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Passenger Mobility Package

The Passenger Mobility Package – An Overview

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Each year, over 13 billion journeys by plane, train, coach, bus, or ferry are made within the EU. In 2022 alone, 55.5 million package holidays were sold in the EU. The protection and continuous improvement of travelers’ rights have thus become a central initiative of the European Union.

In November 2023, the European Commission published the so-called “Passenger Mobility Package.” This package aims, among other things, to strengthen passenger rights and introduce more effective regulations for package holidays.

Strengthening Passenger Rights

The passenger regulations for air, rail, sea, and bus travel foresee largely similar changes. On the one hand, national enforcement bodies – in Austria, for example, the Agency for Passenger and Traveler Rights (apf) – are required to conduct more intensive monitoring. This monitoring should be carried out both announced and unannounced through audits, inspections, surveys, reviews, and examination of documents.

On the other hand, the provision of information regarding passenger rights is to be provided electronically in the future. Additionally, the introduction of a standardized refund form is planned, though its use will not be mandatory for travelers. The proposal also includes solutions for refund issues concerning flight tickets booked through travel agents.

The “Passenger Mobility Package” also contains a new regulation for travelers using multiple modes of transport, such as plane, train, and bus, and who miss connections due to delays. The regulation for multimodal travel addresses this existing gap and includes provisions for reimbursement when connections are missed, while under certain conditions, it allows for liability exemption for online travel agents.

More Effective Regulations for Package Holidays

A significant new aspect of the Package Travel Directive concerns the regulation of vouchers: travelers must be informed that they are not obligated to accept a voucher. Furthermore, each voucher must be protected against insolvency. The insolvency protection does not only apply to vouchers but to refunds in general and should be granted within three months after the traveler has submitted their refund request with all necessary documentation.

A recourse provision allows the tour operator to demand a full refund of all payments from the service provider within seven days if a service is canceled or not provided.

Although no EU-wide travel warning will be introduced, it is clarified that official travel warnings are crucial for assessing a free cancellation. In the wake of the Covid-19 pandemic and given current crisis situations due to natural disasters and wars, this is a particularly important aspect.

Don’t hesitate to contact our Team to learn more about the Passenger Mobility Package.

Incorrect Information Provided by the Tour Operator

Incorrect Information Provided by the Tour Operator

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The European Court of Justice (ECJ) ruled in joined cases C-650/23 and C-705/23 that a passenger who had a confirmed booking for a flight on the basis of a package tour can claim compensation from the operating air carrier within the meaning of Art 7 (1) of Regulation (EC) No 261/2004 even if incorrect information provided by the tour operator led to the passenger believing that the flight originally booked would not be operated, although it took place as planned.

The decision concerns a flight from Heraklion (Greece) to Linz (Austria). One day before the scheduled departure, the passenger was informed by the tour operator of a change in flight times and the destination airport. For this reason, the passenger did not show up for check-in for the flight in question. However, the flight was actually carried out as planned; the tour operator’s information was therefore incorrect. The passenger then demanded compensation from the operating air carrier and based his claim on Article 4 of Regulation (EC) 261/2004 (denied boarding). The Schwechat District Court awarded him this compensation, but the airline appealed against this decision to the Korneuburg Regional Court. The airline’s two main arguments were the missing of the facts of denied boarding and the lack of accountability of a rebooking by the tour operator.

The Regional Court of Korneuburg initiated a preliminary ruling procedure and wanted to know from the European Court of Justice whether a passenger who has a confirmed booking as part of a package tour can claim compensation from the operating airline if the tour operator has informed the passenger without prior consultation with the airline that the booked flight will not be carried out, although in reality it took place as planned.

Referring to its previous case law and the aim of Regulation (EC) 261/2004 to ensure a high level of protection for passengers, the European Court of Justice ruled that the operating air carrier is liable for incorrect information provided by the tour operator to passengers regarding the rescheduling or cancellation of a flight. Furthermore, the ECJ referred to the possibility of the operating air carrier to have recourse against the tour operator in accordance with Art. 13 of the Regulation.

Don’t hesitate to contact our Aviation Team to learn more about passsenger claims in Austria.

Hidden defect in the design

Hidden defect in the design

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The European Court of Justice (ECJ) ruled in case C-411/23 that a hidden defect in the design of an aircraft about which the manufacturer informed about few months in advance may constitute extraordinary circumstances within the meaning of Article 5 (3) of Regulation (EC) No 261/2004.

The case in question pertains a flight from Krakow (Poland) to Chicago (USA) that was scheduled to be operated by an aircraft for which the airline had been notified of a potential defect in the design several months before the scheduled departure. Consequently, several restrictions were imposed on the use of these aircrafts.

Four days prior to scheduled departure, an engine malfunction occurred, which was indeed due to the identified defect in the design. The engine was sent for servicing and due to a global engine shortage, an alternative engine was not available until after the scheduled departure.

