The EU’s current flight compensation rules are pushing airlines to cancel flights that could otherwise operate with a short delay, and that’s bad news for passengers, according to Malta Air CEO David O’Brien.

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This week it was reported that the EU was considering a proposal to increase threshold for airlines to have compensation to delayed travellers from three to a maximum of six hours – a proposal which has been criticised by consumer protection organisations across the bloc.

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Replying to questions by MeetInc, O’Brien said the system, which entitles passengers to up to €600 if their flight is delayed by more than three hours, has created a warped incentive structure where it can make more financial sense for airlines to cancel a flight than to run it late.

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“If a short delay leads to a €250 compensation bill per passenger, but cancelling the flight and rebooking travellers avoids that cost, the economic incentive is to cancel,” he said. “This benefits neither passengers nor the environment.”

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The European Commission’s proposed reform would raise the compensation threshold to four hours for flights under 3,500 km and six hours for longer flights, while also expanding the list of “extraordinary circumstances” under which compensation wouldn’t apply – such as air traffic control strikes, technical faults discovered shortly before take-off, or last-minute crew sickness.

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O’Brien’s stance reflects the broader position of IATA, the global airline industry body, which argues that the current rules have done little to improve punctuality while fuelling litigation and increasing operational costs. In fact, he said, the regulations, referred to as, EU261 may have made things worse for passengers by encouraging cancellations over pragmatic delays.

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“The cost burden of EU261 has not incentivised greater punctuality,” O’Brien said. “It has instead created a secondary litigation industry, delayed investment in newer, greener aircraft, and constrained growth – especially in smaller and island markets like Malta.”

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For Malta, the debate is particularly relevant. Air travel is a lifeline for residents, businesses, and tourists alike. Maltese people are flying more frequently than ever, whether for work, holidays, studies, or to visit family abroad. Budget carriers have made this easier — but also brought tighter schedules and more congestion, especially in the busy summer months when delays are more common.

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Some of these delays stem from systemic issues, such as poorly planned rotations or airspace bottlenecks. But others are due to last-minute problems that may be outside an airline’s control: technical faults, crew illness, or external strike action.

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Regulations don’t reflect aviation realities

O’Brien argued that holding airlines financially liable in every case doesn’t reflect the realities of how aviation works. “We support clear, enforceable passenger protections,” he said, “but they must be proportionate and grounded in operational realities. Delays are often outside our control, and blanket compensation ignores that fact.”

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MeetInc has also reached out to KM Malta Airlines, the island’s other major carrier, for their position on the proposed changes. A response is expected in the coming days.

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Consumer organisations, meanwhile, have strongly opposed the reform. The European Consumer Organisation (BEUC) has called the proposal “an unacceptable step back,” warning that up to 75% of passengers who currently qualify for compensation could lose that entitlement under the revised thresholds.

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Critics also argue that expanding the definition of “extraordinary circumstances” could give airlines a blanket excuse to avoid compensation, even in situations that stem from poor planning, understaffing, or operational inefficiencies. While events like air traffic control strikes or extreme weather may clearly fall outside an airline’s control, consumer groups warn that vague or overly broad exemptions could be used to sidestep responsibility in less clear-cut cases — such as technical faults or last-minute crew shortages, which may in fact reflect deeper structural issues within the airline itself.

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The reform is part of a broader package of aviation legislation that includes some consumer-friendly elements — such as banning surcharges for standard-sized hand luggage and introducing clearer, standardised procedures for filing complaints. These changes have been welcomed by many passenger rights groups but are seen as insufficient offsets to the more sweeping changes to delay compensation rules, which remain the most controversial aspect of the package.

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The European Parliament has yet to formally weigh in, and several national governments have already expressed reservations. The final shape of the law will be determined through negotiations between EU member states and institutions, where differing priorities — from protecting regional air connectivity to shielding consumers — are expected to clash.

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For O’Brien, the bottom line is simple: “We want passengers to reach their destination, even if late, rather than see their flight cancelled to avoid a payout. This reform is about keeping people moving, not denying them their rights.”

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