www.parliament.uk/commons-library | intranet.parliament.uk/commons-library | papers@parliament.uk | @commonslibrary

BRIEFING PAPER

Number SN00233, 6 July 2015

Air passenger compensation

By Louise Butcher

Inside: 1. Compensation for denied

boarding, delay or cancellation

2. Compensation for lost or damaged baggage

3. Compensation for death or bodily injury

Number SN00233, 6 July 2015 2

Contents Summary 3

1. Compensation for denied boarding, delay or cancellation 4 1.1 What are passengers entitled to? 4

Denied boarding 4 Delay 5 Cancellation 6 A word on ‘extraordinary circumstances’… 7 Level of compliance 8

1.2 Who can help? 9 Current arrangements – the CAA 9 Proposed changes - an ‘aviation ombudsman’ 9 How to make a complaint 10

1.3 What is the relevant law? 12 EU Regulation 2004 12 UK Regulations 2005 14 Legal challenges and court judgements 14 Plans for a new EU Regulation 15 Gibraltar 17

2. Compensation for lost or damaged baggage 18

3. Compensation for death or bodily injury 19

Contributing Authors: Louise Butcher, Transport Policy

Cover page image copyright: Bank notes and coins [image cropped]

3 Air passenger compensation

Summary This paper explains what compensation is available to passengers under EU legislation where they have been denied boarding or suffered flight cancellations or delays. It does this in the light of recent legal judgements and the European Commission’s attempts to update the relevant Regulation which sets out passenger rights and how they apply.

It also sets out air carrier liability under the Montreal Convention for death or bodily injury and lost or damaged luggage.

Since the EU legislated to provide a comprehensive system of air passenger rights in 2004 increased awareness of those rights and the ability to complain and appeal has led to a significant increase in the number of people doing so. This has been supplemented by a number of court cases which have ruled on the circumstances in which airlines must pay compensation; appeals against some of these judgements have meant that some airlines have been reluctant to pay out compensation until the legal position is absolutely clear. The CAA takes the view that the position is clear, that payments should be made and is taking action to require enforcement by some airlines.

The international Montreal Convention came into force in the UK in 2004 and is intended to replace other international agreements on air carrier liability that have been in place, in some cases, for over 80 years.

The Civil Aviation Authority (CAA) is the responsible UK body for providing advice in this area.

Information on the cost of air travel (fares, charges, taxes etc.) can be found in a separate briefing paper (CBP7211). This and information on other aviation-related matters can be found on the Aviation Topical Page of the Parliament website.

Number SN00233, 6 July 2015 4

1. Compensation for denied boarding, delay or cancellation

The law on passenger compensation in the event of denied boarding, cancellation or delay has been in effect for a decade, yet there remains some confusion as to exactly what an airline must do for passengers when they encounter a problem. Some of this confusion is due to various legal challenges and uncertainty as to the enforcement of their outcomes.

In the UK the relevant body to assist with making a claim and to advise on an individual passenger’s rights is currently the CAA (see section 1.2, below, for more information).

It is important to note that the CAA cannot help with claims arising from delayed flights from another EU Member State to the UK, in which case passengers would need to contact the National Enforcement Body in that Member State.

Furthermore, the EU Regulation as a whole does not apply to flights coming from outside the EU on a non-EU airline.

1.1 What are passengers entitled to? Full details of passenger rights under the Regulation1 are available on the CAA website and in their Know Your Rights leaflet.

In summary, the Regulation prescribes what airlines must provide their passengers in the event that a flight is delayed or cancelled. This applies even if the information is not contained in the airline’s terms and conditions. It only applies in the following circumstances:

• If the flight is departing from a designated country (regardless of which airline operates it); or

• If the flight is arriving in a designated country, but departing from elsewhere, only if the airline is based in one of these countries.2

A list of designated countries is available here; essentially it is all EU countries, Iceland, Norway and Switzerland.

Denied boarding Any passenger who is involuntary denied boarding (‘bumped’ off their flight where giving up their reservation was not voluntary), is entitled to compensation providing they checked into their flight on time.3

The airline must give the passenger either a refund of the ticket price or an alternative flight, plus additional compensation based on the delay time of the alternative flight offered by the airline.

