VOLCANIC ASH AN ASSESSMENT OF EC REGULATION 261/2004 AS THE DUST SETTLES

Transcription

1 146 [2010] T RAVEL L AW Q UARTERLY VOLCANIC ASH AN ASSESSMENT OF EC REGULATION 261/2004 AS THE DUST SETTLES Sue Barham Airlines could be forgiven for thinking that they have offended a higher power given all the crises they have had to deal with in recent times from SARS to Swine Flu, from record snowfall last winter in the UK to deep worldwide recession. However, very little prepared carriers for the unprecedented 8 day closure of airspace in northern Europe in April 2010 and the myriad passenger rights issues which they faced as a result. This article will explore some of those issues, in particular, the extraordinarily broad obligations to which carriers were subject under EC Regulation 261/2004 ( EU 261 ) relating to denied boarding, cancellations and long delays and will also look at a related ongoing legal debate as to the nature of the remedies provided by EU 261. Eyjafjallajökull Volcano in Iceland erupted first on 20 March The consequence was a brief evacuation of around 500 local people, but otherwise the eruption attracted little attention. However, the volcano erupted again on 14 April 2010 and this time the eruption and its consequences were of an entirely different magnitude. The problem for European airspace was that the eruption occurred beneath glacial ice, the effect of which was to chill the lava, causing it to fragment into tiny particles of glass and ash. The result was an ash plume rising up to between 20,000 and 35,000 feet which, with unhelpful winds, drifted over Northern Europe. As the industry will recall only too well, airspace in Northern Europe was effectively shut to commercial flights Northern Europe was effectively shut to commercial flights between 15 and 23 April 2010, followed by intermittent shut downs during May. At the height of the crisis, most scheduled passenger traffic within Northern Europe was cancelled, the maximum impact being on Sunday 18 and Monday 19 April when 19,000 flights per day, or just under 30% of worldwide scheduled passenger capacity, were cancelled. Whilst the skies fell silent over Northern Europe and remained clear of vapour trails for an unprecedented period of time, chaos of course mounted. Millions of passengers were stranded awaiting the reopening of the skies; car rental firms did bumper business as prices rocketed; Eurostar and cross channel ferries operated at capacity; and, on 19 April 2010, the UK s Cabinet Crisis Response Committee (COBRA) announced that Royal Navy vessels (HMS Ark Royal, HMS Ocean and HMS Albion) were to be deployed to repatriate stranded British travellers (Operation Cunningham). In the end in fact only HMS Albion was directly involved in repatriation from Northern Spain. The losses suffered by the airline industry as a result of the ash crisis have been at extraordinary levels. IATA has spoken of a total US$1.7 billion loss to the industry whilst Air France/KLM indicated it was losing 35 million per day. Not least amongst the financial hits to industry as a result of the airspace closures have been the costs of compliance with EU 261.

2 [2010] T RAVEL L AW Q UARTERLY 147 Scope of EU 261 Article 3 of EU 261 applies (and gives rights) to: all passengers departing from an EU airport; and passengers departing from an airport in a third country travelling to an airport in the EU if the operating carrier is a community carrier. Many UK and EU airlines faced probably their biggest bills under EU 261 because of the need to look after passengers who were stranded overseas during the ash crisis. For non-eu carriers, the problems were a little less severe, the crucial distinction being that non-eu carriers flying into the EU are not caught by the Regulation and could legitimately take the position that they were not obliged to provide EU 261 remedies to their passengers. Non-EU carriers who were unable to operate flights into the EU therefore they had to look to local law and/or the provisions of their conditions of carriage in order to be certain of the extent of their obligations to their passengers. They could however be certain that EU 261 did not apply to them. Remedies under 261 for volcanic ash disruption Most airlines faced probably their biggest bills because of the need to look after passengers who were stranded overseas airline has a defence to the obligation to pay compensation if it can prove that the cancellation was caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken. Whilst extraordinary circumstances is not defined at all adequately in EU 261 and has been subject of controversy, legal analysis and uncertainty since EU 261 first came into force in 2005, in relation to volcanic ash there appears to be no doubt. There has been no suggestion that the disruption caused by volcanic ash is anything other than extraordinary circumstances such that compensation is not payable under EU 261. Recent guidance from the UK Department for Business, Innovation and Skills (BIS) in the UK in the context of obligations of tour operators during the ash crisis, has suggested that, whilst the initial airspace closures can properly be regarded as force majeure, the fact that the industry now has the experience of volcanic ash disruption could mean that a recurrence of the issue will be regarded as being more foreseeable in the future and that there could be greater liability consequences for tour operators in the event of future disruption. Such a finding would be harsh: simply because something is foreseeable does not mean that it is avoidable and carriers will be concerned to ensure as far as possible that the extraordinary circumstances defence in EU 261 is not subjected to similar attempts to water it down in this way. One of the very few bright spots for airlines during and subsequent to the ash crisis has been that there has yet to be any suggestion that they are obliged to pay compensation to passengers under EU 261 for the disruption to flights. EU 261 provides that passengers are entitled to compensation, on a sliding scale depending upon the length of the cancelled flight, of between 250 and 600. However, pursuant to Article 5(3) an Obligation to Refund and Re-Route (Article 8, EU 261) Passengers whose flights were cancelled as a result of volcanic ash disruption were entitled to a choice under EU 261 between:

