On 4 October, the Court of Justice of the European Union (CJEU) handed down two important judgments in relation to the compensation air carriers are liable for when air travellers are denied boarding.  The CJEU found that i) an air carrier must compensate passengers when they have been denied boarding because their flight was rescheduled as a result of a strike at the airport two days beforehand and ii) passengers on connected flights must be compensated when denied boarding as a result of a delay to the first flight caused by the airline company.

Regulation (EC) No. 261/2004 (the Regulation) establishes a set of common rules on the compensation and assistance that must be offered to passengers travelling to or from the European Union in the event of denied boarding, cancellation or a long delay to flights.  In particular, the Regulation stipulates that the term “denied boarding” refers to instances in which an air carrier does not carry passengers when they have a confirmed reservation, still wish to travel and have presented themselves on time.

According to the CJEU, as the Regulation is aimed at ensuring a high level of protection for passengers by means of a broad interpretation of the rights granted to them, the concept of denied boarding must be construed as relating to all circumstances in which an air carrier does not carry a passenger, including operational reasons such as rescheduling as a result of overbooking.  On that basis, if an air carrier does not allow a passenger to board on the grounds that the flights arranged by that carrier have been rescheduled—absent any reasonable grounds such as the passenger’s health, safety, security or insufficient documentation—this will be characterised as denied boarding.  This means that air carriers will have to offer compensation when boarding is refused due to flights being cancelled, delayed or overbooked as a result of unforeseen circumstances.  

The CJEU also restricted the scope of the exemption that is available for air carriers under Article 5 of the Regulation.  Article 5 provides that an air carrier does not have to compensate the traveller if the cancellation is caused by “extraordinary circumstances” that could not have otherwise been avoided.  The Regulation provides that extraordinary circumstances may relate only to a particular aircraft on a particular day and cannot apply to a passenger denied boarding because of the rescheduling of flights as a result of extraordinary circumstances affecting an earlier flight.  As such, the exemption works in favour of the carrier if the event in question could not have been avoided, even if all reasonable measures had been taken.  The CJEU ruled, however, that if the air carrier is obliged to cancel a flight on the day of an extraordinary circumstance, e.g., a strike by airport staff, and then takes the decision to reschedule its later flights or rebook the passengers’ reservations, this carrier will not be able to rely on the extraordinary circumstance exemption to justify denied boarding on those later flights.  In practical terms, this means that if a passenger is denied boarding on a subsequent rescheduled flight, this denial would be construed as resulting not from the strike but, instead, from the rescheduling.  As such, it would not constitute an extraordinary circumstance and the air carrier would be obliged to pay compensation to that passenger. 

Significantly, the fact that a carrier has paid compensation for denied boarding does not prejudice its rights to seek compensation under national law from any person who caused the denied boarding, including third parties.