1 EU Regulation 261/2004/EC, see below 2 CAA, Is your flight covered by EU rules? [accessed 3 June 2015] 3 information in this section taken from CAA, Your rights when you are bumped from a

flight [accessed 3 June 2015]

5 Air passenger compensation

Compensation for denied boarding

For short-haul flights that cover less than 1,500km:

• If the delay is less than two hours, you can claim €125

• If the delay is more than two hours, you can claim €250 For medium-haul flights that cover 1,500km – 3,500km, or flights within the EU of more than 1,500km:

• If the delay is less than three hours, you can claim €200

• If the delay is more than three hours, you can claim €400 For long-haul flights that cover more than 3,500km:

• If the delay is less than four hours, you can claim €300

• If the delay is more than four hours, you can claim €600

Passengers are entitled to a cash payment, usually paid by cheque or bank transfer. Some airlines may also offer an alternative such as travel vouchers or free travel services. Passengers are free to choose which suits them best.

Alternative flights can either be as soon as possible or at a later date that suits the passenger. In the event that the passenger chooses to fly as soon as possible, the airline must also provide care and assistance while they wait for the flight (i.e. food, drink, communications and accommodation, if there is an overnight stay).

The passenger is entitled to a refund for any unused parts of their booking (e.g. the return flight), and a flight back to their departure airport if they have already completed part of their journey.

Delay Any passenger who is delayed is entitled to compensation providing their flight meets the relevant requirements.4 The airline must give the passenger care and help and compensation.

Compensation for delay

For short-haul flights that cover less than 1,500km: • For delays of under three hours, you cannot claim compensation

• For delays of more than three hours, you can claim €250 For medium-haul flights that cover 1,500km – 3,500km, or flights within the EU of more than 1,500km:

• For delays of under three hours, you cannot claim compensation

• For delays of more than three hours, you can claim €400 For long-haul flights that cover more than 3,500km:

• For delays of under three hours, you cannot claim compensation

• For delays of three to four hours, you can claim €300

• For delays of more than four hours, you can claim €600

4 information in this section taken from CAA, Delays and compensation [accessed 3 June 2015]

Number SN00233, 6 July 2015 6

Affected passengers are also entitled to care and assistance. This usually means food, drink, access to communications (like a phone) and accommodation (if necessary).

Once a flight has been delayed for more than five hours, the passenger is entitled to a refund if they no longer wish to travel. They will also receive a refund for any unused parts of their booking (e.g. the return flight), and a flight back to their departure airport if they have already completed part of their journey.

Cancellation Any passenger whose flight is cancelled is entitled to compensation providing their flight meets the relevant requirements.5 The airline must give the passenger a refund or offer an alternative flight and provide compensation.

Compensation for cancellation: short haul

For short-haul flights that cover less than 1,500km: Seven to 14 days’ notice: • If your new flight arrives more than four hours after your original flight, you can claim €250.

• If your new flight takes off more than two hours before your original flight, and arrives more than two hours after it, you can claim €250.

• If your new flight takes off more than two hours before your original flight, and arrives less than two hours after it, you can claim €125.

Less than seven days’ notice: • If your new flight arrives more than two hours after your original flight, you can claim €250 – no

matter what time it departs.

• If your new flight takes off more than one hour before your original flight, and arrives less than two hours after it, you can claim €125.

Compensation for cancellation: medium haul

For medium-haul flights that cover 1,500km – 3,500km, or flights within the EU of more than 1,500km: Seven to 14 days’ notice: • If your new flight arrives more than four hours after your original flight, you can claim €400 – no

matter what time it departs.

• If your new flight takes off more than two hours before your original flight, and arrives three to four hours after it, you can claim €400.

• If your new flight takes off more than two hours before your original flight, and arrives less than three hours after it, you can claim €200.

Less than seven days’ notice: If you received less than seven days’ notice of the cancellation, you can claim compensation based on the timings of the alternative flight:

• If your new flight arrives more than three hours after your original flight, you can claim €400 – no matter what time it departs.

• If your new flight departs more than one hour before your original flight, and arrives less than three hours after it, you can claim €200.

5 information in this section taken from CAA, Delays and compensation [accessed 3 June 2015]

7 Air passenger compensation

Compensation for cancellation: long haul

For long-haul flights that cover more than 3,500km: Seven to 14 days’ notice: • If your new flight arrives more than four hours after your original flight, you can claim €600 – no

matter what time it departs.

• If your new flight departs more than two hours before your original flight, and arrives less than four hours after it, you can claim €300.

Less than seven days’ notice: • If your new flight arrives more than four hours after your original flight, you can claim €600 – no

matter what time it departs.

• If your new flight departs more than one hour before your original flight, and arrives less than four hours after it, you can claim €300.

Affected passengers who choose an alternative flight are also entitled to care and assistance. This usually means food, drink, access to communications (like a phone) and accommodation (if necessary).

Affected passengers who choose a refund are entitled to their money back for any unused parts of their booking (e.g. the return flight).