As a result, the flight in question had to be operated with an alternative aircraft leading to a three hour delay.

Based on these facts of the case, the operating air carrier was of the opinion that the cancellation was necessary due to extraordinary circumstances and, therefore, refused to pay compensation payments to passengers.

The ECJ determined that the occurrence of such hidden defect in the design that was supposed to be used for the operation of the flight is within the meaning of Article 5 (3) of regulation (EC) No 261/2004 even if the airline had been informed by the manufacturer months before the scheduled departure. Furthermore, the ECJ decided that maintaining a fleet of replacement aircrafts is considered a reasonable measure, provided it is technically and economically feasible, depending on the airline’s capacities.

Don’t hesitate to contact our Aviation Team to learn more about passsenger claims in Austria.

Technical Failures

Technical failure affecting a new aircraft model

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The European Court of Justice (ECJ) ruled in case C-385/23 that the occurrence of an unexpected and unprecedented technical failure affecting a new aircraft model may constitute extraordinary circumstances within the meaning of Article 5 (3) of Regulation (EC) No 261/2004.

The case at hand concerns a flight from Helsinki (Finland) to Bangkok (Thailand) that was to be operated by an aircraft which had entered into service just over five months earlier. However, the fuel gauge of that aircraft experienced a technical failure during refueling shortly before take-off, which resulted in the cancellation of the flight due to safety concerns. Neither the aviation safety authority nor the aircraft manufacturer was aware of the defect prior to this incident. It was later on discovered that the reason for the failure was a hidden design defect affecting all aircraft of the same type.

Based on these facts of the case, the operating air carrier was of the opinion that the cancellation was necessary due to extraordinary circumstances and, therefore, refused to pay compensation payments to passengers.

The ECJ decided that such technical failures affecting a new aircraft model recently put into service where the manufacturer of that aircraft recognises that the failure was caused by a hidden design defect conerning all aircraft of the same type and impinging on flight safety are covered by the concept of extraordinary circumstances within the meaning of Article 5 (3) of Regulation (EC) No 261/2004.

Don’t hesitate to contact our Aviation Team to learn more about passsenger claims in Austria.

Lack of Airport Staff

Lack of airport staff as extraordinary circumstances

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The European Court of Justice (ECJ) ruled in case C-405/23 that the lack of airport staff may constitute extraordinary circumstances within the meaning of Article 5 (3) of Regulation (EC) No 261/2004.

In the case at hand, a delay of more than 3 hours occurred, inter alia, because the loading of baggage onto the plane had been slowed down as there had been an insufficient number of staff of the airport operator responsible for that service. The question whether such lack of airport staff may constitute extraordinary circumstances was referred to the ECJ by the regional court of Cologne in its role as court of appeal.

The ECJ cited its prior ruling C-308/21 in which it was stated that general failures of an airport´s refueling system are not to be regarded as being intrinsically linked to the operation of the aircraft which completed the delayed flight. According to the ECJ, it is for the referring court to determine, whether the failures of the baggage loading operations due to a lack of airport staff must be regarded as a general failure in accordance with the cited case law. Regarding the criterion that extraordinary circumstances must also be beyond the air carrier´s control, the ECJ stated that it is for the referring court to determine whether the air carrier was able to exercise effective control over the operator of the airport.

It was further emphasized that extraordinary circumstances alone are not sufficient to relieve air carriers from their obligation to pay compensation to passengers. Air carriers must additionally state and proce that they took all reasonable measures appropriate to the situation.

Don’t hesitate to contact our Aviation Team to learn more about passsenger claims in Austria.

The legal basis and the transferability of passenger rights

The legal basis and the transferability of passenger rights

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The European Court of Justice (ECJ) ruled in case C-11/23 that the entitlement to compensation for flight cancellations stems directly from Regulation (EC) 261/2004 and is independent from a contract of carriage the parties may have or may have not entered into. This clarifies that passengers have a right to compensation regardless of contractual stipulations, provided that they meet the conditions set forth in the Regulation.

Additionally, the ECJ stated that clauses within an air carrier´s General Conditions of Carriage (GCC) that limit a passenger´s options to transfer his rights granted by Regulation (EC) 261/2004 constitutes an impermissible restriction of his rights and is, therefore, null and void. The ECJ highlighted that in order to ensure a high level of protection for passengers, it is necessary to guarantee those affected by a cancellation the freedom to choose the most effective way to defend his or her right, including (where provided for by the relevant national law) to transfer his or her claim to a third party.

More detailed information on the use of GCC in Austria can be found in our article “General Conditions of Carriage in Austria“.

Don’t hesitate to contact our Aviation Team to learn more about passsenger claims in Austria.

