On July 31 2009 the Cologne Upper Regional Court ruled on two aspects of Lufthansa's general conditions of carriage.1 The Federation of German Consumer Organization challenged the carrier's practice of refusing to carry passengers who failed to use their tickets and coupons in the agreed sequence (ie, they skipped certain segments). The court held that the trend among passengers of so-called 'non-sequential use of coupons' or 'cross-border selling' undermined the airline's tariff structure and was not permitted in the applied conditions of carriage which formed an essential part of the contract of transportation between passengers and the airline. The court also ruled that passengers were not permitted to purchase tickets for a return journey, but use only the outward coupon of each ticket (so-called 'cross-ticketing').
Conditions of Carriage
The challenged condition reads as follows:
"3.3.1. The ticket you have purchased is valid and its calculation is based on the complete transportation as shown on the ticket, from the place of departure as entered in the ticket to the final destination as entered in the ticket. You shall not be entitled to carriage under the ticket and the ticket is no longer valid if you do not use its coupons completely and in order shown on the ticket... the contract excludes the cancellation of individual parts (coupons) of the journey".
Many airlines' conditions of carriage originate from the International Air Transport Association's Recommended Practice 1724, which for many years has provided suggested rules on the non-sequential use of coupons. It prohibits so-called 'smart ticketing' by passengers or agents that work together collusively with their customers to circumvent this condition.
Airlines have increasingly begun to refuse to accept these practices and deny boarding if such behaviour is discovered. The airlines' price models and tariff structures are based on considerations that many passengers (as well as several courts) have hitherto failed to observe with sufficient care. In principle, ticket prices are determined by offer and demand. Other factors include flexibility, refundability and the minimum duration of stay.
Traditional legacy carriers that rely on a hub-and-spoke system to provide their services face the same situation in most markets. When offering a connecting flight via a home country airport, traditional legacy carriers must compete with foreign carriers that may, for example, offer only a direct, non-stop, point-to-point service on the same route. This can lead to a situation where a pure domestic flight from B to C is more expensive than a flight departing from a third country going from A to B to C. It is also not unusual for a one-way fare to be more expensive than a return ticket for the same route, depending on the minimum stay.
Passenger Agreements are Binding
The court held that unauthorized changes to the agreed terms that are documented render the ticket and the contract of carriage invalid. In such circumstances, the carrier is allowed to deny boarding or charge the applicable fare for the journey. This position is well justified. Airlines cannot be expected to tolerate or accept the abuse of their tariff structures by passengers who never intend to travel on the agreed sequence of a flight ticket. In contrast to a number of recent lower court rulings, the court made clear that such passengers did not require protection.
The Cologne court's decision has been well received across the aviation industry and it is hoped that the decision will establish a precedent for the German Supreme Court, which will undoubtedly be obliged to look into 'smart-ticketing' practices in the near future.
1 Decision 6 U 224/08.
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