UK: Regulation (EC) No. 261/2004: Delays, Cancellations And A New Headache For Carriers

Last Updated: 20 August 2009
Article by Sue Barham

Opinion of Advocate General, Sturgeon v Condor Flugdienst GmbH and Böck & Lepuschitz v Air France, 2 July 2009

Proceedings in the European Court of Justice (ECJ) have threatened the legal validity of distinguishing between delay and cancellation for purposes of compensation payments under Regulation (EC) No. 261/2004, but the ultimate outcome could be far from favourable for carriers.

Ever since EC Regulation 261/2004 on denied boarding, cancellations and delays came into force, a key question has been when a delay is in reality a cancellation: key because it makes the difference between whether or not the passenger is entitled to compensation. Now that distinction is under threat.

The Advocate General to the European Court of Justice (ECJ) has recently published an Opinion in two joined cases referred by the German Federal Court of Justice and the Vienna Commercial Court. The cases requested clarification of the distinction between "delay" and "cancellation" under Regulation 261/2004. The trouble with referring questions on the proper interpretation of Regulation 261 to the ECJ is that one often gets more than one bargained for. That was the case with the ECJ's decision in late 2008 in Wallentin which has made life extremely difficult for carriers seeking to rely on a defence of "extraordinary circumstances" when flights are cancelled for technical reasons, and it threatens to be the case here too. For, as well as examining the vexed question of when a delay becomes a cancellation, the Advocate General's approach threatens a wholesale reopening of the regulation by questioning the underlying logic - and hence the legal validity - of why cancellation of a flight obliges the carrier to pay compensation to the affected passengers but delay does not.

In both these cases heard by the ECJ, the claimants had argued that their flights had in reality been cancelled rather than, as the carriers argued, delayed and that they were accordingly entitled to compensation under Article 5 of Regulation 261. The ECJ was accordingly asked questions aimed at assisting in determining whether a flight has been delayed or cancelled for the purposes of the Regulation.

When is a delay a cancellation?

The Advocate General acknowledged that there are a number of factors which might, in any particular case, indicate that a flight has been cancelled rather than just delayed. Those include: change of air carrier, change of aircraft, change of flight number, change of airport of departure or arrival, issuing new boarding passes, requiring new check-in, description of the flights as "cancelled" by flight crew or customer service representatives. The more of these factors that are present, the more likely it is that the flight has been cancelled rather than delayed; however, the Advocate General's view is that no one of these factors can, on its own, be conclusive. Each national court has to decide the question weighing the factors in each case, thereby leading to considerable legal uncertainty. As to whether the length of the delay should be determinative, the European Commission had submitted in argument that if a flight is "inordinately" delayed, it is difficult to maintain that it is still the "flight which was previously planned". However, there is nothing in the regulation which assists with deciding when a delay has become "inordinate" and the Advocate General was unwilling to read into the Regulation a specific time limit which is simply not there, regarding this as another instance of the Regulation leading to undesirable unpredictability and legal uncertainty.

On the central question "when is a delay a cancellation?", the Opinion therefore takes matters not a great deal further except to confirm that each case has to be considered by national courts on its own particular facts.

However, as noted, the distinction is important because of the availability of compensation for cancellation but not for delay; the Advocate General sought to understand the rationale for that and concluded that it has no logic. The stated aim of the Regulation was enhanced consumer protection for passengers; there appears to have been a view that airlines are responsible when they cancel flights and inconvenience passengers and so should pay compensation but that they are not always responsible for delays and so should not have to compensate passengers for that. There is an illogicality to that approach and the Advocate General understandably considered that it did not bear great analysis. It is entirely possible to envisage circumstances in which delayed passengers are inconvenienced far more than those whose flight has been cancelled: for example, following a flight cancellation, passengers might be re-routed promptly by the airline such that they suffer little disruption to their original schedule; a flight delay may, however, not be resolved for many hours with the result that the delayed passengers are put to much greater inconvenience, expense and disruption. Despite that, the delayed passengers receive no compensation whilst those whose flight was cancelled do.

In the view of the Advocate General, the underlying rationale of the Regulation was that, where the airline was not responsible for the passengers' inconvenience, it should not have to pay compensation but that, where the airline is responsible, it should have to pay. If that is correct, there is absolutely no reason to distinguish between delayed and cancelled flights. An airline may be at fault for a cancellation or not; it may equally be at fault for a delay, or not. In the Advocate General's view, affording different remedies to passengers in those circumstances breaches the fundamental EU law principle of equal treatment: passengers in a comparable situation are being treated differently to the advantage of one category (those whose flights are cancelled) and the disadvantage of the other category (passengers whose flights are subject to long delays). That raises significant doubts as to the continuing legal validity of the distinction between delay and cancellation in regulation 261.

What happens next?

The Advocate General has recommended that the cases be reopened so that proper submissions on this important issue can be made by the member states, the European Commission and the European Parliament. It seems likely that will happen although the ECJ will need to accept the Advocate General's opinion first. Of concern for carriers is how this process then develops. There are two possibilities. First, the Commission and the Parliament might argue successfully that there is a sound legal justification for continuing the distinction between cancellation and delay and requiring the airlines to compensate for one but not the other. On the other hand, the EU legislators might just seize with both hands the opportunity afforded to them to re-open the regulation and to argue successfully for the introduction of compensation for delays as well as cancellations. That would not introduce new compensation obligations for carriers overnight but it could very well be the start of a process which results in that.

"Extraordinary circumstances" exemption

Finally, and on a separate issue, the Court in the Böck case had asked the ECJ whether technical problems with an aircraft leading to a change of schedule represented "extraordinary circumstances" which could absolve the airline from having to pay compensation for a flight cancellation. Unfortunately, the Advocate General appears not to have taken the opportunity to take another look at the Wallentin judgment, which is in dire need of watering down and refinement, and instead simply reiterated the principle which emerged from that judgment that technical problems will not be extraordinary circumstances "unless the problem stems from events which, by their nature or origin, are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond its actual control".

A piece of legislation as vaguely drafted as EC regulation 261 was always likely to result in more than its fair share of referrals to the ECJ in an attempt to get some clarity; however, as this case and that of Wallentin has shown, clarity is not always the best outcome and some questions are best left unreferred.

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.

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