Wow: Lufthansa Paid 500 Million Euros In Compensation In 2018

Europe has some of the strictest regulations when it comes to compensation that airlines are required to pay in the event of delays or cancelations. This policy is known as EU261, and with this airlines are required to pay either 250EUR, 400EUR, or 600EUR in cash compensation in the event of a significant flight delay. The amount varies based on the distance of the flight and how long the delay is.

This doesn’t apply in the event of “extraordinary circumstances,” which includes things like weather and air traffic control delays. However, it does apply in the event of mechanical delays, crews timing out, etc.

This policy is in stark contrast to the US, where there are no government regulations when it comes to compensating passengers for flight delays. Your flight could be hours or days late, and the airline doesn’t owe you a dime.

Lufthansa paid HOW MUCH in compensation?

So, just how much are European airlines paying out in compensation? Reuters reports that in 2018, Lufthansa spent about 500 million Euros in passenger compensation relating to delays and cancellations.

This is what was said by a senior Lufthansa executive responsible for fuel purchasing at an oil conference, though a Lufthansa spokesperson hasn’t yet confirmed this.

However, a Lufthansa spokesperson has confirmed that the amount of compensation that the airline paid out in the first nine months of 2018 has more than doubled to 350 million Euros, which suggests this figure may indeed be accurate (or close to accurate). We’ll know for sure next month.

Crunching the numbers on 500 million Euros compensation

That sounds really high, so let’s crunch the numbers. To make things easy, let’s assume the average person is getting 400EUR compensation, accounting for some people getting 250EUR and others getting 600EUR. That means about 1.25 million people received compensation, which translates to 3,400+ people per day.

That sounds really high, as that translates to 17+ significant delays per day (assuming the average plane has 200 seats — again, these are all rough numbers). But presumably this compensation also includes lost baggage compensation and other things, which I imagine contribute significantly as well.

Bottom line

It’s pretty remarkable that European airlines make money at all, between strikes and EU261. While Lufthansa hasn’t had as many labor issues in the past year as prior to that, in some years Lufthansa has lost hundreds of millions of Euros due to strikes.

Then they’re also often impacted by non-airline strikes, given that we frequently see airport, air traffic control, and other strikes throughout Europe.

No wonder airlines in other regions rally so heavily against government regulations related to compensation.

Are you surprised by the 500 million Euros amount?

Comments

  1. Could include duty of care payments as well (though strictly not considered compensation) as well as other non-EC261 related compensation payments? Your method of averaging is very thumb-sucky and good chance it’s way off

  2. Its not the EU261-money. Its includes hotels, rebooking on other airlines, compensation for passengers cost…etc.

  3. Yep, we got some of it this past year. Well, they should be more on time then! Plus sort out FRA (which was the main cause of our delay).

  4. And those horrible American carriers saying there should be a level playing field. Ok then, introduce this then into the US to motivate those garbage airlines to start caring about customers! Then instead of making hundreds of millions in profit they would make a loss instead. But then the US government is too weak to introduce such thing. It’s all about money there – much more important than people.

  5. It’s not just the cash payments, but includes hotels, making alternative travel arrangements, etc.

    Even so, the whole point of EU261 is that the legislators do *not* want any airline to have to make payments. It’s supposed to incentivise airlines to do their jobs properly, so the compensation was set at a level that was deliberately intended to hurt an airline if they kept screwing-over their passengers. The idea was that the threat of big losses seemed to be the only way to get the airlines to sort themselves out.

    I have zero pity for Lufthansa – or any other airline paying out massive compensation.

  6. Lucky, you seem to forget the main factor that lead to this amount of compensation – Lufthansa has had major delays due to the integration of Air Berlin’s planes into Eurowings for the last 2yrs.
    Remember LH had already signed on to lease 38 AB planes before the airline went burst.

    There was a shortage of pilots and then the strikes (and shortage) of air traffic controllers causing many flights to be delayed last summer.

    On two different occasions i had my dometic LH flights from MUC cancelled and was rerouted via FRA. I claimed EU261 on both occasions.

    That figure could have been much higher if all affected passengers had claimed the compensation. The figure is not just for LH itself but for the whole Lufthansa group which carried 142Million Pax in 2018.

  7. A part of this will also be (EU261) compensations for misconnects. Even a very small delay can lead to a misconnect given the very short MCT in Frankfurt.

  8. I am surprised — but I’m also curious how much LH (and other airlines) profit from change/ancillary fees from passengers each year and whether it surpasses the 500 million number.

  9. I’m also curious if this is an amount for Lufthansa proper, or all of the brands that Lufthansa owns (including Brussels Airlines, SWISS and Austrian, Eurowings). Including them would likely raise the amount fairly significantly.

  10. Given Lufthansa’s notorious reluctance to pay EC261, you have to wonder how much would have been paid out if they had followed the rules properly.

  11. As SQT said:

    “It’s priced in to all passengers. Lufthansa paid for it but from passengers’ pockets.”

    I’d be interested to know how many tickets got sold to ascertain how much each passenger paid to provide the EU’s generous passenger compensation rules.

  12. I wish there was a similar regulation in the US. It would force the airlines to become better – or go out of business because of the compensation payments.

  13. @sqt

    Good thing they operate in an extremely competitive aviation environment then. They can’t bake penalty fees into tickets without pricing themselves out of customers.

  14. The purpose of EU261 wasn’t to punish airlines but to stop them just cancelling flights – especially for commercial reasons such as light loads – at the last minute and leaving passengers stranded without recompense or care. They could still do that but there would be a cost to them in compensating passengers which would change the economics of the cancellation.