Urteil zu ABB

Ruling on the GCC of a Hungarian Airline

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The Austrian Supreme Court recently issued a new ruling (4 Ob 222/22h) on the General Conditions of Carriage (GCC) of a Hungarian airline, declaring numerous clauses therein as unlawful. This decision is the latest in a series of judgments against air carriers and their GCC.

The proceedings were initiated by the “Bundeskammer für Arbeiter und Angestellte”, an association authorized to litigate under the Austrian Consumer Protection Act and aimed to prohibit the airline from using certain clauses in their GCC. In its decision, spanning over 100 pages, the Austrian Supreme Court addressed numerous clauses, providing significant guidance for all air carriers operating in Austria.

Since authorized associations, especially the “Verein für Konsumenteninformation” (VKI) and the Bundeskammer für Arbeiter und Angestellte, can (and regularly do) file such lawsuits against airlines operating in Austria, it is advisable for air carriers to use this new ruling on GCC as an opportunity to review their own GCC. More detailed information on the standard procedures of associations authorized to file such lawsuits, the system of reviewing GCC in Austria, and the criteria applied can be found in our article “General Conditions of Carriage in Austria“.

The clauses whose use has now been prohibited by the Austrian Supreme Court include:

  • Liability exclusion for fragile luggage
  • Choice of law clause in favor of Hungarian law
  • The possibility of rebooking to an alternative means of transportation
  • Restriction of rights under Regulation (EC) 261/2004 (“Air Passenger Rights Regulation”)
  • Submission of compensation claims exclusively via the airline’s website

Our experienced Aviation Team is happy to answer your questions about the use of General Conditions of Carriage in Austria, review your GCC to reduce the risk of legal proceedings, and represent you in court.

The necessity to suffer a loss of time to receive compensation

The necessity to suffer a loss of time to receive compensation

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In its recent rulings on cases C-474/22 and C-54/23, the European Court of Justice (ECJ) clarified that passengers are not entitled to a compensation payment in cases when their booked flight is delayed by more than 3 hours if they did not actually suffer a loss of time themselves, especially if they did not present themselves for check-in.

Traditionally, passengers whose flights arrive over three hours after the scheduled arrival time have been entitled to the same compensation passengers of cancelled flights receive. This principle was established in the landmark Sturgeon ruling (C-402/07 and C-432/07). However, the recent ECJ rulings demonstrate that there are still differences between flights that are cancelled and those that are significantly delayed.

The cases in question both involved flights from Düsseldorf (Germany) to Palma de Mallorca (Spain) where the operating carriers announced significant delays. In case C-474/22, upon learning of the delay, the passenger chose not to board the flight and later assigned his rights to flightright, which then sued the carrier for compensation. In case C-54/23, another passenger opted to book an alternative flight, resulting in an arrival delay of less than three hours.

The ECJ ruled that in both instances, the passengers are not eligible for compensation. This decision was based on Article 3 of Regulation 261/2004, which sets forth that the regulation only applies if passengers – except in cases of cancellations – present themselves for check-in in a timely manner. The passengers argued that this criterion should not apply in situations where the operating carrier had already announced that the flight would be delayed more than 3 hours, since such significant delays must be treated like cancellations.

However, the ECJ did not follow this reasoning ant stated that its landmark decision in the Sturgeon case was based on the concept that passengers enduring a delay of three hours or more suffer an irreversible loss of time and, consequently, a level of inconvenience comparable to that of passengers on cancelled flights. According to the ECJ’s rationale, compensation is a redress for this loss of time. Therefore, since the passengers in the recent cases either did not board their flights or managed to reduce their delay through alternative bookings, they did not experience the same loss of time and are, thus, not entitled to compensation.

However, it’s important to note that these passengers might still have other rights under Regulation 261/2004 or applicable law, such as ticket reimbursement or damages equivalent to the costs of the alternative flights they booked.

Don´t hesitate to contact our Aviation Team to learn more about passenger claims in Austria.

Denied Boardings

Recent court practice on denied boardings

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On 26 October 2023, the European Court of Justice (ECJ) issued a new ruling on the interpretation of Articles 4 and 5 of Regulation 261/2004 in connection with denied boardings (case C-238/22).

In this ruling, the ECJ determined that an air carrier that informs a passenger in advance that, against the passenger´s will, they will be denied boarding for a flight with a confirmed reservation, must compensate that passenger, even if the passenger does not present themselves for boarding.

In the case at hand, the air carrier denied transporting the passenger on the inbound flight because they had not taken the outbound flight, a common practice based on so-called “No-Show Clauses”.[1] The ECJ interpreted this application of a No-Show-Clause as a denied boarding, disregarding the interpretative guidelines on Regulation 261/2004 published by the EU Commission on 10 June 2016.

