Reforming aviation consumer policy
On 31 January 2022, two years to the day that the UK left the EU, the UK Department for Transport launched a consultation entitled “Reforming aviation consumer policy: protecting air passenger rights” (the “Consultation”). Noting the impact of the COVID-19 pandemic and the “devastating effect” this had upon the aviation sector, the government also references having “seen industry step up to respond more flexibly”. Capitalising on this, the aim of the Consultation is to seize the opportunity offered by withdrawal by the UK to review the retained EU legislation providing consumer protections for domestic UK flights. The stated aim is to showcase “the UK’s leading role in modernising passenger experience and supporting industry to provide the best service”.
Whilst a cynic might question if, two years on from Brexit, this is more delayed perfection (striving to be the “best”) than seeking continuous improvement, the UK Civil Aviation Authority (“CAA”) does at least proffer some statistics. Indeed, the CAA website publishes flight punctuality statistics for airlines operating at ten major UK airports and dating back more than 30 years to 1990, before the Maastricht Treaty of 1992, which created the European Union from the European Communities, had even been signed.
The Consultation is – rightly, given the continued impact of EU261[1] upon our European aviation operations as a country, focused upon domestic aviation. Our brief analysis of the CAA statistics therefore does the same, identifying two specific routes: Heathrow to Glasgow and Birmingham to Newcastle. What is stark over the period from 1990 to 2019 (the last full year of statistics pre-pandemic), is the changing face of domestic carriage by air. In 1990, there were 1226 flights from Birmingham to Newcastle; this rose to 1931 annual flights five years later, yet in 2019 there were only 20 flights on this sector. However, in that period, average delays per flight (on this route) rose from 4 to 22 minutes.
We witness a similar pattern with the (admittedly more popular) route from Heathrow to Glasgow – with 14507 flights in 1990, but falling back to 5980 by 2019. Yet at the same time as that reduction in service, passengers experienced an increasing trend for delay, from 6 minutes to an average of 12 minutes per flight.
Of course there is something in particular which characterises domestic carriage by air in the UK – whilst a series of islands, so often necessitating vital air links (the Isles of Scilly being just one key example), we are also a relatively small country, with well-developed road and rail networks. There are choices available to passengers. In 2019, the longest domestic scheduled air service was between Gatwick and Inverness, at 538 miles. The scheduled flight time is around 90 minutes, compared with a 10 hour drive or around eight and a half hours by train as calculated between the mainline stations of these cities. The average flight delay on this route in 2019 was just 15 minutes.
The Civil Aviation Authority -v- Ryanair DAC
So what is the Consultation aimed at achieving – how is the UK government engaging with the concept of modernising the passenger experience to provide the best service? The Consultation highlights an ongoing court case explaining that on 5 December 2018 (so before Brexit), the CAA began enforcement action against an airline for not paying financial compensation to passengers who had been “affected by cancellations and delay due to industrial action by airline staff.” The outcome of the CAA’s enforcement action has to be determined before any compensation claim can be pursued against the airline. On 29 April 2021, the High Court had ruled that the airline must provide compensation to passengers who had been so impacted.
The case continues and a Court of Appeal ruling was handed down in the matter of The Civil Aviation Authority –v- Ryanair DAC on 2 February 2022[2]. As LJ Newey highlighted, “the question raised by this appeal is whether the appellant, Ryanair DAC (“Ryanair”) is obliged by Parliament and Council Regulation (EC) No 261/2004 (“the EU Regulation”) to pay passengers compensation in respect of flights that were cancelled in 2018 as a result of strike action by employees of the airline”. Whilst Ryanair’s case was that the cancellations were caused by “extraordinary circumstances” pursuant to the Regulation, so that compensation would not be payable, the CAA sought an enforcement order requiring payment by Ryanair and the first instance Judge, HH Judge Gerald, had agreed.
