Disruption to flights, such as cancellations and delays, or missed connections, can cause considerable annoyance and inconvenience. But there are no regulations on compensation payments whatever the circumstances of the disruption. Typical airline terms and conditions include clauses which state that schedules and timings (and even dates!) are not guaranteed.
Most airlines follow a Recommended Practice on "General Conditions of Carriage" from the International Air Transport Association (IATA). The Recommended Practice is updated from time to time. The clauses on delays and cancellations in the most recent versions give passengers the choice, in the event of cancellation or failure to operate "reasonably according to schedule", of a later flight on the same airline, or some other "mutually agreed" alternative transportation ("within a reasonable period of time"), or a refund. But you have to know to insist on your choice!
In practice, many airlines will provide refreshments or overnight accommodation for passengers whose flights have been cancelled or are subject to a long delay. Or they may transfer passengers to other flights. But very few will voluntarily pay compensation in addition (unless under EU Regulation 261/2004. Click here for details)
Nevertheless, under provisions in the Montreal Convention (which came into force in the UK on 28 June 2004), an airline is liable for "damage occasioned by delay" (Articles 19 and 22.1), up to a limit of 4,694 Special Drawing Rights (SDRs). However, an airline may not be liable if "it proves that it and its servants and agents took all measures that could reasonably be required to avoid the damage or that it was impossible for it or them to take such measures" (Article 19). In practice, any payment that an airline is prepared to make for a delay will at best be reimbursement of expenses that it accepts were directly and necessarily incurred as a result of the delay (such as meals or overnight hotel accommodation). Airlines generally do not accept any liability for inconvenience, stress or any consequential losses arising from the delay, unless they are required to do so as a result of court action.
When a flight is cancelled, an airline is contractually obliged to provide alternative transportation (not necessarily by air) or a refund. But most airlines' conditions of carriage specifically exclude liability for any consequential losses. In theory, it should be possible to argue that a cancellation is the same as a delay for the purposes of making a claim under the Montreal Convention (because the Convention simply refers to "delay in the transportation by air" and a passenger can be delayed as a result of cancellation). But in practice, the two are generally taken to be different.