A word on ‘extraordinary circumstances’… An airline is not obliged to pay compensation if it can prove that a delay or cancellation was caused by ‘extraordinary circumstances’. This is defined in paras 14 and 15 of the preamble to the 2004 Regulation as follows:

(14) As under the Montreal Convention, obligations on operating air carriers should be limited or excluded in cases where an event has been caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken. Such circumstances may, in particular, occur in cases of political instability, meteorological conditions incompatible with the operation of the flight concerned, security risks, unexpected flight safety shortcomings and strikes that affect the operation of an operating air carrier.

(15) Extraordinary circumstances should be deemed to exist where the impact of an air traffic management decision in relation to a particular aircraft on a particular day gives rise to a long delay, an overnight delay, or the cancellation of one or more flights by that aircraft, even though all reasonable measures had been taken by the air carrier concerned to avoid the delays or cancellations.

In July 2014 the CAA stated that it had “made some progress towards a shared understanding of ‘extraordinary circumstances’ (when compensation is not payable) with airlines and other EU enforcement bodies, and have embarked on gathering data to assess the general state of compliance with legislation”.6

As explained in section 1.3, below, what constitutes ‘extraordinary circumstances’ has been subject to legal challenge. In particular, the

6 CAA, Annual Report & Accounts 2014, CAP 1193, 16 July 2014, p26

Number SN00233, 6 July 2015 8

Jet2 v Huzar judgement in July 2014 found that for a technical problem with a plane to constitute an extraordinary circumstance, the circumstances must be ‘out of the ordinary’. The CAA explains:

The Court’s view was that, although the fact that a particular technical problem may be unforeseeable, this does not mean that it is out of the ordinary or unexpected. Indeed, the Court’s view was that difficult technical problems arise as a matter of course in the ordinary operation of a carrier's activity – some may be foreseeable and some not but in general they are properly described as inherent in the normal exercise of the carrier's activity.

Notwithstanding the Jet2 v Huzar judgment, European case law (in particular the Wallentin-Hermann v Alitalia3 case) still applies and therefore there may be technical faults that are not inherent in the ordinary operation of a carrier’s activity, for example where the fault is the result of a hidden manufacturing defect, and hence such technical faults could constitute an extraordinary circumstance.7

Level of compliance In March 2015 the CAA published two reports looking at airlines' compliance with passengers rights regulations.

The first – a review of airline policies in relation to supporting passengers during disruption and providing information – found “a number of examples of very good practice as well as some airlines we are very concerned about”.8 It praised easyJet, Ryanair and Wizz Air, acknowledged that British Airways, Emirates and Lufthansa were taking steps to improve and highlighted Aer Lingus and Jet2 as “falling well below what is expected of them from their passengers and the law”.9 The CAA has begun the legal phase of its enforcement process against Aer Lingus and Jet2, using its powers under Part 8 of the Enterprise Act 2002.10

The second report looked at whether airlines are following the law as clarified by the Supreme Court in Jet2 v Huzar and Dawson v Thomson Airways (see below). It found that “the vast majority of … airlines” were respecting the court’s decision and paying compensation”, but was “extremely disappointed to find that it appears a small number of airlines are letting their passengers down by failing to consistently pay compensation and also applying a two year limit to claims”.11 The CAA has begun the legal phase of its enforcement process against Jet2 and Wizz Air under Part 8 of the 2002 Act and is using other powers in Part

7 CAA, Financial compensation, technical faults and time limitations: Compliance report, CAP 1275, 23 March 2015, p5

8 CAA, A right to know: Compliance report, CAP 1227, 23 March 2015, p3 9 see, e.g. “Proof airlines will do ANYTHING to avoid paying out for your flight delay as

Jet2 makes legal threat to complainants”, Daily Mail, 3 June 2015; and “Airlines defy Supreme Court and refuse to pay £50m delay compensation to holidaymakers”, The Independent, 8 February 2015

10 ibid., p3 11 op cit., Financial compensation, technical faults and time limitations: Compliance

report, p2

9 Air passenger compensation

8 to “obtain further information from Ryanair on their approach to assessing passenger claims for flights disrupted by technical faults”.12

1.2 Who can help? Current arrangements – the CAA Representation for UK air passengers has been through a number of institutional changes and is about to change again. At present the Civil Aviation Authority (CAA) Passenger Advice and Complaints Team (PACT) handles complaints. However, this is not an ombudsman scheme and the CAA is unable to impose its findings on airlines. There are plans to change this from later in 2015, though there may be a transitional period where some passengers have no complaint resolution mechanism open to them but the courts. They may also be a charge for these services in future.

