On March 13, 2013, the European Commission released proposed amendments to Regulation (EC) No 261/2004 (hereafter “EC 261”),1 which governs the rights of passengers in the event of a cancelled or delayed flight to or from the European Union.3 If approved by the European Parliament and a majority of the Member States of the European Union, the amendments should provide some clarity to the rights and obligations of air carriers who operate flights to and from airports located in the European Union. The proposed amendments also impose additional obligations on air carriers regarding their response to delayed and cancelled flights.
EC 261, as interpreted by the European Court of Justice (ECJ), has sparked considerable controversy in the airline industry. While the recent amendments are not likely to resolve the controversy over the Regulation, the amendments may strike a better balance between passenger rights and the obligations imposed upon air carriers. If approved, the amendments are expected to enter into force by early 2015.
The Backdrop to the Amendments
EC 261 was enacted in 2004 with the stated objective of enhancing the protection of passengers engaged in air travel to, from, or within the European Union. The key elements of the Regulation are: passenger compensation for flight cancellation and denied boarding; a duty imposed upon air carriers to provide care and assistance to inconvenienced passengers; and a requirement that each Member State establish a National Enforcement Body to ensure proper application of the Regulation. The Regulation provides an exception to the payment of compensation for flight cancellations caused by “extraordinary circumstances,” a term left undefined in the Regulation.
The March 13 amendments follow a series of decisions by the ECJ that expanded the scope of the EC 261 beyond its original text. The ECJ’s most significant decision was in the Sturgeon case,3 which greatly expanded a passenger’s right to seek compensation under EC 261. In Sturgeon, the ECJ ruled that passengers were entitled to compensation for flight delays of three hours or more, even though the text of the Regulation only provided the right to compensation in the event of a cancellation or denied boarding. The ECJ reasoned that equal treatment principles demanded that passengers of both cancelled and delayed flights receive compensation because, in the court’s determination, passengers were similarly inconvenienced in both circumstances. The decision dealt an unexpected blow to the airline industry, as this type of “judicial legislation” was a departure from the civil code protocol adhered to by the European Union and the court’s decision unequivocally expanded air carriers’ liability. Industry professionals challenged the Sturgeon holding in the Nelson/TUI Travel case.3 However, the ECJ reaffirmed its earlier decision that passengers who are delayed three hours or more are entitled to compensation.
The ECJ’s decision regarding the factual circumstances that should be considered “extraordinary” also has created spirited debate since EC 261 was enacted. In Wallentin- Hermann,5 the ECJ ruled that cancellations and delays stemming from mechanical or technical problems that are “inherent in the normal operation of the aircraft” – in other words, problems identified during the routine maintenance or pre-flight check of the aircraft – do not qualify as “extraordinary circumstances.” Rather, according to the ECJ, only mechanical or technical problems that are latent or unforeseen, such as a manufacturing defect in a component, fall within this category.
Key Aspects of the Proposed Amendments
The proposed amendments are designed to clarify the rights and obligations that exist under the Regulation and provide increased certainty as to how the Regulation will be applied in the future. For instance, the new regulation would include a definition of “extraordinary circumstances,” as well as a non-exhaustive list of events meeting this criteria. The amendments also seek to strike a better balance between protecting passengers and exposing air carriers to increased costs and liability. The most significant changes to EC 261 are highlighted below.
Trigger Times for Delay Compensation
To address the prohibitive costs associated with providing compensation to delayed passengers, the European Commission proposes extending the delay threshold (currently three hours based on the Sturgeon decision) triggering the compensation requirement and creating different threshold times based on the flight distance. The European Commission proposes the following delay thresholds:
1) Time frame for compensating delayed passengers on flights within the EU and international flights of 3,500 kilometers or less is changed from three to five hours;
2) Time frame for compensating delayed passengers on flights between 3,500 kilometers and 6,000 kilometers is extended to nine hours;
3) Time frame for compensating delayed passengers on flights longer than 6,000 kilometers is extended to 12 hours.
Definition of “Extraordinary Circumstances”
To clarify which events constitute “extraordinary circumstances,” for which there is no compensation requirement, the proposed regulation defines the term as: “circumstances which, by their nature or origin, are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond its actual control.” The amendments also include a non- exhaustive list of events that meet this criteria. These events include:
1) Meteorological conditions not consistent with flight safety;
2) Labor disputes at the air carrier or essential service provider;
3) Natural disasters rendering safe flight operations impossible;
4) Technical problems not inherent in the operation of the aircraft, such as hidden manufacturing defects;
5) Security risks, sabotage, or acts of terrorism;
6) Life threatening medical risks requiring interruption or deviation;
7) Air Traffic Management airspace closure or closure of an airport;
Events that are specifically excluded from the “extraordinary circumstances” qualification are:
1) Technical problems inherent in the normal operation of the aircraft;6
2) Crew unavailability not stemming from a labor strike.
Duty of Care
The new Regulation expressly provides that the air carrier’s duty of care applies even when the delay or cancellation is the result of “extraordinary circumstances.” However, recognizing the heavy burden this imposes on air carriers, particularly in the case of large scale flight disruptions (e.g. the Spring 2010 European volcanic ash disruption), the European Commission proposes a cap to the duty of care and assistance, including a three-day limit on the requirement to provide hotel accommodations7
Statute of Limitations
The proposed Regulation would impose a statute of limitation on all court claims of two years from the date the aircraft arrived or was schedule to arrive.
The proposed regulation imposes an additional duty on carriers for tarmac delays. Tarmac delays of more than one hour will require airlines to provide water, available lavatories, and air conditioning or heat as appropriate.
Under the new amendments, carriers will be prohibited from denying boarding on the return portion of a flight even if the passenger did not travel on the originally scheduled outbound segment of the flight.
Perhaps unsurprisingly given the controversial nature of the Regulation, both IATA and consumer groups have voiced early opposition to various provisions in the amendments. Additionally, air carriers are wary of whether the amendments will provide them with any relief from the high costs they must incur to adhere to the current provisions of the Regulation. While it remains to be seen whether these views, in addition to the European Commission’s proposed amendments, will be considered by the European Parliament and Member States, the issuance of the amendments reflects a recognition of the uncertainties surrounding EC 261 and the need for changes. Whether the March 13, 2013 amendments strike the proper balance between consumer rights and fairness for the air carriers remains to be seen.
- Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004.
- Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 261/2004, COM (2013) 130 final (Mar. 13, 2013).
- Joined Cases C-402/07 and C-432/07, Sturgeon v. Condor Flugdienst GmbH//Böck v. Air France, SA,  E.C.R. I-10923.
- Joined Cases C-581/10 and C-629/10, Nelson v. Deutsche Lufthansa AG/TUI Travel plc, et al v. Civil Aviation Authority .
- Case C-549/07, Wallentin-Hermann v. Alitalia- Linee aeree Italiane SpA,  E.C.R. I- 11061.
- Examples would include a problem identified during a routine maintenance or a pre-flight check or a problem that arose due to a failure to correctly carry out such maintenance or pre- flight check.
- Exemptions are made for passengers who are disabled, pregnant, or an unaccompanied child.