3 148 [2010] T RAVEL L AW Q UARTERLY Reimbursement within seven days of the cost of their ticket for the price at which they bought it; or such as these are resolved without recourse to litigation and so guidance from case law is relatively limited. Re-routing to their final destination under comparable transport conditions. Where passengers opted for re-routing, the airlines obligation under Article 8 of EU 261 was to do so either at the earliest opportunity or at a later date at the passenger s convenience, subject to availability. This provision has thrown up a number of question marks over the years, not all of which have been resolved even now. For example, is a carrier obliged to provide re-routing utilising another carrier s services or does it meet its obligations by providing re-routing only on its own services? It is certainly clear that EU 261 allows carriers to re-route using another carrier s services; it is far less clear whether a carrier fails to fulfil its obligation to offer rerouting at the earliest opportunity unless it has offered re-routing with an alternative carrier if that could be made available to passengers earlier than a re-routing on its own services. Another unresolved uncertainty is what constitutes comparable transport conditions. There is helpfully some European Commission guidance on the issue and it appears to be accepted that, in some instances, surface transportation can be regarded as comparable transport conditions. During the ash crisis, very little re-routing was in fact possible given the blanket closure of airspace. However, if transport by bus, taxi, navy warship or otherwise was available, an offer of re-routing by those methods of transport will have fulfilled the airline s obligation pursuant to Article 8. However, there are still areas of uncertainty; for instance, what if first class passengers can only be accommodated in economy class? Is that still comparable transport conditions? In most instances, claims which give rise to issues The passenger welfare obligations contain no express time limit as to their duration, no monetary limit and no defence Passenger Welfare (Article 9, EU 261) Article 9 of EU 261 obliges carriers to provide free of charge care and assistance to passengers whilst they are awaiting re-routing of their flight. The obligation is to provide meals and refreshments, hotel accommodation (where a stay of one or more nights is necessary), transport between airport and place of accommodation, and a means of communication (two free telephone calls, fax messages or s). Crucially, the passenger welfare obligations in Article 9 of EU 261 contain no express time limit as to their duration, no monetary limit and no defence. It does not matter that the circumstances which have given rise to the need for passengers to be looked after are entirely outside the control of an airline and completely unavoidable; the carrier nevertheless must comply with these obligations. It was of course Article 9 which caused the majority of angst during and following the ash crisis. Whilst there was little doubt that EU 261 obliged airlines to provide potentially unlimited care and assistance to passengers whilst the airspace closures continued, there remains immense frustration that EU 261 is such a blunt instrument. Quite simply, EU 261 was never intended or designed to cover the situation in which carriers found themselves in April The Regulation was aimed at providing protection for air passengers by ensuring that they are looked after overnight if necessary if their flight is disrupted. One can debate the justification for imposing upon airlines a strict obligation to provide accommodation and refreshments for

