Markets

How Continental Screws Americans Out of $800 When It Cancels European Flights

By Jim Edwards

Updated on: February 16, 2011 / 9:58 AM EST / MoneyWatch

Continental (CAL) has an odd policy toward U.S. passengers on cancelled flights home from Europe: When they're stranded in the airport awaiting alternative flights, Continental tells them they're eligible for up to â‚¬600 (about $822) in cash compensation. Once the passengers are back on U.S. soil, however, Continental tells them to take a hike -- with a $200 credit voucher.

The controversy revolves around European regulation EC 261. It's designed to deter airlines operating out of European airports from canceling flights for frivolous reasons by compensating travellers generously if the airline upends their flight plans. In addition to â‚¬600, the law can require airlines to provide alternative flights and overnight hotel stays to travelers. Continental told The New York Times last year that it obeys the law as it relates to U.S. travelers on flights home from Europe:

That means travelers flying on American, Delta, Continental, United and US Airways from Europe to anywhere else in the world are covered by the European Union's passenger rights laws --- a fact that representatives from those airlines (except United) reluctantly confirmed, after multiple phone calls and e-mail messages.

Moreover, Continental actually hands American passengers a piece of paper when their flights are canceled promising them the money. The form even asks passengers to write down their bank account numbers so Continental can wire cash to them.

I discovered this last year when my flight home from Edinburgh to New York was canceled. Continental got me onto another flight four hours later -- but that was routed through London, turning a seven-hour trip into a 19-hour saga. Before I left Edinburgh, however, a Continental staffer handed me a copy of its pledge to obey EC 261, which can also be found on Continental's web site, and this compensation form (click to enlarge.):

The form clearly offers passengers compensation, and asks them to sign for it. Once home, Continental denied the promise it made on the form. After several rounds of communication with Continental, the airline's customer care manager, Victoria Durr, wrote me a letter that said:

Because all routine preventative maintenance actions were performed on the aircraft as scheduled, and the extended delay could not have been reasonably predicted or avoided, the event is considered force majeure and exclusionary to the mandatory compensation rules.

That explanation appears to stand in contradiction to current European law, however. In a November 2009 ruling, the European Court of Justice said that delays due to technical or maintenance issues do not count as excluded from compensation:

... although air carriers can be exempt from their obligation to compensate their customers in the event of "extraordinary circumstances", a technical problem in an aircraft is not covered by that concept unless that problem stems from events which are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond its actual control.

Continental declines to give details
The ruling was made after airlines used the "maintenance" excuse for virtually all delayed flights, resulting in fewer than 1 percent of passengers getting compensation. Regardless, the clear intent of the law is to give passengers money when their flights are canceled, something Continental seems loathe to do. Continental spokesperson Mary Clark said:

We have a review and claims process (that includes our legal team) for all flight delays and cancellations from cities departing the EU that might be subject to the EC 261 regulations. When it is determined through this process that compensation is due and a claim is made, the compensation is issued without regard to the customer's nationality or country of residence.
Although some cancellations due to mechanical issues may be compensable under the regulation, our review process determined that was not the case in this instance. However, all economy customers on the flight received travel certificates for use toward future travel. In addition, meal vouchers, hotel accommodations and phone access were provided at the airport in Edinburgh.

She was not able to say whether Continental had ever compensated a single U.S. customer under the rule.

Two other passengers on the flight -- Nobel prize for economics winner Prof. Joseph Stiglitz and Anya Schiffrin, the director of Columbia University's School of International and Public Affairs' Media and Communications Specialization -- got the same runaround from Continental.

Although the Times recently repeated the notion that Americans can get compensation if they are bumped on their way home from Europe, experience suggests they should not rejoice prematurely when Continental hands them a promissory note for â‚¬600.

Related:

Image by Flickr user steven de polo, CC.