Following the outcome of a Government consultation paper, the full force of the Consumer Rights Act 2015 (CRA) will apply to the aviation sector as from the 1 October 2016. The result could lead to compensation being paid upto the price of the air ticket.
The Consumer Rights Act 2015 (the CRA) has been hailed as a landmark in the field of consumer law; the biggest overhaul of consumer rights in a generation.
The CRA came into force on the 1 October 2015.
The CRA introduced two new remedies in relation to the provision of services in the case of non-conformity with the contract. A service is taken not to conform with the contract where it is not performed with reasonable skill and care or a term which relates to performance. These new remedies are:
- The right to repeat performance. This could be the right for a further flight, probably unlikely in practice.
- If that is “impossible” or not done in a reasonable time, the right to a reduction in price. This could mean a full refund of the flight cost paid.
Initially the Government took the decision to exempt the transport sectors (aviation, maritime and EU licensed rail passenger operations) from the provision that prevented the the supplier from limiting liability to less than the price paid for the service.
The Government’s rationale in considering such an exemption was that the aviation industry was already subject to existing and established compensation schemes available such as the Montreal Convention and Regulation 261/2004. These schemes provide fixed compensation of between €250 to €600 in the case of cancellation or delay. The cost of a flight could of course be substantially more.
The Government went through a consultation process and has recently published its findings. In relation to the aviation sector the Government whilst concerned to maintain the integrity and exclusivity of the Carriage by Air conventions, concluded on balance in favour of bringing the CRA into force in full. The Government considered the scope for additional claims under the CRA in practice will be limited in the aviation sector.
What will be the likely impact upon the aviation industry?
There are a number of claims companies and lawyers who are continually looking for new ways to push the boundaries and margins on passenger claims. There have already been a number of court decisions on “technical faults” and the time limits for bringing claims.
Those same claim companies will now be going through the new rules looking for a new angle.
There is arguably already precedent for bringing claims under the CRA in addition to Regulation 261/2004. We have already seen in the case of Sturgeon v Condor Flugdienst (C-432/07) the ECJ has sought to distinguish the application of Regulation 261/2004 from the Montreal Convention. The case of Sturgeon went further to establish a right for standardised compensation in addition to any specific loss that could have been caused by the delay.
The CRA states that if a service is not provided with “reasonable care and skill” then the passenger will have a right to a price reduction which could be a full refund. There is also a provision in the CRA which could make an airline in breach of any term which relates to the performance of the contract (such as the date and time of the flight) liable to compensate the price paid without fault.
Will the changes increase the amount of compensation paid or number of claims made?
It is likely that the majority of delay/cancellation claims will continue to be dealt with under 261/2004. The passenger does not have to establish or prove their loss, and the defences available for the airline under 261/2004 are very limited.
There will however be cases where the flight cost is high and/or the passenger has suffered a particular loss over and above the general inconveniance of a delayed flight which may encourage a passenger to make a claim under the CRA.
The CRA will not effect baggage claims.
Post 1 October 2016 there will an increase in litigation in the short term until there is clarity as to how the Courts will apply the CRA to passenger delay claims. The Courts have however in recent years tended to make decisions in favour of consumer rights at the expense of airlines.