Volcanic ash and closure of airspace - airlines' obligations under EU Regulation 261/2004 (Part 1)

As reported in our February 2010 Bulletin, airlines operating from European airports were already extremely concerned at the beginning of this year by the decision of the CJEU in the joined cases of Sturgeon v Condor and Böck and Lepuschitz v Air France which effectively sought to re-write Regulation 261/2004 and extend their obligation to pay fixed levels of compensation to flight delays over 3 hours. However, this concern was soon to be overshadowed by entirely unforeseen events.

Seismic activity at the Eyjafjallajokull volcano in Iceland started at the end of 2009 and gradually increased in intensity until 20 March 2010 when a small eruption started. From 14 April 2010 the eruption entered a second phase and created an ash cloud that spread across parts of Northern Europe and surrounding areas rising to a height of approx 30,000 feet. This led to the closure of much of Europe's airspace from 15 until 20 April.

The presence of volcanic ash in the air is a safety hazard to aircraft as the particles can affect aircraft systems and, if ingested into an engine, can transform into glass due to extreme heating, inhibiting the performance of the engine and in some cases leading to flame out. Some airlines have reported finding volcanic dust in engines during borroscope inspections. Subsequent eruptions have ensued but these have caused more limited closures of airspace. The seismic activity at Eyjafjallajokull continues and may well do for some time given that its last eruption continued for over 12 months.

These unprecedented events have caused significant unforeseen burdens for airlines as a result of the Regulation. It is clear at least that the fixed levels of compensation specified in Article 7 are not payable upon cancellation of flights due to the closure of airspace. The events constitute "extraordinary circumstances" even within the restricted definition given by the CJEU in Wallentin-Herman v Alitalia and thus the defence provided by Article 5.3 is available to airlines. This was confirmed by EU Transport Commissioner Kallas soon after the beginning of the crisis in April 2010

However, the remaining obligations upon airlines under the Regulation in the event of flight cancellation and delay, particularly care and assistance at airports and overnight accommodation along with associated transport costs, continue to apply. As has received much publicity, some low cost carriers have strongly criticised the open-ended nature of such obligations in view of the frequently low price paid by their passengers, and legacy carriers have suffered disproportionate costs also. Ryanair, for example, is reported to have paid over €40 million to meet its obligations under the Regulation as a result of the airspace closures. Its renowned chief executive initially asserted that such claims would not be paid but he subsequently agreed to pay "reasonable" claims.

Some airlines have pointed out that equivalent compensation in the ferry and rail sectors is limited to the price a passenger has paid for the ticket. They claim it is inequitable that a passenger who paid say €40 for a ticket is potentially entitled to claim many times that amount for hotel and associated expenses.

Some commentators have suggested that the crisis demonstrates how political considerations were a primary motivating factor for the Regulation without proper consideration being given to its effects. The volcanic eruption has certainly given rise to a number of practical issues in respect of which the Regulation is unclear and this article attempts to shed some light on these.

Right to care whilst waiting to be re-routed

The events of April 2010 demonstrated how open-ended airlines' obligations can be where it is not possible to re-route passengers for several days. Where passengers choose the option of re-routing rather than a refund following a flight cancellation, carriers are obliged to offer the care and assistance specified in Article 9. This covers meals and refreshments (in reasonable relation to waiting time), hotel accommodation and associated transport and two telephone calls, telexes, faxes or emails. The carrier's obligation is to offer the passenger the choice but no time is specified for the passenger to make the choice. Strictly, there would seem to be nothing to stop a passenger who did not clarify his/her intentions being accommodated, potentially for several days, and subsequently asking for a refund if re-routing had not been possible by that time.

Although the Regulation is again unclear in this respect, in the event that re-routing is not possible until the next day, where passengers can reasonably return home arguably they ought to do so and airlines should have no obligation to meet hotel expenses for passengers who are at their point of departure.

The obligations of the operating carrier to provide care and assistance to passengers whose flights are cancelled apply to all passengers with confirmed reservations, even those who have not presented themselves for check in. Some airlines have questioned whether they are liable for the hotel and meal expenses of passengers who have not come to the airport, so that the airline did not have an opportunity to offer care of its own. There have been some lower level court decisions in England which held that the Regulation does not create rights which are enforceable by passengers, so that if a carrier does not make any offer, the passenger has no remedy other than to complain to the relevant national enforcement body which could prosecute. However, such decisions are surprising as the clear provisions of EU Regulations are generally directly enforceable by those affected by non-compliance and, in view of the general approach of courts (particularly the CJEU) to interpretation of the Regulation, it seems likely that, even where no offer of accommodation was made, carriers would be obliged to reimburse reasonable hotel and meal expenses subject to the provision of receipts.

However, where airlines have offered meals and hotels but passengers have not accepted these offers and made their own arrangements, airlines should have good arguments to contest claims for such expenses.

The Regulation does not impose any time limit on the obligation to offer care, with the apparent result that passengers are entitled to such care until they can be re-routed, however long that may take. During April 2010, when it was not clear how long the closure of airspace would last, some airlines questioned how long the care obligations could reasonably last. Under Article 8.1 (a) any reimbursement must be paid within 7 days. Although the position is by no means clear, it is at least arguable that if re-routing is not possible within 7 days, it is reasonable that the care obligations should cease in line with the time limit specified for reimbursement.

Clearing the backlog

Article 11 of the Regulation provides that operating carriers shall give priority to persons with reduced mobility and any persons accompanying them as well as unaccompanied minors. The obligation is expressed to apply to care but it is likely that similar priority should be given when re-routing passengers once airspace opens after a long closure. Beyond that, the Regulation gives no clue as to whom airlines should give priority when clearing the backlog and most airlines seem to have adopted a sensible first-in, first-out approach without displacing passengers with confirmed reservations on services once airspace reopens.

The Regulation does not suggest that airlines have any obligation to provide additional flights or to re-route passengers on other carriers but such obligations, particularly the latter, may be inferred by a court if it is not possible to re-route passengers for some time following the reopening of airspace.

Delay

Although delay seems to have been less of an issue than cancellation, the provisions of the Regulation relating to delay may also be relevant.

Where flights are delayed for 2, 3 or 4 hours (depending on the length of the flight), the care obligations in Article 9 also apply. If a flight is delayed for 5 hours or more, passengers should also be offered a refund in accordance with Article 8.1 (a). However, the re-routing obligation does not apply, which is logical given that it is still intended that the flight will operate.

In addition, in the event of delay passengers may also claim proven losses under Article 19 of the Montreal Convention, although the carrier will have a defence where it could not reasonably avoid the damage. This defence would certainly apply for so long as airspace remained closed but may not do so after it reopens, and a passenger who is delayed further may have the additional right to damages under the Convention if the carrier cannot show that it took all reasonably necessary measures.

Looking forward

On 27 April 2010, EU Transport Commissioner Kallas presented to Commissioners a preliminary assessment of the effects of the closure of airspace and this identified a number of immediate, short and medium term measures to be taken. Significantly, immediate measures included a co-ordinated EU action to revise the existing ICAO recommended procedures in the event of volcanic activity. Further, the assessment confirmed that state aid for carriers affected by the closure would be permitted in principle provided it was granted on the basis of uniform criteria and did not distort competition.

Many airlines have called for the Regulation to be redrafted to exclude situations such as the volcanic ash crisis or at least to cap airlines' exposure in such event. However, there has been no indication from the Commission that any such measures will be introduced, and any amendment of the Regulation raises the possibility that other, less welcome, amendments may be introduced.

In the meantime, some aviation authorities, including in the UK and Ireland, have doubled the allowable concentration of...

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