Double compensation for cancellation and delay of subsequent re-routing under Regulation 261/2004

Regulation 261/2004 sets out the conditions for compensation for cancellation, delay and denied boarding by airlines to their passengers. On cancellation, air carriers have the obligation to assist passengers by offering several options, including re-routing the passenger to their final destination at the earliest opportunity. This case asked whether compensation can be cumulative, where an airline cancels a first flight, and there is significant delay on the flight to which it has re-routed its passengers. The CJEU held that this is possible.



Background

The claimants booked a direct flight from Helsinki (Finland) to Singapore. The flight was cancelled due to a technical defect in the aircraft. The defendant airline (Finnair) re-routed the claimants on a Helsinki-Singapore connecting flight via Chongqing (China), also operated by Finnair. The re-routing flight was delayed. The claimants sought compensation under Regulation 261/2004 for (i) the cancellation of the initially booked flight, and (ii) the delay of the re-routing flight.

The airline awarded standard compensation to each of the claimants for the cancellation of the original flight. However, it refused to compensate the claimants for the delay on two grounds. First, it considered that Regulation 261/2004 does not impose a compensation obligation where the delay occurs on a re-routed flight, offered to the passengers subsequently to the cancellation of their original booking. It believed the claimants were not entitled to additional compensation under the Regulation. Second, Finnair believed that the delay was due to an extraordinary circumstance under Article 5(3) of the Regulation. The part of the aircraft that had failed (a rudder steering servo) had a hidden defect on this type of aircraft, according to the manufacturer. Rudder steering servos were also 'on condition' parts, meaning they were only replaced when they became defective. Finnair permanently stocked a spare part.

Referral to the Court of Justice of the European Union (CJEU)


The Helsinki Court of Appeal asked the CJEU to clarify whether compensation for delay could be obtained, where delay was on a re-routed flight operated by the same airline that had already paid compensation for the cancellation of the original flight. If so, the referring court also wished to know whether the defendant could rely on the extraordinary circumstances exemption on the facts of this case to avoid awarding the claimants the compensation for delay.

Double Compensation

The Court reasserted the right to standard compensation for delay under Regulation 261/2004. Paragraph 2 of its Article 3 determines the scope of such right: the regulation applies to passengers with a confirmed reservation on the flight concerned, or have been transferred by an air carrier or tour operator from the flight for which they held a reservation to another flight, irrespective of the reason. It follows that a passenger whose flight has been cancelled, and who is re-routed by the air carrier, has the right to standard compensation under Regulation 261/2004 again, if the re-routed flight is delayed.

The CJEU affirmed that this finding is backed up by the purpose of the Regulation. Passengers who are exposed to both the inconvenience of a cancellation, and the inconvenience of a delay, should be compensated for each of these inconveniences. In addition, the CJEU believed that this outcome would provide airlines with an incentive to ensure that they remain in compliance with their obligation to assist under Article 8 of the Regulation (and see that assistance through properly), repeating that the objective of the Regulation is to ensure a high level of protection for passengers.

It is worth noting that the CJEU supported double compensation in the context of multiple qualifying incidents occurring in the journey. The result should perhaps be contrasted with a qualifying delay on the first sector of a multi sector flight, in relation to which the CJEU has previously held that national courts are to consider first and foremost the final time of arrival: if the airline provided an alternative flight which arrived on time, the cancellation of the original flight does not automatically lead to compensation. For further details, please refer to our article on case C-191/19 here.  

Extraordinary Circumstances

The second question asked the CJEU whether the failure of an 'on condition' part amounts to an extraordinary circumstance for the purposes of Regulation 261/2004, as long as the airline stocks a spare part.

As a reminder, the CJEU repeated it is settled case law that an airline is released from its obligations to pay compensation under Regulation 261/2004, if they can prove the cancellation or delay was due to events that are both (i) not inherent in the normal exercise of their activity and (ii) outside their control. Technical shortcomings do not typically constitute an extraordinary circumstance [1]. The failure of certain parts cannot constitute an extraordinary circumstance because the breakdown is intrinsically linked to the operating system of the aircraft [2].

The CJEU reasoned that based on existing case law, the failure of an 'on condition' part is inherent in the normal exercise of the activity of the airline, and is not outside of the airline's control, and so an airline may not rely on this to avoid paying compensation under Regulation 261/2004. Even if a failure does meet the extraordinary circumstances test, the CJEU underlined that the referring court must ascertain whether, on the facts of their particular case, the failure was intrinsically linked to the operation of the aircraft – where it was, the failure cannot amount to an extraordinary circumstance.

Conclusion

The CJEU's interpretation of Regulation 261/2004 means that passengers can be entitled to cumulative compensation for cancellation and delay within the context of a single journey, emphasising how important it is for airlines to ensure that the assistance they provide under Article 8 is efficient.

Extraordinary circumstances has been extensively defined by case law. Despite the consideration in drafts amending Regulation 261, which envisage that unanticipated defects which are acknowledged by the manufacturer may amount to "extraordinary circumstances", the CJEU continues to apply established definitions and tests to the facts of the cases before them.

[1] Judgment of 22 December 2008, Wallentin-Herman, C-549/07, EU:C:2008:771 .

[2] Judgment of 4 April 2019, Germanwings, C-501/17, EU:C:2019:288.

 

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