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entitled to carriage under the ticket and the ticket is no longer
valid if you do not use its coupons completely and in order shown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
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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