Dark clouds for airlines before Dutch Supreme Court

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In January 2012, several airlines lodged appeals before the Dutch Supreme Court (Hoge Raad) against decisions of lower courts awarding Sturgeon compensation for delayed flights. On Friday 11 May, the Advocate General handed down his Opinion in which he advises the Supreme Court to dismiss all airlines’ claims. In a damning conclusion for the airlines the Advocate General holds that the European Court has already answered all their questions. The decision of the Supreme Court will probably follow in September.

Interestingly, at the Supreme Court hearing in March, one person was sitting at one side of the room (EUclaim’s CEO Hendrik Noorderhaven) and fourty something black and grey airline representatives at the other. Apparently, the airlines thought their massive presence would impress the Supreme Court. In fact, however, this is exactly the kind of behaviour that judges do not like. It looks like airlines have problems to understand the distinction between a lobby and a court of law.

The airlines have asked the Supreme Court to quash the lower courts’ decisions. Why? Because the lower courts applied Sturgeon and failed to ask the European Court preliminary questions.

In his Opinion, the Advocate General deals with the airlines’ arguments in the same vein as I did in various publications and various previous blog posts. The Opinion refers a number of times to my publications but the ground for the Advocate General’s opinion is, of course, the European Court’s case law itself. This case law provides for a consistent line from IATA to Sturgeon and makes clear that passengers of delayed flights are entitled to compensation.

According to the Advocate General, Sturgeon reflects European Union law and is to be applied in all EU Member States. He considers this to be an acte éclairé (not to be confused with an éclair, an oblong pastry), which means that the European Court has already answered the questions raised by the airlines. The Advocate General concludes that the lower courts were right to apply Sturgeon and that there is no need for the Supreme Court to ask the European Court preliminary questions.

The way the Opinion is drafted suggests that the Advocate General has no doubt whatsoever about what the airlines wrongly call the ‘validity’ of Sturgeon. This adds to the expectation that the Supreme Court will follow the Advocate General’s advice. The decision of the Dutch Supreme Court is scheduled for late September.

On Tuesday 15 May 2012, the Opinion of Advocate General at the European Court in the TUI case will be published. Anyone expecting a surprise?

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Misleading advertising by Transavia, other airlines and the Commission

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Hard times for Dutch airline Transavia. Last week, it lost its case against EUclaim (see my blog post of September 2011): a Dutch Court of Appeal decided that EUclaim is not misleading passengers by posting on its website delayed and cancelled Transavia flights that may entitle passengers to compensation. This week, the Dutch advertising watchdog held that Transavia misleads its customers by not mentioning right of passengers to compensation in case of a long delay.

The first case was decided as I predicted. The Court held that EUclaim is entitled to list delayed and cancelled flights on its website, including those from Transavia, because the website makes sufficiently clear that compensation is likely but not guaranteed. Different opinions as to the right to compensation in case of long delay do not justify a gagging order for EUclaim, particularly not where EUclaim carefully assesses, on the basis of a broad range of objective data, whether or not extraordinary circumstances occurred.
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This litigation seemed to have been more inspired by bothering EUclaim than by a real chance to win the case. EUclaim is a pain in airlines’ bosses assess. Airlines love individual passengers, because they are harmless and easy to fob off (easyFoboff). But when passengers bundle their legal power through claim handlers like EUclaim, airlines are dismayed they have to face the full force of the law.

This week, in an interesting turn of events, the Dutch advertising watchdog (‘Reclame Code Commissie’, RCC) held that Transavia itself was misleading its passengers. The reason? In its customer information, Transavia says that in case of long delay passengers are entitled to care and a refund but it ignores the right to compensation following the ECJ’s decision in Sturgeon.

The RCC considered that Transavia’s information is incomplete and that the airline hides essential information. As this missing information can cause the average consumer to take a transactional decision he would not have taken otherwise, the RCC concluded that Transavia’s information is misleading and therefore unfair. The airline said it will appeal the decision.

The EU wide relevance of the decision is that the Dutch advertising code is based on the European Unfair Commercial Practices Directive (UCPD). Article 6(1)(g) UCPD clearly lists as ‘the consumer’s rights’ as the material information the trader must provide.
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It goes without saying that the decision does not only regard Transavia. Many if not most airlines omit to inform passengers about their right to compensation in case of long delay (if they inform passengers at all). Clearly, the European Commission should take the initiative for an enforcement action by the national consumer authorities. The problem is, however, that also the European Commission is misleading passengers. Over two years after Sturgeon, their airport billboards still fail to mention the right to compensation in case of long delay. Not that this will help the airlines very much because the failures of the Commission (not being a trader anyway) cannot serve as justification for airlines’ failures...

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Sturgeon’s Fate. Part 1: The Hearing

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This summer, the European Court of Justice will decide the fate of its Sturgeon decision. In this decision of 19 November 2009, the ECJ held that passengers not only have right to compensation in case of denied boarding and cancellation but also in case of a long delay.

The first stage in this process was a hearing on Tuesday 20 March where the Court heard two cases in which national courts have asked questions about Sturgeon.