For many years, the main body to which UK air passengers could go for advice or to make a complaint was the Air Transport Users’ Council (AUC), set up by the CAA in 1973 but with no statutory authority. In March 2011 the CAA announced its intention to create a new independent body to represent passengers’ interests, replacing the AUC, to be called the Aviation Consumer Advocate Panel (ACAP).13

The Labour Government did plan to give Transport Focus (see above) the AUC’s responsibilities and make it the statutory air passenger consumer body.14 However, the Coalition Government announced in July 2010 that it would not be going ahead with this change.15

Proposed changes - an ‘aviation ombudsman’ All this has been changed by the EU Alternative Dispute Resolution (ADR) Directive (Directive 2013/11/EU), which requires schemes to be available to help settle any dispute that cannot be resolved though a business’s own complaint handling procedure.

In January 2015 the CAA published a consultation on implementation of the ADR Directive. This set out the need for change as follows:

… a system of private alternative dispute resolution (ADR) is a better way to bring about the improvements needed to achieve our vision. That is to say, a scheme set up and directly funded by the aviation industry, but with clear and independent governance, and regulatory oversight by the CAA as a designated competent authority

The European Directive on ADR provides a legal framework for such ADR arrangements and specific information tools to encourage clarity and transparency.16

12 ibid., p3 13 CAA press notice, “CAA strengthens passenger representation and streamlines

complaints system”, 9 March 2011 14 DfT, Reforming the Framework for the Economic Regulation of Airports Decision

Document, December 2009, paras 7.28 & 7.40 15 HC Deb 21 July 2010, c22WS 16 CAA, Reforming consumer complaints handling: Consultation on the CAA’s draft

policy, CAP 1257, December 2014, p4

Number SN00233, 6 July 2015 10

However, it also highlighted the fact that the Directive would not be mandatory in aviation, so the onus will be on the CAA to find a way of guaranteeing that all of the 200-plus airlines serving the UK will join an ADR scheme. The CAA’s preferred approach is to “give the industry the necessary support to establish its own ADR arrangements, while accepting not all airlines may join a scheme straight away”. This could lead to a scenario where “for a transitional period, some passengers may have no access to complaint resolution other than the courts”.17

ADR will be directly funded by the businesses that use it, with the CAA providing regulatory oversight. This is consistent with how ombudsman-style schemes work in other sectors such as energy and financial services.

The ADR Directive allows ADR schemes to charge consumers a nominal fee to use their services. The CAA’s ‘strong preference’ is for ADR to be free of charge to consumers. It goes on:

If ADR schemes charge, their fee should be no more than the lowest fee for bringing a claim in the country court (currently £25) and be for the sole purpose of deterring spurious complaints. If a consumer’s complaint is upheld in any way, the CAA will require that the fee is refunded.18

By 1 September 2015, the CAA wants to see ‘firm commitment’ to ADR from airlines who together carry at least 50% of passengers to and from UK airports. If this milestone is reached, “the CAA will begin to wind down its own passenger complaint handling service, although it will continue to use intelligence from passenger complaints to support its consumer enforcement work”.19

How to make a complaint Details of how to make a complaint about a flight or an experience at an airport are given on the CAA website.

In the first instance you must complain to the relevant airline. The CAA recommends providing as much detail as possible and that in case anything should go wrong with a claim, it is useful to have a record of any communications.

When you first contact your airline, aim to set out your case clearly and concisely. Explain what happened and when, and why you feel you are entitled to receive a payment. Things to bear in mind include:

• State exactly what compensation and expenses you are claiming (find out beforehand what you are entitled to);

• Send your claim to the airline’s customer relations department (you can escalate your complaint if you do not get the result you hoped for);

17 ibid., p4 18 CAA press notice, “CAA confirms plans for creation of “aviation ombudsman””, 15

April 2015 [notes to editors] 19 ibid.

11 Air passenger compensation

• Give the airline as much information as possible (e.g. full contact details, booking reference and travel dates; details of disruption, names of any staff you spoke to); and

• Provide as many supporting documents and as much evidence as you can (e.g. copies of all relevant receipts, if you are claiming expenses, tickets, boarding cards and booking confirmations).

If you do not receive a satisfactory response to your complaint it can then be escalated to the CAA, who will undertake an initial assessment, then if the complaint is within its scope, it will ask the airline or airport to reassess it in the light of the relevant legislation and guidelines. The airline/port will reply and the CAA will then give the complainant their final assessment.

