Australia: Are You Sure You Don't Want To Check That? Liability Limits For Carry-On Baggage On Domestic Flights

IN BRIEF

The emergence of Low Cost Carrier airlines, and the unbundling of checked baggage by legacy carriers has resulted in more airline passengers travelling with carry-on baggage only, or using their full carry-on allowance and minimising their checked baggage. Similarly, the emergence of smartphone and tablet PC technology has meant a likely increase in the value of many passengers' baggage. However, the legislation has not kept pace with these changes and the liability limits granted to airlines in relation to domestic travel are viewed as inadequate.

INTERNATIONAL CARRIAGE

The Civil Aviation (Carriers' Liability) Act 1959 (Cth) (CACL) ratifies the Convention for the Unification of Certain Rules Relating to International Carriage by Air opened for signature at Warsaw on 12 October 1929 (the Warsaw Convention) and the Convention for the Unification of Certain Rules Relating to International Carriage by Air done at Montreal on 28 May 1999 (the Montreal Convention) in relation to International air travel, as well as establishing a liability regime for domestic travel.

The Warsaw Convention was established in order to provide internationally accepted limits on a carrier's liability for death, injury or damage. At the time it was opened, the majority of airlines in the fledgling industry were state-owned and the liability limits in the Warsaw Convention provided protection to the vulnerable industry by allowing stakeholders to fully insure against liability to passengers and reducing the incidence of litigation against airlines.

The Montreal Convention was an effort to modernise and consolidate the Warsaw Convention, and lists as one of its guiding principles the importance of ensuring protection of consumer interests in international air transport and the need for equitable compensation.

While as of 1 August 2012 approximately 103 countries had ratified the Montreal Convention, a significant number of destinations for Australian travellers (such as Indonesia, Thailand and Vietnam) have not, and so travel to these countries is still governed by the Warsaw Convention.

The Warsaw Convention provides for liability limits based on the weight of checked baggage and a maximum of 5000 franc poincares (approximately A$3000) for carry-on baggage. The Montreal Convention sets a combined limit of 1000 Special Drawing Rights (around A$2000) for checked and carry-on baggage.

However, these liability caps do not apply if the passenger can show that the baggage was either intentionally damaged by the carrier, or due to the carrier's recklessness.

DOMESTIC CARRIAGE

Part IV of the CACL together with the Civil Aviation (Carriers' Liability) Regulations 1991 (Cth) establish limits of A$1600 for a domestic passenger's checked baggage, but only $160 for carry-on baggage. Further, the passenger must prove that they were not responsible for the damage to their checked baggage.

These liability caps were first implemented in 1991, long before the first Low Cost Carriers started to appear in Australia, and despite a review into airline liability being conducted as part of the Aviation White Paper process in 2009, have not changed for over 20 years.

Further, there is no circumstance in which the liability caps for domestic travel do not apply – even in cases of intentional damage.

In its Liability Insurance Discussion Paper¹,the Government recognised that the domestic system may not appropriately balance the interests of carriers and passengers. However, this related to the concept that the liability caps are unbreakable (even in the case of intentional damage), rather than due to the high likelihood that a passenger's carry-on baggage will significantly exceed the value of $160.

With prices for smartphones and tablet PCs start at around $500, this one item can have a value more than 3 times the total liability cap for a passenger's entire carry-on baggage.

Passengers should remember that this liability cap applies not just in the event of a crash, but to any damage to their carry-on items during flight – including as a result of the actions of an overzealous crew member, a fellow passenger indelicately shoving their items into an overhead locker, or from those items falling from an overhead locker, having moved around during flight.

CONCLUSION

Until the Government acts to bring the liability limits for domestic travel in line with those for international travel, passengers should give extra thought to those items of luggage that they carry-on.

Footnotes

¹Review of Carriers' Liability and Insurance: Discussion Paper, May 2009

For further information please contact:

Andrew Draper, Partner
Phone: + 61 2 9233 5544
Email: ajd@swaab.com.au

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.