    It should also be noted that the wording of the regulation did not allow for compensation for delayed flights only cancelled flights and it was the courts that expanded it to include delays and so vastly increasing the costs to the airlines.

    It is the same courts that have also gradually whittled away at the definition of extraordinary circumstances that have also increased the compensation payouts.

    EU261 did include duty of care for delays – meals etc after specific lengths of times depending on the length of the flight.

  15. Of 100+ flights on the LH group I’ve had one bagage delay and it really was my fault…so I don’t think luggage is an issue.

  16. It’s a lot of money, but LH Group is also the largest carrier in Europe and still profitable. It’s not surprising, and likely the figure includes other non-direct monetary compensation (meals, hotels, etc…). Their main hubs in Europe don’t all have a lot of low cost competition so I’m sure they more than make up for the EU 261 compensation.

    I don’t feel bad for them at all.

  17. MAKP read EU261/2005 – the current regulation – and you’ll see there is no compensation for delay.

  18. Got a delay of 5 hours on my flight Rome-Rio de Janeiro two days ago and Alitalia only got water and a “panini”. As they treated everyone in a rude way giving a @#[email protected] to everyone should I ask for compensation? They say the dalay was caused due to a storm in Milan where our aircraft was coming in.

  19. So what? Effectively European flyers pay their own compensation as naturally any EU airline would bake that into their fares. It´s a zero sum game.

  20. So my guess with this one is Lufthansa is possibly making money hand over fist, and has more than enough to give you and still have change left in their pocket?!

  21. Actually the regulation applies to ANY carrier departing or landing in the EU. Two years ago I got United to pay 800 Euros for me and companion en route from EU to San Diego as they were late arriving at the connecting airport and caused a lost connection… Obviously they denied I had the right to request it, but a simple well drafted letter sent by certified mail made the trick.

  22. It’s not a zero sum game. It’s a zero sum game only in a monopoly situation. Like the government.

    If there is competition in the marketplace better managed airlines will displace badly run airlines that cancel flights and payout hefty sums.

    If you really think it’s zero sum call your congress(wo)man and tell them they are incompetent. There should be more competition in the marketplace.

  23. @ChrisC I dont know why you think delay is not included.

    Article 6

    Delay

    1. When an operating air carrier reasonably expects a flight to be delayed beyond its scheduled time of departure:

    (a) for two hours or more in the case of flights of 1500 kilometres or less; or

    (b) for three hours or more in the case of all intra-Community flights of more than 1500 kilometres and of all other flights between 1500 and 3500 kilometres; or

    (c) for four hours or more in the case of all flights not falling under (a) or (b),

    passengers shall be offered by the operating air carrier:

    (i) the assistance specified in Article 9(1)(a) and 9(2); and

    (ii) when the reasonably expected time of departure is at least the day after the time of departure previously announced, the assistance specified in Article 9(1)(b) and 9(1)(c); and

    (iii) when the delay is at least five hours, the assistance specified in Article 8(1)(a).

    2. In any event, the assistance shall be offered within the time limits set out above with respect to each distance bracket.

    https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32004R0261&from=DA

  24. @ChrisC Perhaps you should read it?:

    Article 6

    Delay

    1. When an operating air carrier reasonably expects a flight to be delayed beyond its scheduled time of departure:

    (a) for two hours or more in the case of flights of 1500 kilometres or less; or

    (b) for three hours or more in the case of all intra-Community flights of more than 1500 kilometres and of all other flights between 1500 and 3500 kilometres; or

    (c) for four hours or more in the case of all flights not falling under (a) or (b),

    passengers shall be offered by the operating air carrier:

    (i) the assistance specified in Article 9(1)(a) and 9(2); and

    (ii) when the reasonably expected time of departure is at least the day after the time of departure previously announced, the assistance specified in Article 9(1)(b) and 9(1)(c); and

    (iii) when the delay is at least five hours, the assistance specified in Article 8(1)(a).

    2. In any event, the assistance shall be offered within the time limits set out above with respect to each distance bracket.

    https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32004R0261&from=DA

  25. @ChrisC
    The old legislation didnt hat delay, the new EU 261 has:

    Article 6

    Delay

    1. When an operating air carrier reasonably expects a flight to be delayed beyond its scheduled time of departure:

    (a) for two hours or more in the case of flights of 1500 kilometres or less; or

    (b) for three hours or more in the case of all intra-Community flights of more than 1500 kilometres and of all other flights between 1500 and 3500 kilometres; or

    (c) for four hours or more in the case of all flights not falling under (a) or (b),

    passengers shall be offered by the operating air carrier:

    (i) the assistance specified in Article 9(1)(a) and 9(2); and

    (ii) when the reasonably expected time of departure is at least the day after the time of departure previously announced, the assistance specified in Article 9(1)(b) and 9(1)(c); and

    (iii) when the delay is at least five hours, the assistance specified in Article 8(1)(a).

    2. In any event, the assistance shall be offered within the time limits set out above with respect to each distance bracket.

    https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32004R0261&from=DA

  26. Lucky – I would be really interested to know the statistics behind delays in European flights. I think there is a big increase in “short” delays as European carriers will do everything to avoid a compensation payout delay i.e. better to have 5 flights delay for 3 hours rather than 4 on time and 1 delay 4 hours….. I certainly have been on multiple flights where they have opened the doors just in time to avoid compensation….

  27. I suspect that EU261 compensation is only a small part of the compensation listed here. Most of it probably goes to hotels, meals and rebooking.

    These compensation schemes are a good incentive for airliners to operate planes on time.

Leave a Reply

Your email address will not be published. Required fields are marked *