the second parameter—the minimum delay threshold—the Commission proposed that compensation should only apply to delays of at least four hours for short- and medium-haul flights, and at least six hours for long-haul flights.

Accordingly, passengers suffering delays of at least four hours on short- or medium-haul flights would have been entitled to fixed compensation of €300, while passengers experiencing delays of at least six hours on long-haul flights would have received €500.

These choices clearly reflected a broader attempt to rationalize the protection system by calibrating the intensity of protection according to the degree of inconvenience potentially suffered by passengers.

A practical consequence of this recalibration would have been a narrowing of the Regulation’s scope of application, leading to a concrete and significant reduction in litigation, particularly in jurisdictions such as Italy, where most disputes concern disruptions affecting short-haul flights.

From this perspective, the Commission’s originally intended deflationary effect is evident. The objective was clearly to curb the increasingly widespread phenomenon of standardized compensation claims and their industrialized management by specialized operators.

At the same time, while access to compensation would have been significantly restricted, passengers’ rights to reimbursement in cases of inadequate assistance would have been strengthened.

The Commission explicitly stated that, in cases of delay or cancellation, passengers should always be entitled to assistance, including refreshments, meals, and accommodation. If such assistance was not provided, passengers would have been entitled to make their own arrangements and subsequently seek reimbursement.

In cases of tarmac delays, passengers would have been entitled to a minimum level of assistance and the right to disembark after three hours.

Similarly, greater importance was attributed to reimbursement rights in situations where rerouting was not adequately provided.

The Commission expressly reaffirmed passengers’ right to be rerouted “at the earliest opportunity”. Specifically, if an airline failed to offer suitable rerouting within three hours of the disruption (whether caused by delay or cancellation), passengers would have been entitled to arrange alternative transport independently and claim reimbursement of up to 400% of the original ticket price.

In short, while significantly reducing the number of cases eligible for compensation under Article 7 of the Regulation, the Commission intended to preserve—or even expand—the remedies available under compensatory liability principles, according to a system of checks and balances designed to reconcile consumer interests with those of economic operators.

Within this framework, the Commission’s proposal formed part of a broader attempt to rebalance the system. While reducing the scope of automatic compensation, it sought to enhance the role of compensatory remedies and, above all, the carrier’s protective obligations as the primary means of ensuring effective passenger protection.

The resulting model would have been less “flat-rate” and more closely aligned with the actual harm suffered, shifting the focus from compensation as a standardized entitlement toward responsibility and proper management of service disruptions.

Yet, as noted at the outset, the Member States ultimately opted for a substantial U-turn, preserving much of the existing framework.

So what changed following the agreement reached on 12 June?

III. An Interrupted Revolution: How Necessary Is the Status Quo?

Looking at the foregoing analysis, the reform proposed by the European Commission would, in substantive terms, have amounted to a genuine hollowing-out of Regulation (EC) No 261/2004, altering its original scope and significantly affecting the effectiveness of passenger protections.

In particular, the proposed intervention focused on two fundamental pillars of the system: the increase in the minimum delay threshold necessary to trigger compensation and the recalibration of flight-distance categories. Formally justified as a means of rebalancing relationships between airlines and passengers, these measures would in practice have considerably restricted the Regulation’s application.

Regarding the first aspect, raising the delay thresholds beyond the three-hour benchmark established by the Court of Justice would have excluded a vast category of disruptions from compensation rights.

Many delays, despite significantly affecting passengers’ legitimate expectations regarding punctuality and reliability, would no longer have met the minimum threshold required to trigger compensation.

As a result, both the compensatory and deterrent functions of the Regulation would have been substantially weakened.

Likewise, the redefinition of flight-distance bands would have had a significant impact on the operation of the system. More restrictive criteria and the consequent redistribution of routes among distance categories would have reduced either the number of cases giving rise to compensation or the amount payable.

This effect would have been particularly significant for short- and medium-haul routes, which represent the majority of flights operated within the European Union.

Against this backdrop, it becomes evident that the proposed parameters would have rendered the Regulation practically inapplicable in a large number of real-life scenarios.

Domestic and intra-EU routes—typically characterized by relatively short distances and delays often falling below the proposed thresholds—would largely have remained outside the scope of effective protection.

Consequently, rather than reflecting a nostalgic attachment to the past, the decision to preserve the three-hour delay threshold and the corresponding compensation range of €250 to €600, determined by the unchanged flight-distance categories, should instead be interpreted as an attempt to preserve one of the world’s most effective passenger-protection systems and prevent its substantive erosion.

IV. What Remains of the Proposed “Revolution”?

From the Commission’s original proposal, what remains—consistent with its protective rationale—is the enhanced focus on airlines’ information and assistance obligations.

Air carriers will be required to provide passengers with clear instructions on how to submit compensation claims.

The most ambitious proposal, which would have obliged airlines automatically to send passengers direct links or pre-filled claim forms, was ultimately rejected. Nevertheless, the principle remains clear: passengers should no longer be left alone to search online for information about procedures, points of contact, and claim forms.

Similarly, the intention to codify an exhaustive list of “extraordinary circumstances” remains unchanged. These are the events which, if proven by the carrier, exclude from the outset any entitlement to financial compensation.

Largely reproducing the examples already contained in Recital 14 of the Regulation, the Commission intended to classify adverse weather conditions, political instability, security risks, and air traffic restrictions as extraordinary circumstances.

In an effort to limit the expansive interpretations developed through CJEU case law, this list was progressively enlarged to include strikes unrelated to the carrier’s own workforce or affecting an entire sector, crew unavailability due to illness, and unforeseeable technical failures, such as those resulting from bird strikes during take-off or landing.

Naturally, it will remain the airline’s responsibility to provide rigorous, objective, and documented proof both of the existence of the extraordinary circumstance invoked and of its causal connection with the disruption concerned.

The airline will not be able to rely on generic assertions. Rather, it must demonstrate, first, that the event fell outside the ordinary exercise of its business activity and beyond its actual control and, second, that the disruption could not have been avoided despite the adoption of all reasonable measures required under a standard of professional diligence.

Only after such a rigorous assessment may the carrier be exempted from the obligation to pay compensation. Otherwise, passengers’ rights under EU law will remain fully intact.

V. Conclusions: Nothing New Under the Sun

In light of the foregoing considerations, one can hardly avoid criticizing the European Union’s somewhat schizophrenic approach.

On the one hand, it opened the door to a far-reaching reform of passenger protection in air transport; on the other, it ultimately retreated from that ambition, perhaps deterred by the costs such a revolution would have entailed: a significant reduction in passenger protections and the practical inapplicability of many of them.

The attempt to rebalance airlines’ obligations against passengers’ rights has effectively been abandoned in favor of a system which, although generally effective, remains largely blind to its own distortions—such as the standardization of compensation claims, their industrial-scale management, and a burden of proof often heavily weighted against air carriers.

These shortcomings are only partially mitigated by easier access to complaint procedures and the likely reduction of the intermediary role traditionally played by claim management companies.

Ultimately, while the Commission’s effort deserves recognition, the conclusion that emerges from the agreement reached on 12 June 2026 is simple: there is, in the end, nothing truly new under the sun.