On 6 June 2018, Advocate General Tanchev delivered his opinion in flightright GmbH v Iberia Express SA1 on passenger compensation payable under Regulation (EC) No 261/2004 (“Reg 261”). The case arose because a short delay on the first leg of a multi-leg journey operated by different airlines meant that passengers missed a connecting flight and suffered an overall delay of 49 hours.
The two affected passengers had booked a three-leg journey from Germany to El Salvador. The tickets were issued by Air Berlin but the flights themselves were operated by Iberia and Avianca under a code sharing arrangement with Air Berlin. The first leg of the flight, operated by Iberia, was delayed by 59 minutes. This resulted in the passengers missing their connecting flight and a 49 hour delay to their final arrival in San Salvador.
A claim was brought by flightright GmbH on behalf of the passengers for compensation for the 49 hour delay. The first instance court simply concluded that there was no compensation claim because the defendant carrier in relation to the first leg was only responsible for a 59 delay. On appeal, the Regional Court (Landgericht Berlin) referred the following question to the European Court of Justice for a preliminary ruling. Does a right to compensation exist under the Reg 261 where:
- A minor delay, leading to a missed connection, results in a delay in arrival at the final destination of three hours or more; and
- The initial leg of the flight, which was delayed, and the subsequent legs of the flight to the final destination, were operated by different air carriers, and the contractual air carrier was another separate entity?
It should be noted that in Folkerts2 the ECJ had previously answered point (1) affirmatively where the multi-leg flights in question were operated by the same air carrier.
The Advocate General concluded that a right to compensation does exist in these circumstances against the carrier operating the first sector and responsible for the delay. Dealing with the two issues outlined above:
- Following Folkerts, the relevant delay for the purpose of calculating compensation is the delay to arrival at the final destination, regardless of whether passengers reach their final destination by means of a single direct flight or an air journey with directly connecting flights.
- The fact that various entities are involved in operating a multi-leg journey does not affect the compensation payable to passengers. The Advocate General reasoned that, given the prevalence of the practice of code sharing, air carriers gaining commercially from the practice should bear the risk involved with regards to passenger delays in reaching their final destination on a multi-leg journey. In terms of which entity should be responsible for paying the compensation, the Advocate General opined that the compensation obligation is imposed upon operating air carriers, rather than contractual air carriers. This covers the airline actually operating the first leg of a multi-leg journey, where a minor delay to that first leg results in a larger delay in reaching the final destination.
The Advocate General emphasised that the aim of the Reg 261 was to strengthen consumer protection for air passengers. Passengers’ rights, including the right to compensation, should be interpreted broadly; and business models that distance legal relations between passengers and air carriers should not hinder passengers’ right to compensation claims.
What happens now?
The Court will make its own ruling on the question asked before the case goes back to the Landgericht for judgment. Although the Advocate General's Opinion is not binding, it is likely to influence the Court’s ruling.
The Opinion suggests that Iberia should be responsible for the ultimate compensation payable, despite the fact that it only operated the first leg of the journey and that under Reg 261 there would have been no compensation payable for the initial delay.
The significant point in relation to the Advocate General's opinion in flightright is that it seems to differ from a later decision made by the Court, where the question of which air carrier acted as the "operating air carrier" was disputed in the case of a wet lease.
Wirth v Thomson
In a recent case in the Hamburg Regional Court3, several passengers sought compensation for a delayed flight from Thomson Airways as the "operating air carrier" under Reg 261. The booking confirmation issued to passengers stated that the flight was operated by Thomson Airways; however they had wet leased the aircraft and crew to TUIFly. The German Court referred the question of who the "operating air carrier" was to the ECJ.
In its judgment on 4 July 2018, the ECJ looked at the definition of "operating air carrier" in Art 2(b) of Reg 261 and said the predominant element was the concept of a "flight", including performance of the flight and the fixing of the itinerary. The ECJ held that "operating air carrier" should be interpreted as not covering the case of an air carrier that wet leases an aircraft and crew to other carriers and does not itself bear the operational responsibility for the flight, even if the booking confirmation suggests otherwise.
