Regulation (EC) No 261/2004 (EU261) requires airlines to pay compensation of €250 to €600 per passenger (depending on the flight distance) for delays of at least three hours, cancellations, or denied boarding from overbooking.

In scenarios where multiple flights are impacted the financial exposures to a single airline, and the industry as a whole, can be significant. Recent commentary suggests that EU261 is having a substantially negative effect on airline finances and may even potentially undermine safety standards. While insurance cover is not currently provided for EU261 claims, the market should be concerned about the significant impact it is having on its insureds.

In this LMA lecture James Jordan, Senior Associate and Chris Birks Associate of Law firm HFW will:

• present an overview of EU261 and when it applies
• consider the financial exposures to the airline industry
• provide examples of real world scenarios that have created significant EU261 exposures (e.g. Iran airspace restrictions and the Coronavirus)
• assess how EU261 is impacting airline safety and why Insurers should be concerned HFW has been at the forefront of legal developments in the aerospace sector for over three decades.

It is a regular advisor to the insurance market and also acts for some of the world’s largest airlines in relation to their EU261 exposures.