The second stage will be the Advocate-General’s Opinion. This non-binding advice to the Court will be delivered on 15 May. In the vast majority of cases the Court follows the AG’s Opinion.

The final stage will be the Court’s decision, which it will hand down either before it rises for the summer vacation on 16 July, or after it has reconvened in early September. Either way, my expectation is that it will be an unfortunate day for the airlines. See my blog posts here and here.

The first case the Court heard was the Nelson case. The Nelson family’s Lufthansa flight from Lagos (Nigeria) to Frankfurt (Germany) had a delay of over 24 hours. Before the Cologne Amtsgericht, they lodged a claim for Sturgeon compensation. When Lufthansa argued that Sturgeon was not in line with the Montreal Convention, the Amtsgericht decided to ask the ECJ preliminary questions.

The second case was that of TUI Travel, British Airways, easyJet and IATA against the Civil Aviation Authority (CAA). In 2010, the CAA began to carry out its task to enforce Sturgeon. In order to stop this, TUI c.s. filed suit against the CAA before the High Court in London. Also this court decided to ask the ECJ questions about Sturgeon.

At the hearing in Luxembourg on 20 March, the parties to these two cases had the opportunity to express their views. Prior to the hearing they had already submitted their written observations. These were published in the ‘Report for the Hearing’, together with the views of some Member States and European Union institutions (Commission, Parliament and Council).

It will come as no surprise that Lufthansa and TUI c.s. argued that the right to compensation in case of delay as set out in Sturgeon is not in line with the Montreal Convention. Their views were endorsed by the Governments of the United Kingdom and Germany and by the EU Council of Ministers.

The Nelsons and the CAA did not submit observations but their positions were implicitly supported by the Governments of France and Poland, the European Commission and the European Parliament. They all argued that Sturgeon was in line with the Montreal Convention.

Four points are worth noting.

1. The position of the German Government runs counter to that of the German Federal Court (BGH). The BGH was the first national court to follow Sturgeon and did so only three weeks after Sturgeon was handed down. It is likely that the German Government’s position was effectively influenced by airline lobbying. There is, of course, nothing wrong with listening to views expressed by lobby groups but as a civil servant one has to be aware of the intrinsic lack of balance in the lobbying process as weaker parties, such as consumers, have a weaker lobby, if they have one at all.

2. The French Government agrees with Sturgeon and thus takes a different view than the German Government and the Council of Ministers. Apparently, the French civil servants were less impressed by Air France than their German counterparts were by Lufthansa.

3. The hearing illustrates why the British airlines chose a case against the CAA to pursue preliminary questions. They knew the CAA would not be able to present a separate position before the ECJ to support Sturgeon because the CAA is part of the UK government. And the airlines were confident that the UK government would support their position. Which it duly did. Some may see this as smart litigation but it is often counterproductive, as these tactics tend to annoy rather than impress the Court.

4. The Judge-Rapporteur in the two cases is Judge Malenovsky. He has been Rapporteur in almost all Air Passegner Rights cases, including IATA and Sturgeon. The Judge-Rapporteur is a key figure in the procedure. He writes the Report for the Hearing and usually also the draft decision. If anything can be concluded from this, it is that the Nelson and the TUI cases are business as usual for the ECJ.

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The nightmare of a White Heathrow

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You may want to think twice whether it is a good idea to travel to, from or through London Heathrow between November and March, when there is a chance of 'heavy snow' (say 3 inches or 8 cm) in Greater London. Unlike other London airports, Heathrow was still not up to the job of clearing stands and runways of snow and keeping the airport running without too much disruption this winter.

On Sunday 5^th February 2012, Gatwick and Stansted experienced delays but almost all flights departed. 30 miles away, a spokeswoman for Heathrow said: ‘Airlines expect to operate about 50% of the 1,300 flights originally scheduled.’ She added: ‘Our snow plan has worked far better than in previous years and the airport is getting back to normal.’

Well done Heathrow’s PR department. This is how you present failure as an act of competence. The gaffe of the day came from Conservative Transport Secretary Justine Greening. Rather than lambasting Heathrow for doing a poor job as compared to neighbouring airports, she commended the airport for the way it had handled the problems. With such a Cabinet minister Heathrow can do without a PR department.

Alastair Campbell, Tony Blair’s spin doctor, once famously said: ‘We don’t do God’. London airport bosses, however, regularly did God. As soon as it started to snow they were keen to explain that this was an Act of God for which they were not responsible. This may have been true in the old days, nowadays the damage/investment ratio (the costs of cancelling flights vis-a-vis the investment in snow clearing and de-icing equipment) has dramatically changed. Disruptions caused by heavy snow are now no longer an Act of God but an Act of the Airport, or rather the Airport’s Failure to Act.

In December 2010, both Gatwick and Heathrow were severely criticised for the chaos in the aftermath of heavy snowfall, which left thousands of people stranded with delays and cancellations beyond Christmas Day. Siim Kallas, the EU’s transport chief and vice-president of the European Commission, was furious. ‘I am extremely concerned about the level of disruption to travel across Europe caused by severe snow. It is unacceptable and should not happen again,’ he said. ‘Airports must get serious about planning for this kind of severe weather conditions’.

