Last week the Court of Appeal ruled against Emirates in joined cases concerning the application of European Regulation EC 261/2004 (the "Regulation"). The Court's ruling, which is binding in the UK, confirms that a non-EU airline may be liable for delay caused by a missed connection at an airport outside the EU. The decision provides some certainty as to the scope of application of the Regulation, and also brings the UK in line with a number of other EU Member States who have interpreted the Regulation in a similarly passenger-friendly way. However the judgment will clearly not be welcomed by non-EU airlines operating out of the UK.
What does the Regulation do?
The Regulation applies to all passengers departing from an EU airport and passengers flying into the EU with an EU carrier. Non-EU airlines are required pay compensation to passengers whose flights out of the EU have been cancelled or delayed (with varying amounts of payment due depending on the length of the delay and distance of the flight).
The Regulation has been the source of much controversy since its introduction, with both national courts and the Court of Justice of the European Union ("CJEU") often finding in favour of passengers. In 2013, the European Commission published a proposal to amend the Regulation, but this has since stalled.
One area of uncertainty under the Regulation involves the treatment of connecting flights. The Regulation defines the "final destination" of directly connecting flights. However, this terminology is not used in Articles 6 and 7 which deal with delay and the right to compensation for delay (as interpreted by case law). The latter uses the phrase "last destination" without defining it. It is perhaps unsurprising that this causes confusion when airlines are trying to interpret the Regulation. Although the CJEU has adjudicated on this issue, none of the previous cases involved a non-EU carrier. These joined cases now provide some clarity.
Another uncertainty on connecting flights relates to how the distance should be calculated - should it be the total distance between departure and arrival via the connecting airport, or just the direct distance between the departure and arrival airports. Last month the CJEU confirmed that the nature of the flight (i.e. direct or connecting) makes no difference, and that in such a case, only the distance that a direct flight would have covered between the departure and arrival airports should be taken into account.
What does this judgment mean?
The present judgment concerns the scenario where a passenger on a non-EU carrier departs a UK airport and travels to their final destination via a connecting flight in a third country. The Court has confirmed that if the first leg departing the UK is delayed and as a result a passenger’s connection at a non-EU airport is missed, meaning arrival at the final destination is delayed by at least three hours, non-EU airlines will be liable for compensation of up to EUR 600 per passenger.
The joined cases of Gahan v Emirates and Buckley v Emirates involved passengers travelling from the UK to destinations in Asia and Australia, both via connections in Dubai, a common stopover point for Emirates flights. As a result of a delay to the flights departing the UK, the claimant passengers missed their connections in Dubai. Having been rebooked onto the next available flights, they arrived at their respective destinations over 12 hours later than scheduled. The passengers attempted to claim compensation under the Regulation and brought proceedings against the airline. In response, Emirates argued that, inter alia, the only relevant flights for the purpose of calculating any delay under the Regulation were the first leg flights departing the EU, and that the effect of delay had occurred outside the EU.
The Court of Appeal rejected Emirates' arguments and confirmed that the Regulation will apply to non-EU carriers in respect of flights to their final destination, so long as the first flight departs from the EU. It is of course significant that in each of the joined cases, both sectors of the journey were purchased together in a single booking.
This decision aligns with the approach of the CJEU in Air France v Folkerts (involving an EU carrier), which stated that, where a number of connecting flights have been purchased under a single booking, the relevant destination for determining any liability for delay under the Regulation was the final destination of the booking.
This judgment, the latest in a long line of pro-passenger decisions involving the Regulation, has particular significance for non-EU long-haul carriers, who often rely on connections in non-EU hubs such as Dubai. However, it is important to note that if the late arrival at the final destination is caused as a result of a delay to the second leg of the journey (i.e. between two non-EU airports), there is no liability under the Regulation. Furthermore, the upside is that if the length of the connection means that, despite a long delay on departure, a passenger is able to "catch up" with the connecting flight, then no compensation should be payable.
The effects of this decision could be felt very quickly, given the volume of cases involving missed connections currently stayed in the small-claims courts pending a decision in these cases. It is expected that the lower courts will follow this judgment and airlines may experience a significant increase in adverse judgments over the coming months.
The CAA, having intervened in the joined cases as an interested party, has welcomed the decision, which confirms its own interpretation of the Regulation. However, Emirates have indicated that they may seek permission to appeal the decision to the Supreme Court, so there could be a further delay before we get complete certainty on this issue.