The European Court of Justice (ECJ) has confirmed that airlines should pay compensation to passengers who are subject to long delays, giving them the same rights as those who are denied boarding or whose flights are cancelled.

In TUI Travel and Others v Civil Aviation Authority (C-629/10), the ECJ confirmed its previous decision in Sturgeon and Others [2009] which extended compensation to delayed passengers on the basis of the principle of equal treatment. As a result, delays of three hours or more to the scheduled arrival time will entitle passengers to monetary compensation from their airline according to the fixed amounts set out under Articles 5 to 7 of Regulation (EC) 261/2004 (the Regulation).

Answering questions referred by the English High Court, the ECJ held that loss of time constitutes an inconvenience which is covered by the Regulation and as such requires compensation. This interpretation is not inconsistent with the Montreal Convention, the ECJ held. It also confirmed that it would breach the EU principle of equal treatment if there were no such obligation to compensate.

Despite submissions from airlines that the obligation to compensate delayed passengers would cause them a heavy financial burden, the ECJ pointed to the defence set out in the Regulation that there would be no obligation if the delay is caused by "extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken, that is, circumstances which are beyond the air carrier's actual control." The ECJ therefore concluded that the financial consequences would not be too great for airlines.

A more detailed review of this case and its implications for the airlines industry will be published in January 2013 in our Insurance and Reinsurance Review.