The European Court of Justice’s decision of January 31, 2013 is the latest in an increasingly frequent series of references for preliminary rulings concerning the interpretation and application of Regulation 261/2004 on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights. Following on the heels of the latest failed industry attempts to topple that regulatory regime for incompatibility with the 1999 Montreal Convention for the Unification of Certain Rules for International Carriage by Air and general principles of EU law such as proportionality and non-discrimination, it contains a somewhat unexpected twist: on this occasion, the operating air carrier argues that large-scale airspace closure should not fall into the category of ‘extraordinary circumstances’ which may exempt airlines from compliance with parts of the Regulation. Instead, the introduction of an additional category of ‘super-extraordinary circumstances’ is contended for, in the hope of releasing air carriers from all obligations under the Regulation.
The underlying dispute arose from the closure of the majority of European airspace on April 15, following the eruption of Iceland’s Eyjafjallajökull volcano in the spring of 2010. The claimant’s scheduled flight from Faro, Portugal, to Dublin, Ireland, was cancelled as a result, along with nearly 10,000 other flights operated by the defendant air carrier. Ms McDonagh thus found herself stranded in Faro from April 17 to 24, reaching her destination two days after Ryanair had resumed flight operations. It was not disputed that Ryanair failed to comply with its obligations to provide care pursuant to Article 9 of the Regulation in the period of the intervening week. Under that provision, passengers have to be provided, free of charge, with meals, refreshments, hotel accommodation, local transport and basic communication services for the duration of the delay.
Ms McDonagh consequently claimed for expenses of €1129, that amount representing her expenditure in procuring accommodation and subsistence. No claim was brought in regard of Article 7 flat-fee compensation, as the competent national authority had unequivocally declared the volcano ash cloud to constitute extraordinary circumstances for purposes of Regulation 261/2004. In refusing to reimburse the claimant, Ryanair argued that this assessment was incorrect: given the magnitude and duration of the airspace closure, it could not be classified as an ‘extraordinary circumstance’ under the terms of the Regulation. The events were said to constitute ‘super extraordinary circumstances’ that released the budget airline not only from its compensation obligations, but also operated to deny passengers’ right to care as set out in Articles 5 and 9.
The Questions referred
The five questions referred by the Dublin Metropolitan District Court under Article 267 TFEU can be summarised in three broad categories. The domestic court enquired, first, as to whether events similar to the airspace closure in April 2010 could be understood as going beyond the existing concept of extraordinary circumstances, and, if so, whether that meant that liability for breach of the airline’s duty to provide care under Articles 5 and 9 was excluded. Second, in the case of particularly disruptive events such as the eruption of Eyjafjallajökull, could temporal and/or monetary caps be read into the care obligations?
The final question referred asked the ECJ to evaluate, in case of negative answers to either of the preceding issues, Ryanair’s suggestion that the 261/2004 regime was in violation of general principles of EU law including proportionality and non-discrimination, Articles 16 and 17 of the Union’s Charter of Fundamental Rights (Freedom to Conduct a Business and the Right to Property, respectively), and the Montreal Convention’s doctrine of an ‘equitable balance of [passengers’ and air carriers’] interests’.
The Court first turned to the meaning of extraordinary circumstances, noting that these are not defined exhaustively in the Regulation, even though Recitals 14 and 15 of its preamble provide several examples, including notably air traffic management decisions and meteorological conditions incompatible with the operation of the flight concerned. On previous occasions, notably in Case C-549/07 Wallentin-Hermann v Alitalia, the term had been defined narrowly as events ‘not inherent in the normal exercise of the activity of the carrier concerned and […] beyond the actual control of that carrier on account of its nature or origin’ .
Following the Advocate General’s analysis of the relevant travaux préparatoires, suggesting that the Legislature had intended to bracket together under this term the entire range of possible events, the Court noted that ‘extraordinary circumstances’ served as an all-encompassing category, ‘whatever [the event’s] gravity’. It refused to recognise a separate category of ‘particularly extraordinary’ events as against both the ordinary meaning of the notion and the underlying consumer-protective objectives of the Regulation. The interpretation put forward by Ryanair was said to lead to rather paradoxical results as ‘carriers would be required to provide care […] to air passengers who find themselves, due to cancellation of a flight, in a situation causing limited inconvenience, whereas passengers […] who find themselves in a particularly vulnerable state in that they are forced to remain at an airport for several days would be denied that care’ .
The idea of temporal or monetary limitations on the air carrier’s protective obligation was rejected in a similarly clear matter, as going against the very purpose of Articles 5 and 9: the longer passengers have to wait during extensive delays, the higher their need for basic protection. In response to the third and final question, the Court relied on previous case law to show that the overall regime laid down in Regulation 261/2004 was proportionate even in the face of substantive negative consequences for airlines, that distinctions between different modes of transport (such as air, rail and road) were warranted and thus not discriminatory, and that the Montreal Convention was not applicable to the question before the Court. Ryanair was therefore under a duty to compensate Ms McDonagh for the consequences of its breach of her right to care; with the precise level of expenses ‘necessary, appropriate and reasonable to make up for the shortcomings of the air carrier’ left as a matter for the referring court to assess.
The case raises at least three interesting questions for EU lawyers. First, as regards the application of the principle of proportionality. The relevant balance to be struck, the Court suggests, is between financial consequences for airlines on the one hand and the aim of ensuring a high level of passenger protection on the other. This is distinct from the operator’s argument that with a ticket price of €98, expenses in excess of €1100 should be seen as disproportionate. Drawing on submissions by the UK government, the Court had little time for such arguments: experienced operators in the relevant sector must internalise the cost of delay care and compensation into the price of their tickets. As Advocate General Bot notes, Ryanair had in fact already introduced such an ‘EU 261’ levy of €2 per passenger in early 2011. Ryanair’s own figures put compensation payments for 2010 at ‘over €100m’ – given that it carried in excess of 72 million passengers that year alone, such a levy would have more than recouped the relevant cost.
A second issue arises from the Council’s submission disputing the admissibility of Ms McDonagh’s claim by suggesting that individual passengers lacked standing to challenge carriers’ compliance with Articles 5 and 9 of the Regulation before domestic courts as a result of the provision for national enforcement bodies in Article 16 of the Regulation. The Court’s unequivocal rejection of this argument will require a serious rethink in the UK courts, which have increasingly become sympathetic to arguments against individual claims. In Graham v Thomas Cook  EWCA Civ 1355, for example, Toulson LJ suggested that the Judge below had been ‘right to hold that breach of [Regulation 261/2004 obligations] does not give rise to a civil action for damages.’ It is suggested, with respect, that this position is no longer tenable.
A final point relates to the relative weakness of claims based on the economic rights found in the EU’s Charter of Fundamental Rights. Ryanair claimed that an open-ended duty of care would deprive airlines of ‘part of the fruits of their […] labour and […] investment’, and was thus in violation of Articles 16 and 17 of the Charter. The Court’s response noted that neither the freedom to conduct a business nor the right to property were absolute and that their scope fell to be determined in accordance with Article 52(1). Given the importance of consumer protection in Article 169 TFEU and the Charter’s own Article 38, the resulting balancing exercise unsurprisingly came down in favour of the consumer.
Fellow, St John’s College, University of Oxford