The EU has recently passed a law making airline companies compensate customers for delayed or cancelled flights as stated in the article "EU Strengthens Passenger Rights". There are fixed rates, ranging from £173 for short flights, £276 for medium-haul and £415 for long-haul flights. (Reported dollar amounts vary.) If the flight is cancelled, the airlines must provide “refreshments and overnight accommodation.” These compensation penalties exclude delays and cancellations that are out of the airlines’ control. Many of the short flights that carry steep penalties are only £10 a flight. This means if you book about ten flights at £10 a piece, assuming the EU flights are as reliable as the U.S. flights, you’re bound to get penalty money for at least one. So, you spend £100 a day and get £173 a day in return for your efforts. This is a 73% increase on your investment daily. This is only the numbers for the short flights…let’s not forget there are bigger penalties for the longer flights! Oh, to think like a capitalist!
While I agree with the idea that some compensation is due for a flight being late, I think that a major perverse incentive has been created here. By doing this, airline companies are simply going to raise their rates passing the cost on to the customer’s; narrow minded people are going to abuse the system, and overall the customers will lose out.