Over a number of years, the European Union has made various legislative moves in a bid to enhance air passenger rights.
With air passenger traffic increasing across the EU, the current EU regulatory framework complements international rules dealing with civil aviation that address the liability of airlines. The EU rules deal with compensation and assistance to passengers in the event of denied boarding, cancellations or long delays, and air carrier liability in the case of accidents. They also regulate transparency of flight pricing, making it obligatory on airlines to enable customers to compare effectively prices for air services of different airlines.
The EU rules brought notable benefits to air passengers if they are flying within the EU on an EU or a non-EU airline, if their flight arrives in the EU from outside the EU and is operated by an EU airline, or if their flights departs from the EU to a non-EU country on an EU or a non-EU airline.
In addition to the EU rules, the EU Parliament has defended air passenger rights by adopting resolutions intended to cover instances such as compensation to passengers in the event of airline bankruptcy.
The Court of Justice of the European Union has also been hard at work in interpreting the EU legal framework following various preliminary references made to it by courts in different member states.
A recent judgment of the CJEU is a case in point. A set of questions were referred to the CJEU by the German Federal Court of Justice that was hearing a lawsuit filed by the Federation of German Consumer Organisations against the German airline Air Berlin. The former was carrying out an exercise in order to verify the transparency or otherwise of airlines’ booking processes online.
Display of chargeable taxes and charges on its website were much lower than those payable in practice
It found various faults with the pricing process of this particular airline. It objected to the general terms and conditions of Air Berlin, which provided that in the event of a cancellation of a flight booking or in the event that the booked passenger does not take a flight, a handling fee is charged on the ticket price due to be reimbursed. It also challenged the pricing practices of the German airline insofar as the latter’s display of chargeable taxes and charges on its website were much lower than those payable in practice and therefore considered them as misleading.
For these reasons, the German organisation brought proceedings before the local courts claiming that Air Berlin had breached the EU rules. The latter provides that airfares must include all the applicable conditions for air services when offered to the public and the final price to be paid must include therefore all applicable taxes, charges, surcharges, and fees besides the applicable airfare.
In its defence, Air Berlin argued that the EU rules do not require air carriers to display separately the amount of taxes, fees and other charges when such were included in the air fare. Air Berlin justified its handling fee as part of the pricing freedom in terms of which under EU law air carriers are free to set airfares and air rates for intra-EU air services.
In its judgment, the CJEU found against Air Berlin and decided in favour of disclosure of air ticket price components and cancellation fees. The Court clarified that EU law places an obligation on airlines to specify not only the final price of the air fare but also customers’ prices of taxes, airport charges, and other charges, surcharges or fees if these have been added to the airfare. Consequently the Court rejected Air Berlin’s claims.
With respect to the cancellation fee, the Court held that although airlines enjoyed freedom when it comes to pricing, adequate safeguards to protect consumers’ interests are required. It considered that the EU consumer rules on unfair contract terms applied also to air travel and therefore, the terms of a contract of carriage by air could be challenged from an unfairness perspective.
In reaching its conclusion, the CJEU upheld the objectives of information and transparency that are fundamental to the EU rules on air passenger rights.
Dr Josette Grech is adviser on EU law at Guido de Marco & Associates.
jgrech@demarcoassociates.com