The key objectives of the EU Regulation are detailed in its recitals – a stated aim of “ensuring a high level of protection for passengers” with “full account … of the requirements of consumer protection” and a recognition that “denied boarding and cancellation or long delay of flights cause serious trouble and inconvenience to passengers”. However, sitting beside a focus to increase the protection for consumers was an understanding within Recital 14 to the EU Regulation that “As under the Montreal Convention, obligations on operating air carriers should be limited or excluded in cases where an event has been caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken. Such circumstances may, in particular, occur in cases of political instability, meteorological conditions incompatible with the operation of the flight concerned, security risks, unexpected flight safety shortcomings and strikes that affect the operation of an operating air carrier”.
There is European jurisprudence on how in reality this takes effect. So in the Wallentin-Hermann v Alitalia decision (Case C-549/07 – 2008) a flight cancellation due to an engine defect was not deemed “extraordinary circumstances” because “technical problems which come to light during maintenance of aircraft … cannot constitute, in themselves, “extraordinary circumstances”” as “air carriers are confronted as a matter of course in the exercise of their activity with various technical problems to which the operation of those aircraft inevitably gives rise”. Further, in Case C-394/14 - 2014, cited by the Court of Appeal, (Siewert v Condor Flugdienst GmbH), an aircraft being struck by a set of movable steps was deemed to be “an event inherent in the normal exercise of the activity of the air carrier”. Those insuring such aircraft might perhaps beg to disagree in rating the risk.
The impact of the European Union (Withdrawal) Act 2018
What though of a strike by employees, rather than by mobile steps? The Court of Appeal examined the issue in three joined CJEU cases involving strike action by an airline’s employees (Krüsemann v TUIFly GmbH, Airhelp Ltd v Scandinavian Airlines System and CS v Eurowings GmbH). The ruling by the CJEU concluded that the relevant provision of the Regulation “must be interpreted as meaning that the spontaneous absence of a significant part of the flight crew staff … which stems from the surprise announcement by an operating air carrier of a restructuring of the undertaking, following a call echoed not by the staff representatives of the company but spontaneously by the workers themselves who placed themselves on sick leave, is not covered by the concept of “extraordinary circumstances”…”
In particular the European Court had noted that airlines as a matter of course face inevitable disagreements with their staff, and so “the risks arising from the social consequences that go with such measures must be regarded as inherent in the normal exercise of the activity of the air carrier concerned”.
The Court of Appeal in issuing its ruling was required to decide in accordance with pre-withdrawal decisions of the CJEU in respect of retained EU law such as the Regulation, pursuant to the European Union (Withdrawal) Act 2018. Interestingly here, therefore, the English Court was bound by the 2018 Krüsemann decision, but only required “to have regard to” the more recent 2021 decisions of the CJEU in Airhelp and CS.
A conceptual test
The first instance Judge had determined a high-level conceptual test “necessitating a fairly cursory fact-finding exercise in relation to whether or not the circumstances are inherent or external to the carrier”, assessing whether the originating circumstances were “part of the carrier’s normal activities as distinct from the bird strike or unruly passenger which are outside the normal activities of the air carrier”.
As to union-employer negotiations, the Judge had viewed it as normal “for such negotiations to break down … for both sides to deploy whatever tools are at their disposal, which include withdrawing labour, going on strike…” and as such not meaning the airline was not in control. With such a conclusion drawn, Ryanair would be compelled to compensate. The airline therefore appealed. On appeal, the UK CAA supported the first instance decision, and the Court of Appeal judgement notes the CAA’s position in essence that if a strike was by an airline’s employees in respect of pay or working conditions, as a matter of course the strike would not ordinarily amount to “extraordinary circumstances”.
The Court of Appeal upheld this decision, with Lord Justice Newey deriving from the Krüsemann decision the conclusion that “strikes over pay and employment conditions are not to be regarded as “extraordinary circumstances” and that whilst “plainly, strikes are capable of amounting to “extraordinary circumstances” at the same time the scope for disagreements, conflicts and strikes was inherent in running an airline, even if the employees’ demands were perceived as unreasonable.
Unintended consequences?
