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I quickly looked into this the other day when the first articles on it appeared. IIRC there's a regulation that states children under a certain age must be accompanied by an adult - and that includes sitting right next to them. Ryanair's policy was to charge the adult the standard "seat booking" extra. Up to 2 kids would then be given seats next to them without additional fees.
So the problem seems to be that if you're travelling with small children, you *must* pay to book yourself a seat.
Ryanair were protesting about any change, no surprise there of course, but I suspect they don't really have to waive the booking fee for the adult, rather they could just allow them to not pay to book a seat, and make sure they are allocated one randomly with their children next to them.
In any case, I'm left wondering if this can be a worthwhile way for the EU to spend its time. Given how much it costs for any large administrative body to do anything, this really doesn't seem like it should be a big priority.
When you are a parent, there are so many extra costs everywhere, that saving a couple of euros on seat bookings a couple of times a year isn't going to make any significant difference.
While I get what you are saying, I'm not entirely sure where else could the people focused on consumer/passenger rights be focused on, considering it was introduced as part of a series of other reforms around this particular form of travel which millions of Europeans use. It isn't like this was a whole procedure brought about just for the seating of kids, either.