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It has been an expensive few weeks for the airline industry:
As a result of this ruling by the Supreme Court, the Telegraph reports that there could now be up to two million compensation claims every year in the UK for flight delays (worth an estimated £876 million).
In addition, there could be some £4 billion in historic claims from passengers. This is a big figure, particularly when you put it in the context of government spending overall for transport (£23 billion in 2013) or defence (£38 billion in 2013).
The Daily Mail has hailed the judgment as a victory for passengers, noting that airline Jet2 has already put aside £17 million to cover flight delay claims.
Even the Money Advice Service, the independent statutory body for improving consumer's understanding of financial matters, has been flagging up the fact that airline customers may be able to claim compensation:
As a result, airlines are having to start to respond to customer claims. They will undoubtedly have a lot of work to do:
Last week, we interviewed Andrew Cooper, of Owens Cooper Consulting Ltd, asking him how the Supreme Court's decision to refuse permission to appeal in the two cases will affect airlines and passengers. He examined the court's reasoning and considered what this means for the future of flight delay compensation claims.
Here's what he had to say:
While both related to aspects of flight delay compensation arising from the Cancellation and Delay Regulation (Regulation (EC) 261/2004), they were on quite different issues:
This case related to a question of the definition of 'extraordinary circumstances'. In particular, the Court of Appeal's confirmation of the decisions of Stockport and Manchester County Courts that, if an aircraft suffers a delay of more than three hours as a result of a technical problem, the relevant airline will not be able to argue that the delay was as a result of extraordinary circumstances, as a technical problem will be internal to the operation of an aircraft.
In this case Thomson Airways were seeking to argue that, as a result of earlier Supreme Court decisions, if an air passenger has a claim for compensation, then that claim must arise as a result of the Montreal Convention (which is subject to a two-year limitation period). Thomson were, therefore, seeking to argue that any claims dating back beyond two years were issued out of time. This position had been dismissed by the Court of Appeal and, in doing so, they appeared to be following the views of the European Court of Justice that the remedies created by the Cancellation and Delay Regulation were entirely independent of the Montreal Convention. As such, that decision is unsurprising.
Accordingly, the result of the decisions of the Supreme Court to reject permission to appeal can be summarised as being:
It could be argued that this will provide more certainty to both airlines and their passengers who are affected by flight delays, albeit with a significant cost implication.
It may be helpful to have a better understanding of the numbers of flight delays of over three hours on flights to or from the UK, on which passengers may therefore have a compensation claim.
The UK Civil Aviation Authority (CAA) records flight punctuality at the ten largest UK airports (Birmingham, Edinburgh, Gatwick, Glasgow, Heathrow, London City, Luton, Manchester, Newcastle and Stansted). In 2013, slightly under 8,500 flights experienced delays of more than three hours. Across the UK as a whole in 2013, aircraft carried on average around 120 passengers per flight. In consequence, we can say that around 1.02 million passengers were affected by flight delays of more than three hours. Not all of those passengers will be entitled to claim compensation--those arriving from airports outside the EU will be ineligible, even if they have experienced a long delay, as will passengers on flights where the delay has been caused by extraordinary circumstances, such as adverse weather, air traffic control strikes etc. However, there are still likely to be more than 500,000 air passengers who may be eligible for compensation in the UK as a result of a flight delay of more than three hours.
The substantive text of the Supreme Court's Order reads:
The Court ordered that permission to appeal be refused in Thomson because the application does not raise an arguable point of law; [and] permission to appeal be refused in Jet2.com because the application does not raise a point of law of general public importance and, in relation to the point of European Union law said to be raised by or in response to the application, it is not necessary to request the Court of Justice to give any ruling, because the court's existing jurisprudence already provides sufficient answer.
Looking at the numbers of passengers who have experienced flight delays of more than three hours, it is therefore somewhat surprising that the Supreme Court concluded this did not raise a point of law of general public importance. If the average compensation entitlement is around EUR 400, or £320, this means that the compensation bill to be met by the airlines, and payable to consumers could be around £160m annually.
Airlines do not generally delay their flights for commercial reasons, and will therefore have to find that compensation from somewhere. In practice, this could easily mean higher fares for all airline passengers, as airlines will need to increase prices to cover the cost of compensation. Most observers would probably reasonably conclude that this was a matter of general public importance--particularly as the Court of Appeal decision has, at a stroke, meant that significantly more delayed air passengers will receive compensation.
The net effect of the decision from a lawyer's perspective is that the Court of Appeal, and consequently the Supreme Court, have provided more certainty to the circumstances in which compensation for flight delays may be payable. However, that certainty has come at a cost, for airlines at least in the short-term, and probably for air passengers in the long-term.
So what do you think? Is this a fair judgment? What compensation should be payable (if any)? Should there be a more nuanced system of compensation? Do let us know below. We always welcome your thoughts.
PS If you want to read more about this check out our previous post: Huzzah for Mr Huzah? Or will airfares rise?
Interviewed by Guy Skelton. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
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