The number of complaints has increased dramatically in recent years:20

The CAA stated that between October 2012 and July 2014 it secured over £2.2 million in compensation for passengers. However, “a huge increase in passengers unhappy with their airlines’ responses to their compensation claims following delays and cancellations meant it has taken longer than we would have wished to process claims. We have now put in place improved systems and dealt with that backlog”.21

As indicated above, the CAA cannot take up complaints about flights that originated outside the UK. If the flight originated in another EU country, one should contact the national enforcement body in that country. A list is available on the European Commission website.

Complaints about a tour operator or travel agent should be taken up with a trade association such as the Association of British Travel Agents (ABTA) or the Association of Independent Tour Operators (AITO). These associations have codes of conduct for their members. ABTA and AITO also offer arbitration procedures through which customers can pursue complaints.

20 source: CAA; the 2013 spike was due to some high profile court cases 21 op cit., Annual Report & Accounts 2014, p26

-

5,000

10,000

15,000

20,000

25,000

30,000

2007 2008 2009 2010 2011 2012 2013 2014

Recorded airline passenger complaints, 2007 - 2014

Number SN00233, 6 July 2015 12

1.3 What is the relevant law? EU Regulation 261/2004/EC (‘the Regulation’) establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights came into force on 17 February 2005. It was implemented in the UK by the Civil Aviation (Denied Boarding, Compensation and Assistance) Regulations 2005 (SI 2005/975).22

According to the International Air Transport Association (IATA) there are over 60 countries with some form of passenger rights regulations, with more countries considering new rules.23 Outside of the EU the US and Saudi Arabia are two notable countries with compensation rules for denied boarding, delay and cancellation.24

IATA has expressed concerns that “some governments are ignoring basic commercial principles” when drawing up air passenger rights law and “are producing regulations that do not address the root causes of many travel disruptions”.25

EU Regulation 2004 The 2004 Regulation replaced an earlier Regulation dating from 1991.26 The 1991 Regulation provided a basic framework for compensation, refunds and alternative flights and assistance at airports in the event of passengers being denied boarding.

There were attempts to amend the 1991 Regulation in the mid-to-late 1990s, but the proposals stalled until late 2001 when the European Commission (EC) decided to take a different approach and published a proposal for a new draft regulation to establish common rules on compensation and assistance to air passengers in the event of denied boarding and of cancellation or long delay of flights.27

The UK Government at the time had concerns that the proposal was brought forward without consultation and without sufficient regard either to the existing European voluntary commitments on air passenger service28 or to the 1990 Package Travel Directive,29 which already provided protection for passengers travelling as part of an inclusive travel and accommodation package. The Department for Transport

22 the publication of the final regulations was preceded by two rounds of consultation, see: DfT, Denied boarding and cancellation or long delays of flights - consultation paper, 25 February 2005; and: DfT, Denied Boarding Compensation Regulation - Second Consultation, 12 January 2005

23 IATA press notice, “Industry Stepping Up Engagement on Consumer Protection”, 9 June 2015

24 ICAO, Summary of consumer protection rules, November 2013 25 op cit., “Industry Stepping Up Engagement on Consumer Protection” 26 Regulation 295/91/EEC of 4 February 1991 27 COM(2001) 784 final, 21 December 2001 28 which took effect on 14 February 2002 29 Directive 90/314/EEC, 13 June 1990; for more information on protection for those on

package holidays, see HC Library briefing paper SN6040

13 Air passenger compensation

carried out a full consultation on the proposal between February and May 2002.30

In December 2002 the EC adopted an amended proposal and political agreement was reached at the December 2002 Transport Council meeting. However, there were still differences on a number of key issues, resulting in the UK voting against adoption. The then Minister for Transport, John Spellar, gave the Government’s reasons for its vote in the House in December 2002:

Regrettably, the proposal was brought forward without consultation and without a meaningful impact assessment. Although the UK supported the revision and strengthening of the regulation, we had considerable concerns about the proposal … In extending the scope of the regulation into new areas, we felt that the Commission's proposal created complications that would make the legislation difficult to implement.

[…] at the Transport Council our overriding objective for the proposal was to reach the right balance between the commercial interests of airlines and the protection of passengers. In seeking that, I was mindful of the need to balance the interests of different groups of passengers and, in particular, to ensure that the proposal did not discriminate against those benefiting from lower fares … In the event, I considered that a suitable balance had not been reached. I therefore did not agree to the proposal.31

In particular, the Government was concerned about the potential impact on budget airlines. Mr Spellar went on:

There is a particular issue in relation to no-frills airlines, whose tickets prices tend to be considerably lower than the proposed levels of compensation. The question could be considered in terms of the interests of passengers versus the interests of airlines. It should also be considered in terms of the interests of the great majority of passengers versus the interests of passengers who are denied boarding.

