Impact of pre-emptive denied boarding on passenger rights - CJEU in LATAM (C-238/22)

Last Thursday, on October 26, the CJEU issued a new judgment on rights of passengers who have been denied boarding, interpreting Regulation No 261/2004. In the LATAM Airlines Group case (C-238/22), the passenger booked return flights with Latam between Frankfurt am Main and Madrid for 22-12-2017 and 7-1-2018. When the passenger could not check in online on Dec 21, they contacted Latam and heard that the airline changed their flight date unilaterally to Dec 20. They just did not inform the passenger about this (which is a bit of a problem, you must agree). Oh, and since the passenger did not take the re-booked flight (they did not know about they were missing), they also lost the right to take the return flight on Jan 7. The airline's policy was that the outward flight had to be taken for the return flight reservation to remain valid. Latam still refunded the ticket the passenger did not use. They refused, however, to either pay compensation pursuant to Regulation 261/2004 or to compensate the passenger for the new reservation they made with a new carrier. 

Pre-emptive denied boarding

The CJEU clarifies that when the airline denies boarding to passengers in advance, against their will - here by informing the passenger that they lost the right to the return flight - the passenger is not expected to still present themselves for boarding to maintain their passenger rights (para 38). This is an important clarification as the literal wording of Article 2(j) of the Regulation 261/2004 qualifies 'denied boarding' as a refusal to carry passengers on a flight, although they have presented themselves for boarding (para 23). This in turns means, pursuant to Article 3(2), passengers being present for check-in (para 24). The CJEU confirms that the concept of 'denied boarding' should be interpreted broadly to offer a wide scope of passenger protection and covers also situations of pre-emptively denied boarding, that is boarding denied in advance (paras 28-29). Still, passengers may claim their compensation despite not presenting themselves for boarding as CJEU perceives their situation as not distinguishable from that of passengers whose reservation was transferred to another flight by the airline, who fall within the scope of Regulation 261/2004 pursuant to its Article 3(2)(b) (para 32). Further argument stems from the historical objective of the Regulation 261/2004 - to prevent passengers' hardship caused by overbooking of flights. As such, drafters did not anticipate pre-emptive denied boarding explicitly in the text of the provisions (para 34).

Right to compensation

Further question pertained to the application of Article 5(1)(c)(i) of Regulation 261/2004, which excludes passengers' right to claim compensation for a cancelled flight, if they were informed about the cancellation at least 2 weeks before the scheduled departure time (para 42). As this provision introduces an exception to passenger rights, it need to be interpreted strictly (para 44), and as such, it does not apply to denied boarding but only to cancelled flights (para 45).

Consequences of sub-optimal re-routing - CJEU in Rusu (C-354/18)

The Court of Justice came out of its summer break yesterday and published a judgment in the case Rusu (C-354/18), further clarifying the application of Regulation No 261/2004 on air passenger rights.

Mr and Mrs Rusu were supposed to fly with Blue Air airlines from Romania to the UK, but they were denied boarding due to a last minute change of an operating aircraft, which resulted in fewer seats and overbooking. They have then been re-routed on another flight, which only took place 5 days later. Blue Air first offered the passengers a free flight ticket as compensation, which offer has been rejected as not fully compensating their loss. Subsequently, they have been offered compensation from Regulation No 261/2004 - 400 Euro each. As the passengers experienced loss that was not covered by this amount of compensation, they filed a claim for further compensation to be paid out to them. This was to cover both material damages - having lost part of their earnings as they were not able to report to work on agreed time - and non-material damages - loss from having experienced a threat of being fired from their job. Blue Air claimed that further compensation should not be awarded to the passengers, as they have agreed to the proposed offer of re-routing, without explicitly emphasising the need to be re-routed on an earlier date, perhaps by another air carrier.

As a reminder, Art. 7(1) Regulation No 261/2004 awards passengers a right to compensation, which has been determined in CJEU's case law and scholarship to compensate passengers for the standardised loss of time (amount of compensation is dependant on the distance of the flight) (para. 30). Additional individual losses may be compensated further based on the provisions of national law, on the basis of Art. 12(1) of this Regulation, which provision also allows national courts to deduct the amount of compensation paid out pursuant to Art. 7(1) from the compensation awarded pursuant to Art. 12(1).

The CJEU indicates explicitly that the loss of earnings by the passengers is a clear example of an individualised loss, which is not covered by the standardised amount of compensation pursuant to Art. 7 Regulation (para. 32-34) and thus can be recovered on the basis of Art 12. It is then up to national courts to determine the individual damage, as well as whether the national requirements for recovering it have been fulfilled (para. 40). Whether the national court decides to deduct from it the amount of compensation paid out pursuant to Art. 7 of the Regulation is left to them to decide on the basis of applicable national or other international law, as well, as Art. 12(1) 2nd sentence provides for such a possibility but not an obligation of deduction (para. 44).

