Aviation Law
August 2nd, 2024
On 22 July 2024, the European Commission released a draft of new interpretative guidelines for Regulation (EC) No 261/2004, which covers passenger compensation and assistance for denied boarding, cancellations, and long delays, as well as Regulation (EC) No 2027/97 on air carrier liability in accidents. These guidelines aim to clarify and improve the application of the regulations, ensuring consistent implementation by airlines, national authorities and courts. The last update was in 2016, with special guidelines during the COVID-19 crisis in 2020. The new draft reflects recent ECJ rulings and interpretations.
The updated guidelines still need their approval by the EC Commission, to be expected by the end of October 2024 but this can be regarded as a mere formality.
Here are some aspect in the draft we would like to highlight:
1. Scope of Reg. 261
Many flights had to be canceled or could only be operated with delays. As passengers in this constellation could in principle be entitled to compensation under Regulation (EC) No. 261/2004, the question arises as to whether the airlines could claim exemption from liability under Art. 5 Para. 3 of Regulation (EC) No. 261/2004 in the event of an error in the security software. Even if, at first glance, there is a lot to be said for this, as the software error could not be controlled by the airline and also had an external impact on operations. However, it is to be feared that claim management companies will attempt a similar argument as in the ATC slot cases, in which they claim that also functional IT is part of the airlines’ sphere as normal exercise of activity. When defending these cases, it will therefore be necessary to explain the specific cause and exact impact on operations and the flight disruption. In addition, there is also the issue of reasonable measures with regard to rebooking efforts, as not all airlines are likely to have been equally affected by the disruption.
2. Events leading to rights under Reg. 261
The guidelines specify the conditions under which passengers are entitled to compensation and further rights in case of denied boarding or flight cancellations and delays. In this regard the guidelines give a detailed account of the ECJ decisions. Especially with regards to compensation claims, the guidelines provide for a separate section for extraordinary circumstances with all types of categories the ECJ had had to decide. Unfortunately, the section on reasonable measures remains rather vague. This is of course no surprise as the ECJ is very much focused on a case-by-case approach and therefore it is mostly the national court that has to decide on the reasonable measures. However, it is more the claim management companies when claiming for compensation that try to generalise the wording of single ECJ-decisions for a wider range of case, especially when it comes to issues such as re-routing of passengers or organising spare capacity aircrafts etc.
3. Passenger rights in case massive travel disruption
In this section the guidelines addresses situation of so called large scale travel disruptions by mentioning examples such as the volcano eruption in Iceland in 2010 and the COVID-19 pandemic. For these situations the Commission clearly addresses the difficulties for airlines to re-route passengers within a short period of time. It even acknowledges that the earliest opportunity for re-routing might be rather uncertain and that it could be preferrable for the passenger to receive a reimbursement of the ticket or to receive a re-routing offer for a later date. However, this view clearly indicates, that airlines will have to stay in contact with the passenger and assess the individual preferences. This is obviously an approach that counteract any automatization in the booking system and will still give airlines a hard time to stay in line with Reg. 261.
One short note regarding compensation claims: the guidelines are a copy of the COVID-19 guidelines from 2020. Although the new guidelines do not specifically refer to the COVID-19 pandemic but shall apply also for other events of massive travel disruption, the chance was lost, to address certain situations in more detail, that were not foreseeable at the time when the guidelines 2020 were published at the beginning of the pandemic. For example, what should approach should be taken in case of mass disruptions caused by huge adverse weather conditions affecting a whole area for several days? This does cause massive travel disruptions but very often it is unclear what measures to re-route passengers after the disruption are regarded to be sufficient and to what extent the consideration of different options has to be proven by the carrier. At least the last sentence in this section indicates that there might be other specific crisis situations that might fall under Art. 5 subs. 3 Reg. 261.
4. Enforcement and Compliance National Enforcement Bodies (NEBs)
The guidelines emphasize the role of National Enforcement Bodies (NEB) in ensuring compliance with the regulations. NEBs are responsible for monitoring airlines’ adherence to the regulations and handling passenger complaints. Further the guidelines facilitate dispute resolution and encourage the use of Alternative Dispute Resolution (ADR) mechanism: Member States are urged to establish ADR entities to handle disputes between passengers and airlines efficiently and cost-effectively. This use of out of court settlements options is also promoted to reduce the burden on judicial systems and provide quicker resolutions for passengers.
Conclusion
The interpretative guidelines aim at clarifications on the application of Reg. 261. By defining key terms, give a detailed account on compensation claims and rights of care, outlining air carrier liabilities, and emphasizing enforcement and compliance mechanisms, the Commission wants to ensure consistent and effective implementation across member states. These measures are regarded crucial for safeguarding passenger rights, promoting fair practices in the aviation industry, and fostering trust between passengers and airlines. However, from former experience in court, judges – at least in Germany – are rather reluctant to apply the guidelines as they do not regard them as binding. We often hear in court that the judiciary shall be independent from any influence from executory bodies and therefore only ECJ decisions are regarded as binding and are the only guideline to follow. For that reason there were many judges that did not really applied the COVID-19 guidelines in Reg. 261 but rather worked out their own legal approaches. To ensure a consistent interpretation of the rules set out in Reg. 261, the legislator will have to review the current rules and follow up on the revision process that was taken up in November 2023. Therefore, if the EC decision makers are serious about the above mentioned aims, the guidelines will not really help but rather a revision of Reg. 261. And as it was often mentioned: the interests of all stakeholders must be taken into consideration in order to come to a fair and for all sides acceptable solution.