It looks like Gatwick, unlike Heathrow, got serious. Might this have something to do with ownership? And with Margaret Thatcher’s sorry politics to privatise public bodies without creating a proper market? In the 1980s, the British Airport Authority that operated seven airports (Heathrow, Gatwick, Stansted, Southampton, Edinburgh, Glasgow and Aberdeen) was privatised, turning it into a private company with an unhealthy market dominance around London and in Scotland.

It was only in 2009, following a report by the Competition Commission, that BAA sold Gatwick Airport to GIP, the owner of London City Airport. Competition was created. And whereas Gatwick has since made clear improvements in preventing disruptions because of snow, Heathrow has only come up with a major cancellation plan so that passengers can experience the flight disruption at home rather than at the airport. Either Heathrow has not invested in proper equipment as it promised it would do, or it bought the equipment but it is unable to operate it in a proper way.

After the Christmas 2010 disaster, the European Commission threatened to impose minimum service requirements unless airports could prove that planning and investment is in place to deal with snow. Heathrow’s cancellation plan is unlikely to convince the European Commission. 

Indeed, what is the point of having European air passenger rights, imposing obligations on airlines, if the EU’s busiest airport can get away with cancelling 50% of the flights, disrupting the travel plans of 100,000 passengers without there being extraordinary circumstances? In such a case airlines potentially would have to pay passengers 30 to 40 million euros in compensation. Perhaps there is an idea for Commissioner Kallas on top of his recent proposal on groundhandling services at EU airports: granting passengers not only rights against airlines but also against airports.

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Ryanair’s excessive fee to change name on ticket

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Ryanair is well known for punishing its passengers for their human errors. So it’s not the best airline for absent-minded professors and other people with reading and spelling difficulties. If you misspell your name on your booking, Ryanair will charge you 160 euro to correct it.

Fortunately, litigation prone Germans regularly help to make the world a better place. This time an annoyed German passenger lodged a claim against Ryanair for having to pay such an excessive fee. And he won. The court ruled that Ryanair must reimburse the passenger.

Yes Mr O’Leary, I see your hand up. What would you like to say?

PEOPLE SAY THE PASSENGER IS ALWAYS RIGHT, BUT YOU KNOW WHAT - THEY’RE ****ING NOT. SOMETIMES THEY ARE WRONG AND THEY NEED TO BE TOLD SO. AND OTHER PASSENGERS ARE NOT GOING TO GET A REIMBURSEMENT SO **** OFF.

  

Thank you Mr O’Leary, that’s enough ****’s for today.

The case was about Mr Heinz Peters, an office manager at a notary firm in the German village of Nettetal. His firm had organised an outing and they were booked on a Ryanair flight to Venice. At Weeze airport, Ryanair refused to check him in. The problem? A classic one: the name on his ticket was Heinz but the name in his passport Heinrich.

The flight was booked on Ryanair’s website by one of the firm’s PA’s. And despite the fact that the website explicitly stated that the name of the passenger must be the same as the name in the passport, the young lady just couldn’t imagine that her colleague’s official name was Heinrich. She considered him every bit a Heinz.

At check-in Ryanair showed excellent customer service by offering to change Heinz’s name on the ticket. Heinz was delighted until he was told that Ryanair would like to pocket 150 euro for this service (Heinz was lucky, currently it’s € 160).

Back from the Venice trip Heinz sued Ryanair before the local court. ‘A 150 Euro changing fee is excessive for a 10 euro ticket’, Heinz argued. Before the case was heard, Ryanair acknowledged the claim. The court then ruled that Ryanair was obliged to reimburse Heinz. Not on the basis of substantive law but on the basis of Ryanair’s acknowledgement of the claim.

Ryanair said that the problem had been entirely Heinz’ fault and reimbursement was a sign of the airline’s good will. The high fee served to prevent the resale of cheap tickets. The latter might be a defendable policy in general but in Heinz’ case there was no reason to assume that he abused the system. He, rather the young lady, had just made an error when booking the ticket.

Obviously, Ryanair wanted to prevent a substantive court decision. And they were right because it is beyond doubt that in a case like this the court would have declared Ryanair’s contract term invalid. Under European law (Article 3, Directive 93/13/EEC on unfair terms in consumer contracts) a contract term is unfair if it causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer. The annex to the Directive says that a term may be regarded as unfair when it requires a consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation (sub e).

Particularly when a passenger mistakenly registers under an incorrect first name or makes a small error in his surname a € 160 is excessive and therefore invalid. This goes for every ticket, regardless of whether it is sold for € 10 or for € 1000. If the contract term is invalid it is not converted into a valid one so in that case the airline is not entitled to charge the passenger anything. It goes without saying that an airline is entitled to charge a reasonable fee for changing the name on the ticket but it is likely that this cannot be more than around € 25.

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