Trade & Transport Bulletin - Restriction on EC Denied Boarding Regulations

A recent decision in the Court of Justice of the European Communities looked closely at the application of the European Communities' denied boarding regulations outlining required compensation and assistance to passengers in the event of denied boarding and of cancellation or long flight delays. The Court's decision has the effect of restricting the application of the regulations.

A preliminary ruling had been sought in proceedings between Emirates and Dr Diether Schenkel (Case C-173/07, ruling delivered 10 July 2008).

Background

Dr Schenkel booked an outward journey with Emirates from Dusseldorf to Manila via Dubai and return, the booking for both outward and return journeys having been made in Germany.

The return from Manila was reserved for a flight on 12 March 2006 but the flight was cancelled due to technical problems. As a result Dr Schenkel did not travel until 14 March.

Dr Schenkel brought an action against Emirates in the Local Court at Frankfurt am Main claiming compensation of EUR600 in reliance on Articles 5(1)(c) and 7(1)(c) of Regulation No 261/2004 of the European Parliament and Council.

Dr Schenkel argued he should be compensated under the denied boarding regulations and submitted that the outward and return journeys were non-independent parts of a single flight from Dusseldorf and so he was a passenger 'departing from an airport located in the territory of a Member State' within the meaning of Article 3(1)(a) of the Regulation.

Emirates argued the two flights were separate and that it did not have a licence to operate as a 'Community Carrier' referred to in Article 3(1)(b) and as such was not obliged to compensate Dr Schenkel for the cancelled flight.

The Local Court allowed Dr Schenkel's claim and Emirates appealed to the Higher Regional Court, Frankfurt am Main.  The Higher Regional Court, decided to stay the proceedings and sought a preliminary ruling on the question:

 Is Article 3(1)(a)…to be interpreted as meaning that 'a flight' includes the flight from the point of departure to the destination and back, at any rate where the outward and return flights are booked at the same time?

The relevant regulations

Article 4 of Regulation no 261/2004, 'Denied boarding' states:

When an operating air carrier reasonably expects to deny boarding on a flight, it shall first call for volunteers to surrender their reservations in exchange for benefits under conditions to be agreed between the passenger concerned and the operating air carrier. Volunteers shall be assisted in accordance with Article 8, such assistance being additional to the benefits mentioned in this paragraph.

Article 5 provides that in the case of cancellation of a flight the passenger shall have a right to compensation in accordance with Article 7.

Compensation under Article 7 is:

• EUR250 for all flights of 1500 kilometres or less.
• EUR400 for all intra-Community flights of more than 1500 kilometres and for all other flights between 1500 and 3500 kilometres.
• EUR600 for all other flights.

Article 7 states that 'in determining the distance, the basis shall be the last destination at which denial of boarding or cancellation will delay the passenger's arrival after the scheduled time'.

Article 8 provides for passengers to be offered a choice of reimbursement of the full ticket cost for the part of the journey not made together with a return flight to the first point of departure, or re-routing.

Article 3(1) deals with the scope of the regulation. It applies:

 (a)    To passengers departing from an airport located in the territory of a Member State
          to which the (EC) Treaty applies.

 (b)    To passengers departing from an airport located in a third country to an airport 
          situated in the territory of a Member State to which the Treaty applies, unless 
          they received benefits or compensation and were given assistance in that third 
          country, if the operating air carrier of the flight concerned is a community carrier.

Preliminary ruling

The Court began by interpreting 'flight' - it not being defined in the regulation.  It looked at the term in the light of the provisions as a whole and the objectives of the regulation.

It noted that Article 3(1) (a) and (b) needed to be read together so that when a passenger departs from an airport in a non-member court, the regulation only applies if the air carrier is a community carrier.

Article 8(2) refers to a flight which is part of a package, implying a difference from a tour or journey, which may consist of several flights.

It was found that the concept of flight must be interpreted as consisting of a unit of an air transport operation, performed by an air carrier which fixes its itinerary. This was contrasted with a 'journey' which it was said attached to the person of the passenger, who chooses his destination and makes his way there by flights operated by air carriers.

The Court also looked at the Montreal Convention 1999 but decided it was not decisive for the interpretation of the EC regulation.

It found that a journey out and back cannot be regarded as a single flight, so Article 3 (1) (a) could not apply in this instance.

The fact that the outward and return flights were the subject of a single booking had no effect on the interpretation of Article 3 (1) (a).

Conclusion

The ruling will give comfort to airlines who have been concerned about the seemingly all-pervasive influence of the EC regulation and particularly in circumstances such as this where a non-member State was the point of origin of a flight and a non-Community carrier was involved.

No doubt Dr Schenkel received the ruling with somewhat less enthusiasm.

For more information, please contact:

Andrew Tulloch, Partner
Tel +61 3 9274 5825
andrew.tulloch@dlaphillipsfox.com