[…] We would have preferred compensation more proportionate to ticket price, and we made point strongly. Ireland, too, thought that that might be preferable, but that view did not get strongly pushed. A number of other countries, which perhaps do not have such a strong no-frills sector at present—although that may change during the next few years—were not minded to accept our position.32

Following seven months of negotiations between the Council and the European Parliament (EP), the two sides reached conciliation on the Regulation in October 2003.33 The 2002 Regulation was ratified by both the Council and the EP in January 2004 and came into force on 17 February 2005.

30 DfT, Denied boarding and cancellation or long delays of flights - consultation paper, 10 May 2002

31 ESC Deb (A) 18 December 2002, cc3-4 32 ibid., c5 33 the ‘conciliation procedure’ is opened if the Council cannot accept all the

amendments adopted by the EP at second reading and consists of negotiations between the two co-legislators in the framework of the Conciliation Committee, with the objective to reach an agreement in the form of a 'joint text'

Number SN00233, 6 July 2015 14

When the Regulation came into force it was accompanied by inaccurate information on the Commission’s website and an information leaflet that was widely distributed in hard copy. Despite pressure from many quarters, the Commission did not withdraw the information until an adverse judgement from the European Ombudsman in June 2007.34

UK Regulations 2005 The new EU rules were implemented in the UK by the Civil Aviation (Denied Boarding, Compensation and Assistance) Regulations 2005 (SI 2005/975).

Publication of the final regulations was preceded by two rounds of consultation in August 2004 and January 2005.

The first consultation sought views on new offences and penalties for non-compliance and whether to designate the CAA’s Consumer Protection Group (CPG) as the UK's enforcement body, and the Air Transport Users Council (AUC) as the UK's designated complaints body.35

The second consultation was issued following responses to the first paper, in which concerns were expressed (particularly by airlines) as to the complexity and regulatory burden of the proposed enforcement regime. With this in mind, the second consultation contained three changes:

• to reduce the burden on airlines to provide the CAA with information as to potential non-compliance;

• to make offences summary36 only, with the penalty on conviction limited to a maximum of £5,000. Passengers would be encouraged in the first instance to seek redress through the Small Claims Court; and

• to give operators with a defence against a charge of non-compliance if it can be shown that they took all reasonable steps and exercised all due diligence to avoid committing the offence.37

It also confirmed the designation of the CAA as the UK's enforcement body, and the AUC as the UK's complaints body.

Legal challenges and court judgements In 2014 there were two key cases heard in the Supreme Court: Jet2 v Huzar and Dawson v Thomson Airways, which resulted in decisions which the CAA believes have substantially clarified the law on when one can claim for compensation.

The first set out in some detail what might constituent ‘extraordinary circumstances’ in cases of technical fault (see 1.1, above), and the second set the time limit for making a claim at six years form the date of the flight. In October 2014 the Supreme Court refused appeals in both

34 Decision of the European Ombudsman on complaint 1475/2005/(IP)GG, 21 June 2007 35 DfT, Denied Boarding Compensation Regulation (EC) No. 261/2004, enforcement in

the UK, 16 August 2004 36 meaning it would be dealt with by the Magistrate’s Court 37 DfT, Denied Boarding Compensation Regulation - Second Consultation, 12 January

2005

15 Air passenger compensation

cases. In February 2015 Liverpool County Court decided not to allow airlines to stay claims pending the outcome of a case being brought in Europe, further endorsing the position set out in Jet2 v Huzar.38

In September 2014 the European Court of Justice (CJEU) reached a judgement in the case of Germanwings GmbH v Ronny Henning, which clarified the law on ‘arrival time’. It found that a flight has officially arrived at its destination only when at least one of its doors is opened, settling many disputes on when a flight has landed and when a passenger can claim compensation from the airline.39

Going back slightly further, in October 2012 the CJEU reached a judgment in the case of TUI Travel and others v CAA, confirming that passengers whose flights arrive more than three hours late may be entitled to compensation for the delay in line with the 2004 Regulation, unless circumstances outside the airline’s control delayed the flight. In April 2013 the CAA reported that in the six months after the judgement it secured €95,700 in compensation for UK passengers hit by delays of over three hours that it considered were within the airline’s control.40

Plans for a new EU Regulation For roughly the past five years there have been indications that the European Commission has wanted to review the 2004 Regulation,41 but nothing materialised until 2013.