Therefore, a wet lessee is the "operating air carrier" under Reg 261 and responsible for compensation for non-compliance, to the exclusion of liability for compensation on the part of the wet lessor who is actually operation the aircraft in question and responsible for the delay. The fact that the booking confirmation issued to passengers may state that the flight is "operated by" another actual wet lessor is not decisive.
Bundegerichtshof Judgment of 12 September 2017, cases X ZR 102/16 and X ZR 106/16
Wirth –v- Thomson came to the same conclusion as a September 2017 decision of the German Federal Court of Justice ("BGH"). There, the BGH overturned the decision of the lower courts in Germany and ruled that the right to compensation under Reg 261 should be asserted against the airline with which the passenger had booked the flight. The BGH did not regard the air carrier whose aircraft and crew were employed under a wet lease agreement as the 'operating air carrier' but instead asserted that the contracting airline is responsible for the obligations under the Regulation.
These three cases involve a number of permutations involving carriage on airlines other than the one issuing the tickets. The first instance court in Wirth –v- Thomson concluded that both would be liable; the lower German courts differed from the BGH in X ZR 102 and 106/16; and the Advocate General in flightright appears to differ from the ECJ in Thomson. The variation in conclusions illustrates continuing difficulties in the application of Regulation 261 principles. Indeed it may seem curious that the issue of respective liability of different airlines involved in the carriage has not yet been resolved by the courts. Traditionally aviation lawyers are used to the concepts of 'contracting' and 'actual' carriers in determining liability under the Warsaw/Montreal systems. The ECJ decision in Thomson suggests a different approach, based on responsibility for delivery of transport: close to, but probably distinct from, that of the contracting carrier. It is probably fair to say that there has been widespread acceptance that the contracting carrier would always be regarded as having the obligations imposed under Regulation 261, by virtue of the contract of carriage with the passenger. However, the definition in article 2(b) of an 'operating air carrier' seems clearly to extend to an actual carrier as well – something which the Thomson case appears to disregard.
Furthermore there is now an unhappy interaction between the use of the term 'operating carrier' under Regulation 261 and under Regulation 2111/2005, which requires transparent notification of the identity of the entity actually operating the flight – i.e. the wet lessor in these cases. It appears that in these cases the passengers were in fact notified of different carriers (i.e. 'contracting' carrier in one instance and 'actual' carrier in the other) but this point did not feature in the judgments.
The analysis in Thomson may apply well to wet lease operations between two airlines, but will apply rather less satisfactorily to the airline conducting a charter flight on behalf of the tour operator which has sold a package holiday to the public. The 'actual' carrier in that instance plainly does fall within the second limb of article 2(b) but if the principles in Thomson are taken to an extreme it may suggest that in the absence of a contract with the passenger the actual carrier does not have Regulation 261 responsibility.
The answer to that last point is that on its terms the ECJ's judgment in Thomson only applies in the context of a wet lease between two airlines. The question which remains is whether the same principles will be applied – in the face of Advocate General Tanchev's opinion - to a code share situation.
These cases involved the compensation obligation rather than the other obligations to provide care, assistance or rerouting, many of which are similarly imposed on the "operating air carrier". Part of the logic of the ECJ decision in Thomson was that the contracting carrier would be better placed to provide logistical support and other aspects of passenger assistance. That may be valid where one airline provides short-term wet lease capacity for an existing route and the wet lessee has all the infrastructure in place. However, other situations, and perhaps some franchise operations, may depend on the wet lessor providing more of the passenger support infrastructure and therefore being in a better position to provide passenger assistance than the contracting carrier. The judgment carries the impression that the ECJ regarded all wet leases as being the same: this is not necessarily true. Given that, now, a wet lessor who is responsible for a delay may be able to avoid any of the obligations of an "operating air carrier", it is even more desirable that where two airlines are both involved in carrying passengers subject to Regulation 261, the contractual relationship should define the allocation of risk and responsibility. That should apply not only for compensation but for discharging passenger assistance obligations.