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Since it came into force in February 2005, the European Union's Air Passenger Rights Regulation 261/2004 has applied to all passengers whose flight is operated within the EU, outbound from the EU or inbound to the EU whilst operated by an EU airline. The Regulation was intended to establish minimum levels of assistance and compensation for passengers denied boarding or affected by long delays or cancellations.
However, the Regulation itself has proved something of a headache for the airline industry. Several of its provisions were unclear and key terms, including the ‘extraordinary circumstances' under which air carriers are not required to pay compensation to passengers, were undefined. This uncertainty resulted in a succession of ECJ judgments which emphasised consumer protection.
In Sturgeon v Condor Flugdienst (C-402/07 & C-432/07)  2 CMLR 12, the ECJ controversially held that, despite no express provision in the Regulation to compensate passengers for delay, passengers are entitled to the compensation as set out in Article 8 for any delay in excess of 3 hours where ‘extraordinary circumstances' do not apply. Sturgeon was confirmed by the Grand Chamber in TUI Travel and others v CAA (C-581/10 & C-629/10)  1 CMLR 42.
Most recently, the case of McDonagh v Ryanair Ltd (C-12/11)  2 CMLR 32 examined the Regulation in the context of the eruption of Eyjafjallajökull, which caused the closure of most of northern European airspace for over a week. The ECJ held that there was no temporal or monetary limitation of the obligation to provide care (which included hotel accommodation) to passengers whose flight was cancelled as a result of ‘extraordinary circumstances' such as the eruption. Furthermore, although the Court recognised that the ruling could have severe financial consequences for air carriers, it held that those consequences "could not be considered disproportionate to the aim of ensuring a high level of protection for passengers".
The new proposals
The proposed revisions to the Regulation were announced on 13 March 2013 and are partly a response to Sturgeon and McDonagh. The key proposals are as follows:
(1) ‘Extraordinary circumstances' is clearly defined in line with the ECJ's decision in Wallentin-Hermann v Alitalia (C-549/07)  2 CMLR 9, i.e. circumstances which, by their nature or origin, are not inherent in the normal exercise of the activity of the air carrier and are beyond its actual control. The proposal also includes a non-exhaustive list of ‘extraordinary circumstances' in an Annex.
(2) The right to compensation in case of long delays is explicitly set out, thereby codifying the ECJ's approach in Sturgeon. However, the time threshold after which the right arises is increased from the 3 hours in Sturgeon. The proposal is 5 hours for journeys within the EU and for international flights of less than 3,500km; 9 hours for international flights of between 3,500 and 6,000km; and 2 hours for flights of more than 6,000km.
(3) A limit of 3 nights (with a maximum of €300 per night) will apply to the right to accommodation in cases of delay and cancellation due to ‘extraordinary circumstances'. However, the limitation will not apply to passengers with reduced mobility, persons accompanying them, pregnant women, unaccompanied children, and people with specific medical needs.
These revisions bring some much-needed clarity. They also help to remedy what the EC Memo accompanying the proposals describes as the "disproportionate financial costs" faced by air carriers post-McDonagh.
This is not to say that the pendulum will swing entirely in favour of the airline industry, however. The proposals also include the following:
(1) Where a carrier is unable to re-route a passenger on its own services so that the passenger arrives at the final destination within 12 hours of the scheduled arrival time, the passenger has the right to be re-routed (where possible) via another air carrier or another mode of transport in comparable transport conditions.
(2) Where a passenger misses a connecting flight because their previous flight was delayed and the connecting flights were part of a single contract of carriage, the passenger will have a right to:
(a) Care, to be provided by the carrier operating the missed flight as it is best positioned to provide this care; and
(b) Compensation, to be provided by the carrier operating the delayed flight but to be calculated by reference to the scheduled time of arrival at the final destination.
Exactly how these vague, yet onerous, proposals will be applied and enforced is open to question. In relation to the re-routing proposal, what are "comparable transport conditions"? As to flight connections, is it not contrary to the principle of proportionality to calculate the delay by reference to the scheduled time of arrival at the final destination rather than the actual delay of the preceding flight?
Even assuming that the European Parliament and European Council of Ministers approve the current proposals, therefore, legal challenges to the revised Regulation 261/2004 are extremely likely.