EU261

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The Council of the European Union has published its proposed “position on the revision of the regulations on air passenger rights and on airlines’ liability”, largely affecting Regulation (EC) 261/2004 (widely known as “EU261”). Since the proposal replaces at least 90% of the operative text of the Regulation, amends or substitutes all but two of its 18 Articles, adds five new ones, and appends a brand new Annex, calling it a “revision” must rank as the greatest understatement in aviation since the captain of Flight BA009 described the loss of all four engines in flight as “a small problem”.

An overhaul of EU261 has been talked about for at least ten years, but until this year the issue had always fallen by the wayside by the time the “business end” of a Council Presidency arrived. The result was to leave airlines and consumers stuck with legislation made in the age of the Telex, and haphazardly updated over the ensuing decades by the Court of Justice in cheerful disregard of the dividing line between judicial and legislative powers. For having broken this cycle of failure, the Polish presidency deserves credit – maybe even enough credit to overlook the proposal’s being a mess of discontinuous numbering, incomplete deletions and at least two glaring mistakes.

For such a comprehensive overhaul, the proposal makes surprisingly few major changes to the main substantive rights. The ones with the biggest likely impacts are these:

The threshold for compensation for a delayed flight is shifted from three to four hours (or six, for longer journeys to and from third countries). This is undoubtedly great news for airlines, and correspondingly unwelcome for passengers and claims management companies. The Council thinks it will make airlines less likely to cancel the first delayed flight in the hope of keeping delays to later flights below the compensation threshold; an unintended but foreseeable (except by the Court of Justice) consequence of introducing compensation for delay.
Compensation for intra-EU journeys is now a flat rate of €300, replacing the previous two bands of €250 and €400 for journeys of less or more than 1,500km respectively. Compensation for journeys of more than 3,500km to or from a third country is cut from €600 to €500. How this affects airlines will depend on their mix of flight distances, with shorter routes becoming more expensive – but only by recent standards. Had the €250 basic level been uprated for inflation over the 21 years since EU261 was introduced, it would now be about €390; so even those carriers with lots of short routes probably shouldn’t feel too sore about this.
Where a customer self-rebooks after an airline fails in its re-routing duties, and then seeks reimbursement of the expense, the claim is capped at 400% of the ticket price of the cancelled flight. This will be most useful to low-cost carriers with on-the-day cancellations and delays, as the price of close-in fares can be ruinous.

More interestingly, the proposal makes a significant change to the process for claiming compensation. Under EU261 as it stands, the duty to pay is triggered by the compensable event, not by the passenger making a claim. But the proposal changes this significantly. For cancellations, the right to be compensated does not now arise until the passenger makes their Article 8 choice between a refund and re-routing (and doesn’t arise at all if the re-routing results in a delay of less than four hours). For delays or missed connections, the right arises “on request”. The need for a request ties in with two further aspects of the proposal: the requirement for a complaint-handling mechanism under Article 15a, and the duty to provide a “pre-filled form” (filled with what, one might ask) to customers who may be eligible for compensation. For those familiar with the battleground between airlines and claims management companies, this is an obvious point of future conflict, and three critical questions emerge, which the Court of Justice will presumably end up having to answer:

Can a claims manager make the “request”, or submit the complaint, or must the passenger do it personally, as suggested by the new Recital 22a?
What if the passenger didn’t make the Article 8 choice that is now required to trigger compensation liability in a cancellation case – can the claims manager do it retrospectively, and if not, is compensation not payable unless and until the passenger does so?
If the passenger fails to submit a request for compensation within six months, as per Article 7 (2a), is the airline no longer liable to pay?

Tremendous expense and trouble could be saved for all concerned if the proposal made the answers to these questions clear, so let’s hope the Council and/or the Parliament are alive to the issue. While they’re at it, they might fix some of the other obvious slips in the text, such as the failure to provide an extraordinary circumstances defence to a compensation claim based on a missed connection (Article 6a), the instant triggering of the information obligation under Article 6 (0) even though there are no rights to be informed of until the delay reaches two hours, and the failure to specify a third option – continuing with the delayed flight – at Articles 6 (1a) and 8 (1).

One huge improvement offered by the proposal is the Annex setting out circumstances deemed to be extraordinary. As the new Recitals indicate, the Council is taking the opportunity to reverse some of the Court of Justice’s more imaginative rulings: crew sickness when out of base, technical problems which could not have been prevented by proper maintenance (even when not amounting to a hidden manufacturing defect) and own-worker strikes where the strikers’ demands are not within the airline’s power to grant are now deemed extraordinary. Although the lists in the Annex are non-exclusive, the use of “shall” instead of “may” will bring very welcome clarity, and should help to reduce the workload of the courts when assessing events falling within these categories.

However, clarification of the scope of extraordinary circumstances is only likely to accelerate the transfer of the courts’ focus onto the “reasonable measures” test. This had already moved to centre stage in litigation as a result of the Court of Justice’s ruling in C-74/19, which introduced re-routing as a reasonable measure in delay cases, and even more so after the absolute dog’s breakfast that was its judgment in C-264/20, when it did the same in respect of cancellations without bothering to think of how this related to the wholly separate re-routing duty under Article 8. The subjective nature of the case law’s “intolerable sacrifices” test means that rulings on reasonable measures vary substantially from court to court, and enormously from member state to member state, with defences that succeed handsomely in one jurisdiction being deemed hopeless by the courts in another – the antithesis of the harmonisation that EU regulation is supposed to achieve. It is a pity that the Council did not see fit to address this issue in the proposal.

Summing up, the revision proposal is practically a wholesale do-over of EU261, incorporating some very welcome updates, but also some missed opportunities, and a few careless slips. The Polish presidency has done both airlines and consumers a great service by getting the ball rolling at last, but until we get real clarity on reasonable measures, and on the implications of the new claim process for compensation, it’s unlikely to result in either of them (or at least their lawyers) spending any less time in court.