As the operating air carrier raised an issue of the passengers not explicitly emphasising the need to reach their destination as soon as possible, by the best/fastest re-routing possible, the CJEU also considered the scope of air carriers' obligations related to arranging the re-routing on the basis of Art. 8(1) Regulation No 261/2004. The CJEU highlights that this provision places the obligation on the operating air carrier not only to provide the passenger with the choice of reimbursement of their flight tickets or re-routing, but also with all appropriate information to make the choice between these options (para. 53-55). It is, therefore, not expected that the air passengers would actively seek any of the information that the operating air carrier is supposed to provide - e.g. on best re-routing options. As Art. 8(1)(b) of the Regulation requires that the re-routing takes place at the earliest possibility, it is up to the operating air carrier to prove that the proposal made by them to passengers complied with this requirement (para. 61). When putting together a re-routing proposal the air carrier should clearly  consider whether the re-routing proposal would transport passengers under similar conditions and at the earliest possibility based on its own resources, or whether it would require a help of another air carrier, in appropriate circumstances, depending on their available seats (para. 60).

Whilst the Regulation No 261/2004 does not place an obligation on operating air carriers to use services of other air carriers to find best re-routing options for their passengers, the CJEU clarifies that if they choose not to do so, they have to be prepared to pay damages under national law. The scope of these damages and under what conditions they will be awarded will differ amongst the Member States then.

Denial is not the right way to avoid troubles...

... at least not for airlines.

On October 4, the CJEU issued two decisions which help clarify the scope of Regulation 261/04 on Denied Boarding, also in relation to its predecessor Regulation 295/91 (repealed).While Regulation  295/91 was explicitly limited by its Article 1 to cases "where passengers are denied access to an overbooked scheduled flight", no mention to overbooking is made in the new text- the CJEU was therefore requested by two national courts to clarify the implications of this novelty, resulting in the decisions Finnair v Lassooy (C-22/2011, from now on Finnair) and Rodríguez Cachafeiro and de los Reyes Martínez-Reboredo Varela-Villamor v Iberia (C-321/11, Iberia).

In very short terms, the Court seems to indicate that the Regulation is- generally speaking- intended to grant compensation to all passengers who are denied boarding on grounds which are "in no way attributable to the passenger to whom boarding is denied (Finnair par 33,  Iberia par 32). 

The concept of "denied boarding" is defined by the Regulation as "a refusal to carry passengers on a flight, although they have presented themselves for boarding under the conditions laid down in Article 3(2), except where there are reasonable grounds to deny them boarding, such as reasons of health, safety or security, or inadequate travel documentation". 

Therefore in principle 

"the concept of denied boarding [...] must be interpreted as relating not only to cases where boarding is denied because of overbooking but also to those where boarding is denied on other grounds[...]." (Finnair par 26)

Thus, provided that the passengers have showed up for check-in on time and with the appropriate travel documents, "reasonable grounds" are required to deny them boarding. Even though the CJEU acknowledges that "the EU legislature intended to provide a non-exhaustive list of the situations in which there are reasonable grounds for denying boarding." (Finnair par 30, Iberia par 29), but these reasonable grounds cannot be taken to encompass events such as those involved in the cases decided. Rescheduling due to a strike or the decision to cancel a reservation in the erroneous belief that the passengers would have missed the connection because of a previous delayed flight (operated by the same company!) cannot be considered as "reasonable grounds". The Court observes that 

"it cannot be accepted that an air carrier may increase considerably the situations in which it would have reasonable grounds for denying a passenger boarding. That would necessarily have the consequence of depriving such a passenger of all protection, which would be contrary to the objective of Regulation No 261/2004 which seeks to ensure a high level of protection for passengers by means of a broad interpretation of the rights granted to them." (Iberia par 33, but see Finnair par 34 for an almost identical consideration).

It seems, then, that the "reasonable grounds" clause has to be interpreted strictly in view of the Regulation's objective of offering travellers a high degree of protection.

In the Finnair decision, the CJEU also clarified that, different than in the case of cancellation, the regulation does not exempt airlines from their obligation to compensate passengers to whom they deny boarding on a confirmed flight on grounds of "extraordinary circumstances". (Finnair par 36) A fortiori, no exemption can thus be foreseen when the denied boarding is only, such as in the case at stake in Finnair, only an indirect consequence of those circumstances (par 37).