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The Dekagram 10th October 2022

Articles, News | Mon 10th Oct, 2022

This week sees the team in ebullient mood following the success of the Red Roses in the first leg of their World Cup campaign. As our readers know, we’re not ones to bask in reflected glory (although we were pleased to note that one of our Heads of Chambers, Simon Readhead KC, has been appointed President of the Medico-Legal Society), but it’s always nice to get a bit of good news as we head into the Autumn. Season of mists and mellow fruitfulness it may well be, but we’re delighted we had the forethought to order Dekumbrellas and hot water bottles for the coming change in the weather. And the advent of Autumn can mean only one thing; the return of the Great Legal Bake, to be held in chambers on 7th November. Watch this space for further details.

Airlines’ Liability Extended Still Further by the Court of Justice of the European Union

Historically the CJEU has shown itself to be willing to interpret airlines’ liability under Regulation (EC) No.261/2004 in ways which some English common lawyers have found surprising, even, on occasion, baffling. The consumer protective rationale underpinning the Regulation has given rise to some interesting results in particular in relation to the obligation to compensate for delays of over three hours, and the narrow interpretation of the ‘extraordinary circumstances’ defence. But when the Court’s approach is seen against the backdrop of caselaw arising from other legislation, it is perhaps rather less unexpected. In the context of Directive (EU) 2015/2302 (the Package Travel Directive), the Court made it plain, in X v Kuoni, Case C-578/19, that the obligations of the service provider were to be construed widely, and any defences available to it were to be construed narrowly. This, the author believes, is now clearly the Court’s starting point in relation to consumer protection in a travel industry context, and the Denied Boarding Regulations, and indeed the Package Travel and Linked Travel Arrangements Regulations 2018, must be interpreted in the light of this purposive approach, even post-Brexit, at least until the promised Bonfire of the Eurolaws (about which more from Tom Yarrow later). Indeed, it was only the other day that the author was being grilled by Popplewell LJ about the rationale behind the recast Brussels Convention, and whether a proposed approach was justifiable on the basis that it would further the protection of insured and other vulnerable parties in a jurisdictional setting. It will be interesting to see what comes of that discussion.

But I digress.

Last week the CJEU gave another judgment which has the effect of extending airlines’ liability in what might be thought to be a surprising way.

The facts in Flightright v American Airlines, Case C-436/21 were as follows:

A passenger purchased, through a travel agency, an electronic plane ticket for a journey on 25th July 2018 from Stuttgart to Kansas City made up of three flights. The first flight (from Stuttgart to Zurich) was operated by Swiss International Air Lines, whilst the remaining two flights (from Zurich to Philadelphia, and from Philadelphia to Kansas City respectively) were operated by American Airlines. The electronic ticket number appeared on the boarding passes for those flights. In addition, that ticket showed that American Airlines was providing services and contained a single reservation number relating to the entire journey. Furthermore, the travel agency issued an invoice showing a total price for the whole of that journey and for the return.

While the flights from Stuttgart to Zurich and from Zurich to Philadelphia, respectively, ran to schedule, the arrival of the flight from Philadelphia to Kansas City was delayed by more than four hours. Before the German courts, flightright, a company providing legal assistance to air passengers to which the rights arising from that delay had been assigned, claimed compensation of €600 from American Airlines, pursuant to the provisions of the Denied Boarding Regulations.

At first instance and on appeal to the Regional Court at Stuttgart the courts held that the delayed flight operated by American Airlines had not departed from the territory of a Member State, so that the Regulation did not apply to it and, therefore, no compensation would be payable and the claim must be dismissed. According to that court, there was nothing to indicate that the defendant in the main proceedings had undertaken to transport the passenger concerned from Stuttgart to Kansas City, or that it had assumed responsibility for that transportation under a code sharing agreement.

Flightright appealed on a point of law to the German Federal Court of Justice, which referred three questions to the Court of Justice regarding the interpretation of certain parts of the Regulation:

(1)   If a travel agency combines connecting flights from different air carriers into one transport operation, charges the passenger an overall price and issues a single electronic ticket for the journey, do these qualify as direct connecting flights within the meaning of Article 2(h) of [Regulation No 261/2004], or does there also need to be a specific legal relationship between the operating air carriers?