In March 2013 the Commission announced proposals to revise the 2004 Regulation in light of concerns that passengers were having difficulty claiming what they were entitled to under the law and were frustrated when air carriers did not appear to apply it properly. The Commission proposed to act in a number of connected areas:

• Carriers should provide better and quicker information to passengers where flights are delayed or cancelled and, in any event no later than 30 minutes after the scheduled departure time;

• ‘Extraordinary circumstances’ would be defined in the new Regulation as “circumstances which are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond its actual control” (e.g. natural disasters or strikes by air traffic controllers should be seen as extraordinary, but technical problems identified during routine aircraft maintenance should not);

• In the event of delay, ‘care and assistance’ should be delivered after two hours, whatever the length of the flight;

• Compensation should be available at 5 hours for all intra-EU flights and short international flights of less than 3,500 km; at 9

38 op cit., Financial compensation, technical faults and time limitations: Compliance report, pp5-6

39 “CJEU defines ‘arrival time’ in the context of flight delay compensation”, Solicitors’ Journal, 12 September 2014

40 CAA press notice, “CAA secures nearly €100,000 compensation for delayed passengers”, 23 April 2013 41 COM(2011) 174 final, 13 April 2011, section 2

Number SN00233, 6 July 2015 16

hours for flights of less than 6,000 km; and 12 hours for flights of more than 6,000 km;

• Where a tarmac delay exceeds one hour, there should be a right to air conditioning, the use of toilets, medical assistance and drinking water and the passenger may request disembarkation after a delay of 5 hours;

• Where an air carrier cannot ensure rerouting within 12 hours on its own services, it must offer passengers rerouting with other air carriers or other transport modes where available;

• Where a passenger misses a connecting flight because their first flight was late, they should be entitled to the same care and assistance and compensation as proposed for point-to-point flights;

• Airlines should provide clear complaint-handling procedures (web form, e-mail address) and reply to passengers within given deadlines (one week for the acknowledgement of receipt and a formal reply within a deadline of two months);

• Where disputes arise, passengers must be able to turn to out-of-court complaint handling bodies that will seek to resolve the dispute in an inexpensive and simple way;

• The provision of accommodation would be limited to three nights in ‘exceptional circumstances’; and

• The obligation to provide accommodation to passengers of flights of less than 250 km and with aircraft with less than 80 seats would be removed.42

The proposal has however failed to progress. Particular issues of dispute between the Commission and Member States have been Gibraltar (see below), and costs to airlines (particularly the trigger points for delay compensation and connecting flights).43

Most recently, after a meeting of the EU Transport Council on 11 June 2015, the Minister, Robert Goodwill, reported that he had:

… underlined the UK’s strong support for the improvements in air passenger rights whilst reinforcing our position that the balanced and proportionate trigger points of 5/9/12 hours should be maintained, a view strongly echoed by some Member States. I also voiced strong concerns on the proposed inclusion of a compensation scheme for missed connecting flights, highlighting the negative impacts for both passengers and airlines. Two Member States called for a lower trigger point of 3 hours with another suggesting anything other than including 3 hours in line with interpretative case law from CJEU rulings was a step backwards in passenger rights.44

42 EC press notice, “Air Passenger Rights Revision - Frequently Asked Questions”, MEMO 13/203, and COM(2013) 130 final, 13 March 2013; neither of the last two proposals would apply to passengers with reduced mobility, persons accompanying them, unaccompanied children, pregnant women and persons with specific medical needs

43 European Scrutiny Committee, Sixth Report of Session 2014–15, HC 219-vi, 24 July 2014, head 2

44 HC Deb 18 June 2015, c12WS

17 Air passenger compensation

Gibraltar One area of disagreement over the proposed new Regulation is Gibraltar.

The 2004 Regulation was adopted prior to the 2006 Cordoba Agreement.45 The Regulation contains a clause suspending its application to Gibraltar Airport, which was apparently “normal practice at that time”. The Commission’s proposal for a new Regulation does not contain provision to remove the Gibraltar Airport suspension. The UK Government is pressing for the new Regulation to extend to Gibraltar Airport in line with the EU Treaties.46

In summarising the issue for the European Scrutiny Committee in early 2015 the Minister set out the Government’s view as follows:

Importantly, the Minister tells us that:

· the issue over Gibraltar's suspension from the present Regulations remains unresolved, which is stalling the progress of several aviation files, including air passenger rights;

· the Government is keen to make progress on these aviation dossiers, not least because of the key economic gains that this would bring for aviation industry across the EU;

· these improvements must, however, be consistent with the EU treaties;

· the treaties are clear — Gibraltar is included in aviation measures;

· EU citizens using Gibraltar Airport should not be denied EU rights because Spain chooses to pursue a sovereignty dispute; and

