A man watches one of the last flights to arrive after many were cancelled due to a storm at LaGuardia Airport on November 7, 2012 in New York City. The Northeast suffered another storm today as a mix of snow, rain and high winds moved through the area, canceling flights and creating hazardous driving conditions. Six thousand households in the area are still without power for more than nine days following Superstorm Sandy. (Photo by Spencer Platt/Getty Images)
Bart Jansen -- USA TODAY
LEIPZIG, Germany - Compensation abroad for airline passengers whose flights are canceled is changing with the smoke of a European volcano.
Europe has a generous compensation policy, which forces airlines to give each passenger as much as $775 when a flight is canceled.
In contrast, the United States has no similar penalty, especially for cancellations blamed on weather or natural disasters. Airlines typically provide a hotel room when a mechanical problem delays a traveler overnight.
But Europe's policy is being revised because of a court decision in January that upheld compensation for a week of flight cancellations after Iceland's volcanic eruption in April 2010.
Airlines had argued the eruption was beyond their control, and are arguing at international forums that the rules should change.
"The volcanic ash episode had entirely unintended effects on airlines," Cathal Guiomard, commissioner for aviation regulation in Ireland, told USA TODAY at the International Transport Forum's annual summit of hundreds of government and industry leaders. "The scope will be somewhat more modest, particularly in those particular catastrophic situations."
The eruption of Eyjafjallajokull volcano grounded flights from April 15 to 22 in 2010.
In the case that grew out of those cancellations, the European Court of Justice, which is the continent's highest court, agreed Jan. 31 with airlines that the eruption represented "extraordinary circumstances." But the court ruled that airlines were still responsible for compensating passengers financially and with meals and accommodations.
Ryanair, the low-cost airline involved in the case, announced it would charge about $3.25 per passenger for possible future cancellations. Robin Kiely, a spokesman, compared penalizing airlines for volcanoes to fining Toyota and Audi for traffic jams.
"We should not be liable for compensation for events which are clearly outside of our control," Kiely said.
Passenger rights such as compensation have grown rapidly during the last decade. There has been recent legislation in Brazil, India, Pakistan, Venezuela, Turkey and the Philippines.
The patchwork of policies can lead to confusion among passengers and airlines when flights travel between countries with different polices. Policies include:
--In the U.S., the Transportation Department can fine airlines when planes sit on a tarmac without allowing passengers to get off. But other than a providing new flight and perhaps a hotel room, airlines aren't responsible for compensating passengers for cancellations.
--European Union regulation 261 from 2004 calls for passengers on canceled flights to be re-routed and get compensation ranging from about $325 for trips up to about 1,000 miles and and $775 for flights longer than about 2,200 miles.
--Israel's Aviation Services Law from 2012 also bases its compensation on the distance of the flight. The figures start about $340 for flights up to about 1,200 miles. The highest is about $800 for flights longer than about 2,800 miles.
Airlines are looking for common policies around the world.
"It's become very difficult for carriers to try to run a global business when there is a patchwork of regulations in effect," said Chaitan Jain, assistant director for government affairs at the airline trade group International Air Transport Association.
The International Civil Aviation Organization, a branch of the United Nations that suggests global airline policy, recommended the development of goals for compensations at a conference in March.
"These core principles will be designed with a view to strike a balance between the protection of consumers and industry competitiveness," spokesman Anthony Philbin said. "They will also have to take into account the needs of states for flexibility, given their different social, political and economic characteristics."
Jan Brueckner, an economics professor who studies the airline industry at the University of California, Irvine, said airlines already know they must be reliable because otherwise travelers will go elsewhere.
"It's not like the airlines can screw their passengers with impunity," Brueckner said. "Airlines have every incentive to run a good operation. Happiness and loyalty of passengers depend on it."
He expected U.S. airlines to block any requirements for them to provide compensation for cancellations.
"That's a non-starter," Brueckner said. "They would scream bloody murder in response to that kind of movement."
George Hobica, found of airfarewatchdog.com, a site that compares fares, said passengers rarely know the rules and airlines are reluctant to explain them.
"I think the main issue with the European passenger protections is that the airlines try to wiggle out of financial compensation by using loopholes," Hobica said. "You'll never hear a flight attendant announce over the PA: 'We've been delayed over four hours due to a faulty air conditioning system, so you're all entitled to 600 euros and here's how to apply for the cash!'"