(2)   If there needs to be a specific legal relationship between the operating air carriers: is it sufficient if two successive connecting flights, to be operated by the same air carrier, are combined in a reservation of the kind described in Question 1?

(3)   If Question 2 is answered in the affirmative: are Article 2 of the [EC-Switzerland Agreement] and the reference to [Regulation No 261/2004] in the Annex to [that agreement] to be interpreted as meaning that [that] regulation also applies to passengers boarding a flight to a third country at an airport in Switzerland?

The Court found that by its first question the referring court was asking, in essence, whether Article 2(h) of the Regulation must be interpreted as meaning that the concept of a ‘connecting flight’ covers a transport operation made up of a number of flights operated by separate operating air carriers which do not have a specific legal relationship, where those flights have been combined by a travel agency which has charged an overall price and issued a single ticket for that operation, with the result that a passenger departing from an airport located in the territory of a Member State who suffers a long delay to the arrival at the destination of the last flight may rely on the right to compensation pursuant to Article 7 of that regulation.

The Court held that does cover such a transport operation. The Court observed that the concept of a ‘connecting flight’ must be understood as referring to two or more flights constituting a whole for the purposes of the right to compensation for passengers provided for in the Regulation. It held that that is the case when two or more flights were booked as a single unit. In the case before the Court, it appeared that the passenger had a ticket constituting proof that the reservation for that passenger’s entire journey from Stuttgart to Kansas City had been accepted and registered by a tour operator. Such a transport operation must be regarded as being based on a single reservation and, therefore, as a ‘connecting flight’.

It was true that the flights comprising the connecting flight at issue were operated by separate operating air carriers, namely Swiss International Air Lines and American Airlines, there being no legal relationship between them; but the Court considered that no provision of the Regulation required that there was a specific legal relationship between the operating air carriers. Imposing such an additional condition would be contrary to the objective of ensuring a high level of protection for passengers, in that it would be capable of limiting their right to compensation where there is a long delay to their flight.

As a result, American Airlines was liable to compensate the passengers, even though the delay occurred only to a flight which departed from and arrived in non-Member States, and even though the airline had not sold the flight combination to the passengers.

Consequently the Court declined to answer the second and third Questions, which were rendered otiose by its answer to the first.

The Court noted that:

“…in accordance with Article 13 of Regulation No 261/2004, the operating air carriers which operated the flights comprising the connecting flight in question may seek compensation from a tour operator or from another person with whom they have concluded a contract, in accordance with the applicable national law. Accordingly, that regulation does not preclude the operating air carrier which has had to pay the compensation provided for by that regulation from being able to seek compensation in respect of that financial burden, in particular from the person through whom the tickets were issued, in the event of a failure by the latter to fulfil its obligations…”

It is, however, difficult to envisage how this could ameliorate an airline’s position in cases such as that considered by the Court. Unless the travel agent sells a combination of flights which is unworkable, it is hard to see what it could possibly do to amount to a failure to fulfil its obligations so as to give rise to a claim under the Regulations. This leaves airlines liable to compensate passengers in respect of flights which might occur entirely outside the EU, solely because, unbeknown to the airline, they have been combined with other flights not operated by it.

It is suggested that this decision is best seen as part of the more general ‘wide obligation/narrow derogation’ policy  pursued by the Court in cases involving interpretation of consumer protection legislation. It will be interesting to see whether the domestic courts of the UK follow the CJEU’s lead on this, or whether, post-Brexit, a more restrictive black letter interpretation is favoured. It may be that the Brexit Freedoms Bill provides the answer to this difficult question; or, of course, it may be that the wide-ranging and fundamental provisions contained within the Bill will, if enacted in their current form, render all of this speculation otiose. Watch out for Tom Yarrow’s forthcoming briefing on that very subject.

About the Author

Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. Last year she was named Best Lawyers’ Travel Lawyer of the Year 2020/2021 and the Lawyer Monthly Women in Law Awards 2020: Personal Injury, and she was a member of the Consultative Group of Experts to the UNWTO Committee for the Development of an International Code for the Protection of Tourists, and is a member of the Admiralty Court Users’ Committee. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases.

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