4 [2010] T RAVEL L AW Q UARTERLY 149 passengers in circumstances where flights have been disrupted for reasons that are entirely unavoidable by the airline concerned. However, there can be no sensible doubt that it was never envisaged that airlines would be paying passengers hotel bills for days on end whilst the industry and travelling public waited for airspace to reopen. So whilst there may be limited objection to the idea of airlines being responsible for putting up passengers in a hotel overnight when flights have been delayed or cancelled and the passengers cannot fly until the following day, making airlines foot the bill for such an unprecedented event is neither justifiable nor what can have been anticipated by the EU legislators who drafted EU 261. Nevertheless, that is how EU 261 has been applied throughout. Following the ash crisis, certain carriers queried the position but the European Commission stated clearly and at an early stage that carriers would be expected to provide EU 261 rights to the full. Passenger welfare claims following the ash crisis are still being dealt with and questions remain as to the extent of the obligations. It is deeply unfortunate that, not uncommon in EU 261, Article 9 is drafted in inexact terms, thereby leaving carriers vulnerable to assertions that their obligations are without limit in both duration and amount. In terms of the amount of welfare costs which airlines must pay, it appears to be more or less accepted that it is appropriate to apply some kind of sense check to amounts claimed so that airlines are not obliged simply to underwrite all accommodation and welfare expenses, whatever level they may reach. Many carriers have sought to impose a reasonableness threshold on the expenses that they will reimburse and, thus far, that approach appears to have been accepted by the National Enforcement Bodies. As to the duration of the welfare obligations, there are difficulties in seeking to apply what would inevitably be an artificial time limit on The obligations endure until the passenger is offered re-routing at the earliest opportunity Article 9 obligations when none is expressed in the Regulation. The obligations endure until the passenger is offered re-routing at the earliest opportunity and, when the airspace is closed, rerouting options become somewhat limited so placing a cap on welfare obligations was problematic. Nevertheless, to the extent that any carrier was able to make an offer to stranded passengers of re-routing by surface transportation, as noted earlier, such an offer is compliant with the airlines Article 8 obligations. Consequently, one means by which carriers could in these circumstances place a cap on their passenger welfare obligations was to make an early offer of re-routing by whatever alternative surface transportation was available. Once an offer of re-routing has been made, the right to welfare of any passenger who rejects that offer of re-routing ceases at that point. The right to passenger welfare exists only for so long as the passenger has to await re-routing involuntarily. If a passenger has rejected an earlier re-routing, his extended wait is no longer against his will and the carrier is not obliged to pick up the hotel bills. Can the passenger sue for recovery of accommodation and other expenses? What redress is available to a passenger if an airline does not provide him with re-routing and/or pay accommodation and other costs? The issue has been looked at in a couple of cases in the courts in the UK (Parker v TUI Ltd and Rigby v Iberia). In each, the Court has taken the somewhat surprising view that there is no civil cause of action afforded to the passenger to enable him to claim compensation for an airline s failure to provide Article 9 welfare and assistance. Instead, the conclusion of the judges in those cases has been that Article 9 provides a public law

5 150 [2010] T RAVEL L AW Q UARTERLY remedy only rendering a carrier liable to enforcement action but not to civil claims. The judges have noted the Civil Aviation (Denied Boarding Compensation and Assistance) Regulations 2005 provide for the enforcement regime in the UK for EU 261 and make it a criminal offence for airlines to breach their EU 261 obligations. That being the case, the argument runs, the redress available to passengers where airlines do not provide appropriate welfare and assistance is to submit a complaint to the Civil Aviation Authority, the UK s national enforcement body for EU 261. Whilst the decisions of the Courts in these cases must be respected, one suspects that their conclusions would not survive further appeal or detailed analysis. Whilst it is the case that the 2005 Regulations impose criminal sanctions for an airline s breach of EU 261 obligations in the UK, it would be surprising if that meant that criminal sanctions are the only remedy and it is to be noted that the 2005 Regulations do not say that. General principles of EU law are of relevance to this debate. EU 261, as an EU regulation, is directly applicable in and forms part of the laws of each EU Member State. EU 261 therefore confers rights directly upon passengers without the need for any domestic implementation. That being the case, a consideration of domestic enforcement legislation has limited relevance. Enforcement regulations are required by Article 16 of EU 261 so that individual EU Member States can take their own measures against carriers in respect of infringements of EU 261. However, that does not negate the right of passengers to enforce their rights through the courts. Support for that is also found in Recital 22 to EU 261 which states expressly that, whilst Member States are required to ensure and supervise general compliance by their air carriers with this Regulation supervision should not affect There appears to be limited basis for concluding that passengers are unable to sue for their full welfare rights Sue Barham is a partner with Barlow Lyde & Gilbert. She can be contacted at sbarham@blg.co.uk. the rights of passengers and air carriers to seek legal redress from Courts under procedures of national law. There appears to be limited basis for concluding that passengers are unable to sue for their full welfare rights under EU 261. Indeed, if that were the correct analysis, why stop with Article 9 passenger welfare obligations? There is no particularly logical basis for asserting that passenger welfare is a public law remedy which does not provide a freestanding civil cause of action, but not to say the same thing in relation to a passenger s right to a refund or, indeed, to compensation for denied boarding or cancellation of a flight. There appears to be no argument thus far nor any case authority to suggest that passengers are unable to sue in the Civil Courts for compensation to which they are entitled under EU 261 if their flight is cancelled. This particular debate is unlikely to end here and, given that some court decisions (albeit without the force of precedent behind them) have come down on one side of the argument, it is an issue which may need to be considered by the higher courts at some point in order to determine the matter with a greater clarity and certainty. EU 261 is a piece of legislation badly in need of review and amendment. Following ECJ decisions in Wallentin-Hermann v Alitalia (2008) and Sturgeon & Böck v Condor & Air France (2009) and now EU 261 s application during the volcanic ash crisis far beyond anything that could have been in the minds of the legislators, the balance between the protection which consumers should legitimately be entitled to expect and what airlines should legitimately be expected to provide has been well and truly lost. Unfortunately, that balance does not look like it will be redressed any time soon.