Ryanair case may precede denied Boarding Regulations Reforms

Posted: 19/04/2012

Ryanair has lost its ECJ challenge against providing essential goods to passengers stranded for extended periods by flight cancellations. But Mark Lee, head of Penningtons' travel law team, explains to Lexis Nexis UK Legal News Analysis why the case might push reforms reducing carrier liability: 

"Ryanair's ECJ challenge to EU passenger assistance rules is likely to fail but that is not necessarily the end of the story," says Mark Lee. "The ECJ's Advocate General (AG) has rejected Ryanair's argument that the 2010 volcanic eruption in Iceland fell into a category of events above and beyond the extraordinary circumstances stipulated in the Denied Boarding Regulations (Regulation 261/2004)," he explains.

"The regulations oblige airlines to reimburse passengers for reasonable costs for accommodation, meals and drinks when a flight is cancelled, even if this is caused by extraordinary circumstances."

The denied boarding regulation was largely intended to take care of the needs of passengers denied a seat due to airline overbooking. Ryanair argued that it was not designed to encompass the huge carrier liability arising from a shutdown of European airspace for a week by the eruption.

"Ryanair's primary argument was that the eruption was so extraordinary that the regulation should not apply," Mark continues. "This was a bold stance to take, not least because the ECJ is very pro consumer protection. Unsurprisingly the AG rejected the argument that there should be a special category of events which goes beyond that definition. Instead he concluded this was exactly the type of situation where consumers require protection most."

The case was referred to the ECJ from the Dublin Metropolitan District Court, and involved a passenger stranded in Faro for a week. She claimed Ryanair owed her EUR1130 for meals, refreshments, accommodation and transport after refusing her assistance.

The ECJ is very likely to agree with the opinion of the AG, Mark says.

"Although the court is not bound to follow the AG's opinion, it usually does, and in this case, I think it will. They will want to protect the consumer and will appreciate that airlines can increase fare prices, should they need to."

He believes one of the reasons Ryanair persisted with such a difficult case is because of the huge financial implications of liability. The situation is particularly difficult for budget airlines, since they may have less financial resources and will also be reluctant to hike prices because of the negative implications for their branding.

"The feeling in the airline industry is that consumer regulation is unfairly onerous compared with legislation applicable to rail and ferry companies. Ryanair specifically argued this discrimination point, although again it was rejected by the AG."

However, hope still exists for the airlines, even if the ECJ finds against them. "Mr Kallas, Europe's Transport Commissioner has launched a review of passenger rights laws and is expected to recommend new legislation later this year. It has been suggested he has some sympathy for the airlines, and the revised proposals may therefore limit or reduce their current exposure. Until then they are very much in the firing line should another 'extraordinary circumstance' occur."

Such rule changes could follow proposals to replace potentially unlimited carrier liability with a fixed money amount, or the establishing of a reserve fund.

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