· as we know, this is of the utmost importance to the UK.47

This is not the first time that Gibraltar has been a sticking point in negotiations in this area. As indicated above, the EC’s attempt to revise the 1991 Regulation fell by the wayside. This was due to a disagreement between the UK and Spain over application to Gibraltar.48

45 in September 2006 the governments of Spain, the UK and Gibraltar signed the Cordoba Agreement, which included measures on issues such as border crossings and access for flights. It also committed the parties to a tripartite forum for regular talks. However, Spain does not appear to have adhered to the spirit or the letter of the Cordoba Agreement, and has sought to exclude Gibraltar from EU aviation legislation, see: Gibraltar Government press notice, “Suspension of Gibraltar Airport from EU legislation would be illegal”, 152/2015, 10 March 2015

46 HC Deb 9 June 2015, c29WS 47 European Scrutiny Committee, Thirty Ninth Report of Session 2014-15, HC 219-xxxvii,

27 March 2015, head 6, para 6.12 48 op cit., Denied boarding and cancellation or long delays of flights - consultation

paper, p1

Number SN00233, 6 July 2015 18

2. Compensation for lost or damaged baggage

The Convention on the Unification of Certain Rules for International Air Carriage (‘the Montreal Convention’) was adopted in May 1999. The Convention consolidated, updated and will eventually replace all previous international agreements on air carrier liability, including the 1929 Warsaw Convention.49 It came into force for the UK on 28 June 2004 under two statutory instruments: the Carriage by Air Acts (Implementation of the Montreal Convention 1999) Order 2002 (SI 2002/263) and the Carriage by Air Acts (Application of Provisions) Order 2004 (SI 2004/1899).

When the Montreal Convention came into force Regulation 889/2002/EC also took effect. This amended Council Regulation 2027/97/EC on air carrier liability in the event of accidents, thereby creating a uniform system of liability within the European Community. This Regulation applied many of the provisions of the Convention to Community airlines whether they were operating within the EU or internationally.

Under the Convention, each passenger can claim up to 1,131 Special Drawing Rights (SDR) (or the sterling equivalent) for lost, damaged or delayed luggage but they must provide evidence. If agreement cannot be reached the claimant has the right to sue the airline for the alleged damages.

49 incorporated into UK law by the Carriage by Air Act 1961

19 Air passenger compensation

3. Compensation for death or bodily injury

The Montreal Convention (see above) establishes a regime of unlimited airline liability for death or bodily injury in the event of an accident. It applies to flights between the UK and the other countries that have ratified the Convention, such as the United States. It establishes strict liability up to 113,100 SDR, irrespective of a carrier's fault. The second tier is based on presumption of fault of a carrier and has no limit of liability. The Convention also establishes a limit of 4,694 SDR per claim for passengers who have incurred costs resulting from a delay, where the airline is held to be at fault.50 1 SDR is currently worth US$1.4.

In cases of death or injury to passengers, the Convention allows contracting parties to require air carriers to make prompt advance payments to assist entitled persons in meeting immediate economic needs. Further, air carriers must be adequately insured, thereby ensuring the availability of financial resources for purposes of compensation.

Legal action for damage resulting from the death or injury of a passenger may be filed in the country where, at the time of the accident, the passenger had his or her principal and permanent residence, subject to certain conditions.

50 the limits of liability were last revised in 2009, see: the Carriage by Air (Revision of Limits of Liability under the Montreal Convention) Order 2009 (SI 2009/3018)

BRIEFING PAPER Number SN00233, 6 July 2015

About the Library The House of Commons Library research service provides MPs and their staff with the impartial briefing and evidence base they need to do their work in scrutinising Government, proposing legislation, and supporting constituents.

As well as providing MPs with a confidential service we publish open briefing papers, which are available on the Parliament website.

Every effort is made to ensure that the information contained in these publically available research briefings is correct at the time of publication. Readers should be aware however that briefings are not necessarily updated or otherwise amended to reflect subsequent changes.

If you have any comments on our briefings please email papers@parliament.uk. Authors are available to discuss the content of this briefing only with Members and their staff.

If you have any general questions about the work of the House of Commons you can email hcinfo@parliament.uk.

Disclaimer This information is provided to Members of Parliament in support of their parliamentary duties. It is a general briefing only and should not be relied on as a substitute for specific advice. The House of Commons or the author(s) shall not be liable for any errors or omissions, or for any loss or damage of any kind arising from its use, and may remove, vary or amend any information at any time without prior notice.

The House of Commons accepts no responsibility for any references or links to, or the content of, information maintained by third parties. This information is provided subject to the conditions of the Open Parliament Licence.