Furthermore, the ECJ ruled that Article 5(1)(c)(i) of Regulation 261/2004 does not apply to cases in which passengers are denied boarding. Therefore, the air carrier must provide compensation payments (Article 7) to passengers, even if they informed the passengers at least two weeks in advance that they will refuse to carry them.

On 11 July 2023, the Austrian Regional Court Korneuburg faced a case (22 R 120/23m) with the following circumstances:

An air carrier was confronted with a shortage of security staff at its homebase (LHR) in the aftermath of the COVID-19 pandemic, resulting in difficulties in handling a sudden increase in passenger numbers during the travel boom following the end of COVID-related travel restrictions. As a response, the air carrier decided to “cancel” several flights due to the challenges in performing the required security checks on the passengers.

The “canceled” flights were, in fact, performed by the air carrier, using the planned time slots, flight numbers and destinations, but with cargo only – without passengers on board.

The Regional Court Korneuburg, serving as the court of appeal, determined that such cases do not constitute a cancellation within the meaning of Article 5 of Regulation 261/2004 but rather constitute denied boardings within the meaning of Article 4.

Additionally, the court emphasized that, in cases of denied boardings, it is irrelevant if the reasons for such denied boardings could constitute extraordinary circumstances within the meaning of Article 5. According to the applicable Article 4, air carriers are always obligated to immediately compensate passengers in accordance with Article 7 if they are denied boarding against their will.

According to Article 2(j) “denied boarding” means a refusal to carry passengers on a flight, except where there are reasonable grounds to deny them boarding, such as reasons of health, safety or security, or inadequate travel documentation. The court concluded (citing ECJ case C‑321/11, 32) that a reason for a denied boarding must be attributable to the passenger who is being denied boarding.

Since the reason for the air carrier´s decision not to transport passengers on the flight in question was not in any way attributable to the passenger, there were no reasonable grounds within the meaning of Article 2(j) for the denied boarding. Consequently, the Regional Court Korneuburg ruled in the passenger´s favor and ordered the air carrier to pay compensation to the passenger.

Don´t hesitate to contact our Aviation Team to learn more about passenger claims in Austria.

 

Agency Fees

Agency fees: Austrian court practice on reimbursements

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According to Article 8 of Regulation 261/2004, passengers have the right to choose between reimbursement of the full cost of the ticket within 7 days or re-routing to their final destination in cases of denied boardings, cancellations, and significant delays. A question of major practical relevance arises regarding whether the wording “full cost of the ticket” includes the obligation for air carriers to reimburse any agency fees passengers had to pay during the booking process.

In its ruling C-601/17 (Harms/Vueling), the ECJ clarified that the reimbursement should encompass the price of the ticket, including the commission collected by a person acting as intermediary between the air carrier and the passenger (i.e., an agency fee), unless that commission was set without the knowledge of the air carrier.

While this ruling provided important guidance, it also raised a new question: What exactly does “knowledge of the air carrier” mean?

To fully grasp this question, it is crucial to understand how flight tickets are sold. Tickets are primarily sold either directly through the air carrier´s website or by utilizing a travel agency (either physically or online). In order to facilitate ticket sales by travel agencies, the International Air Transport Association (IATA) grants IATA-certified agencies the authority to issue tickets directly for its airline members.

Traditionally, these travel agencies acted as commercial agents for airlines and received service fees from them. However, over the last 20 years, numerous airlines have altered their pricing models to exclude service fee payments to travel agencies and promoted ticket purchases directly through their own websites. Consequently, travel agencies have adapted their business models and now add fees to the ticket prices paid by their customers, the passengers. Nonetheless, the travel agencies retain the right to issue flight tickets directly.

In response to C-601/17, passengers (represented by their lawyers or claim farms) argued that due to the special relationship between air carriers and travel agencies, reimbursements of ticket costs must include agency fees. They contended that air carriers are aware that travel agencies typically charge fees as part of their business model and that this general knowledge is sufficient to establish the air carrier´s obligation to reimburse the agency fees.

While there have been numerous German rulings on this topic, Austrian rulings, especially by the highly relevant Regional Court Korneuburg, have been scarce. Therefore, we are delighted to announce that our Aviation Team recently managed to obtain two favorable rulings from the Regional Court Korneuburg in this matter on behalf of one of our airline clients.

In these rulings (22 R 226/22y and 22 R 37/23f), the Regional Court Korneuburg (upon our appeals against decisions rendered by the District Court Schwechat) stated that the term “knowledge” used by the ECJ refers to the specific knowledge about the agency fee charged by the intermediary. The court emphasized that the different elements of a ticket, such as the price, must be approved by the air carrier, which can only occur with specific knowledge. The potential information rights of air carriers based on IATA agreements or the existence of incentive agreements that do not specify the amount of the agency fee do not alter this conclusion.

Don´t hesitate to contact our Aviation Team to learn more about passenger claims in Austria.