Thursday, 19 July 2012

Protecting consumers' choice in choosing air fares - CJEU case Deutschland (C-112/11)

19 July 2012: CJEU's judgement in the case Deutschland (C-112/11)

Regulation No 1008/2008 on common rules for the operation of air services protects passengers from unfair treatment by the airlines. For example, its recital 16 puts an obligation on the airlines to clearly indicate the final price (inclusive of all taxes, charges, fees etc.) to be paid by customers for air services, so that they are able to compare effectively the prices for air services of different airlines. The regulation defines what kind of charges should be included in the final price, as well as what to understand under air fares and air rates. It also requires all optional price supplements to be communicated in a clear, transparent and unambiguous way at the start of any booking process to the customer. The customer needs to clearly indicate his choice to pay any optional charges, which means that the 'opt-in' system has to be used to acquire customer's consent. The airlines are not allowed to check in boxes for optional price supplements as a default choice of passengers. (Art. 23 Regulation). This provision aims at protecting customers from overlooking a certain payment that has been chosen for them, which they may forget to reject. Moreover, it may prevent customers from seeing the default chosen options as the 'right ones', which they should go with.

In the case at hand the German consumer protection (BVV) organisation brought a case against, a company which organises air travel online. In the process of making a reservation on their website, the customer sees on the right hand side of the page his current travel costs. The 'total price of travel' that is indicated encompasses also 'travel cancellation insurance', which is calculated automatically and added to the travel price even though it is an optional payment. The passenger then pays the total price of travel in a single sum to, which company then transfers the costs of the cancellation insurance to an insurance company. If the customer does not want to take on the cancellation insurance, he needs to opt-out from this charge (and an information about how to do this may be found only at the bottom of the internet page). The BVV rightly noticed that this method could be seen as infringing provisions of the Regulation. The legal question that arose was whether the reference in Article 23 of the Regulation to 'optional price supplements' should be understood as covering costs, connected with the air travel, arising from services supplied by third parties (e.g. travel cancellation insurance) which are charged to the customer by the company selling the travel as part of the total price.

The CJEU decided that such an interpretation of this provision is necessary in order to assure transparency with regard to the prices for air services. (Par. 13)

"Those optional price supplements therefore relate to services which, supplementing the air service itself, are neither compulsory nor necessary for the carriage of passengers or cargo, with the result that the customer chooses either to accept or refuse them. It is precisely because a customer is in a position to make that choice that such price supplements must be communicated in a clear, transparent and unambiguous way at the start of any booking process, and that their acceptance by the customer must be on an opt-in basis, as laid down in the last sentence of Article 23(1) of Regulation No 1008/2008." (Par. 14)

In that respect, as also noticed by Advocate General Mazák, it should not make a difference for the scope of the passengers' protection whether the optional additional service is offered by an air carrier or by another, third party. (Par. 17) Therefore, as long as the optional additional service that is being offered during the booking process to customers is linked to the flight itself, it does not matter who is offering its performance. It falls under the definition of 'optional price supplements'. (Par. 18) The customers should, therefore, have a real choice as to whether they want to pay such a supplement and not find themselves bound by it as a default option.

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