Perhaps one of the most interesting aspects of the ruling was an analysis of Ryanair’s contention that this interpretation of the EU Regulation would lead to “unintended consequences and perverse incentives, not least because the position of trade unions in collective negotiations would be strengthened in an undesirable way”. The Court of Appeal addressed this contention flagging that “in the context of international travel there is virtue in a passenger’s rights to compensation being the same whether his flight is from say, London Stansted or Dublin. In fact, an air carrier which had to make cancellations as a result of a strike would have an incentive to cancel flights from the United Kingdom rather than European Union airports”.
We see here, the Court of Appeal interpreting the EU Regulation to seek to provide a level-playing field for consumers (passengers) within geographical (as opposed to political) Europe. The passenger should, the Court contends, have the same rights regardless of whether the flight is one from England or Ireland.
Wider powers and modernising the passenger experience
What does the CAA think? It commented “we are committed to protecting the rights of air passengers and are determined to ensure all airlines comply with their legal obligations.” Notwithstanding the potential in this instance for an appeal to the Supreme Court, the concluding remarks of the CAA were truly insightful – “this process reinforces the need to modernise our powers. In this respect, we welcome the Government’s recent consultation on strengthening airline passenger rights.”
So, in the face of two English Court decisions upholding the rights of the CAA to compel an airline to pay compensation for passenger flight delay and/or cancellation, the CAA contends it needs modernised powers and a further strengthening of airline passenger rights. This is in part tied to the 2021 Competition and Consumer consultation by the Competition and Markets Authority as to reform of civil consumer enforcement powers, and an examination of whether enhancement could apply to, for example, the CAA. Yet, the UK government in its latest Consultation seeks “views … on whether these powers alone would be enough, or whether additional civil sanctions imposed by the CAA administratively would be beneficial”.
The idea would be to enable the CAA to determine for itself if an “aviation business” had breached consumer rights law, to order compensation or redress and even to impose financial penalties. This is laudable, but is it truly necessary?
In opening the Consultation, the UK government recognises the rules on compensation for flight cancellations and long delays provided in the EU Regulation and specifically addresses the impact of the UK being a signatory to the 1999 Montreal Convention – noting “whilst reforms can be made to domestic flights, international flights are limited to the provisions of the Convention” although additionally acknowledging that proof of loss caused by delay within the Convention is distinct to the EU Regulation’s compensation for inconvenience, and so can be claimed in addition.
What is really interesting here though, is the apparent drive of the UK government to examine the “opportunity to align domestic aviation compensation for delays … with other domestic modes” such as maritime or rail travel. For the latter, under a nationwide scheme (“Delay Repay”) compensation payable is typically 50% of the single ticket price in the event of delay of 30 to 59 minutes, with the majority of rail operators giving a full refund (or 50% of the return ticket price) for delays over an hour. Compare this to flight delay compensation under the EU Regulation: compensation incepts at 3 hours flight delay with the level of compensation determined by the flight distance. The lowest level of compensation (for 3 hours of more delay on a flight of up to 1,500km distance) is Euro 250), rising to Euro 400 for flights over 2,500 km distance. In all instances, the compensation level is divorced from the actual flight ticket price and in the case of low-cost air operators, typically exceeds the same by some margin.
So whilst the CAA seeks wider powers, and the government speaks of modernising the passenger experience, there is some indication, at least in relation to domestic carriage by air that the stated aim of strengthening air passenger rights may be more focused on “supporting industry”. As a reminder, the average delay when flying from Heathrow to Glasgow in 2019 was just 12 minutes. There will of course be extremes, and occasions on which the specific delay far outstrips the average, but the Consultation appears drafted to focus upon the fact and length of any delay (or cancellation) rather than the cause.
It is a consultation, and doubtless the views of airlines, regulators, passenger rights groups, and even lawyers such as ourselves (DAC Beachcroft is currently drafting its own response to the consultation) will be taken into account. However, it does appear striking that the Consultation focuses on alignment with current compensation regimes in place for, for example, the rail industry. This could well be the level playing field which the UK domestic airline industry so badly needs. Whether that will be perceived by the customer as an enhancement of passenger rights remains to be seen. In the words (again) of Mark Twain – “I was seldom able to see an opportunity until it had ceased to be one”.
[1] Regulation (EC) No. 261/2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights.
[2] Neutral Citation Number: [2022] EWCA Civ 76
