You are correct that the provisions of EU law can be construed as punitive damages. That’s why I emphasised the German legal tradition. Also, those damages do not apply in all possible situations of cancelled flights and they do not punish withholding refunds for no reason. If the airline cancels three weeks prior and then refuses to pay, the EU law does not apply and the behaviour we would like to disincentivise is not to honour the refund claims rather than the cancellation.
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