Problems in practice
Many air operators in Europe would agree that the EU Denied Boarding Regulation (261/2004) is in need of a thorough review. This is all the more urgent following Sturgeon(1) and in light of the inadequacy of EU law to deal with extraordinary circumstances, such as those caused by the volcanic ash cloud in April 2010.
The Sturgeon judgment has been widely criticised by the airline industry, particularly for:
- its extension of the right to compensation provided by Article 7 of the regulation in respect of long flight delays; and
- the exclusion of technical problems (which come to light during aircraft maintenance or as a result of failure to carry out such maintenance) among the reasons for delay that may be deemed ' extraordinary circumstances'.
The cost implications for airlines are serious. If a passenger buys and uses a €49 ticket for a flight from Rome to Milan, but arrives three hours late, he or she is entitled to €250 under Article 7 - five times the price paid for a service that he or she has received. The volcanic ash cloud brought further problems. If the same passenger was unable to make the journey on the ticket due to the closure of Italian airspace, and chose not make the journey by other available and practicable methods (eg, by train or by car), he or she was entitled to hotel accommodation at the expense of the airline until the latter was able to offer a new flight on the same route.(2)
The problems of the denied boarding regime are exacerbated in Italy, which faces a number of specific issues not necessarily shared by other EU countries. Around 95% of passenger claims are not dealt with by the main civil courts, but fall within the competence of justices of the peace as small claims (ie, claims under €5,000). Justices of the peace rarely have adequate experience in aviation matters: they often apply the equity principle and tend to favour the passenger. Moreover, air carriers frequently struggle to satisfy the burden of proof, especially when seeking to provide proof of force majeure and technical faults on aircraft. Documents provided by the air carrier, such as technical logs, may be considered difficult for a non-specialist to understand; as a result, insufficient value is attached to them, which often makes witnesses an expensive necessity. This further raises the cost of defending a claim before the court of a passenger's residence or domicile, which is likely to high in comparison with the value of the claim itself. No less significantly, there is a tendency to award moral damages in addition to indemnification under Article 7 of the regulation. For all these reasons, air carriers generally prefer to settle claims, rather than contesting them.
In Italy, air carriers are represented by Assaereo, the national air carriers association. Among Assaereo's roles in representing Italian air carries, it cooperates with ENAC, the Italian Civil Aviation Authority, on the application of Italian, European and international regulations and in monitoring developments in aviation case law.
In July 2010 Assaereo organized a conference where representatives of airlines, aviation authorities and consumer groups discussed the problems surrounding passenger claims. Among the ideas to emerge from this and other industry discussions are:
- the establishment of an entity to specialise in the resolution of small claims within the sector, with the Air Transport Users Council in the United Kingdom as a possible model;
- more appropriate, standardised and approved contractual models between air carriers and other operators (eg, tour operators, handlers and agents), as well as standardised general conditions of transport; and
- a review of relevant insurance policy conditions.
In general, a number of amendments or improvements would be widely welcomed by airlines, such as:
- the exclusion or revised application of denied boarding compensation rules in crisis situations;
- an end to cumulative indemnification (ie, the application of both Article 7 damages and moral damages);
- a rule to make compensation proportionate to the ticket price of a flight;
- an amendment to allow passengers to be rerouted by alternative means of transport;(3)
- a clear distinction between cancellations and long delays, and the consequences of both; and
- a clarification on the conflict or concurrent application of denied boarding compensation and damages according to international and national rules.
For further information on this topic please contact Laura Pierallini or Gianluigi Ascenzi at Studio Legale Pierallini e Associati by telephone (+39 06 88 41 713), fax (+39 06 88 40 249) or email ([email protected] or [email protected]).
(1) See the European Court of Justice ruling in Sturgeon v Condor/Böck v Air France, published on November 19 2009.
(2) See Articles 5 and 9. Although the regulation excludes pecuniary compensation for exceptional circumstances and force majeure events for which the service provider bears no liability, airlines are obliged to cover the cost of food and accommodation for the period between the flight that the customer booked (and which was cancelled) and the flight that he or she ultimately takes.
(3) For example, in the case of a flight from Rome to Milan, which are also well connected by rail, the ability to reroute a passenger by train could be beneficial for passenger and airline alike.