Huzzah for Mr Huzah? Or will airfares rise?

Under the EU's 'Denied Boarding Regulations', airplane passengers are entitled to compensation if their flight is cancelled or delayed for more than a certain number of hours, depending on the distance to be flown, unless the disruption is caused by 'extraordinary circumstances'.

Typical examples of such out-of-the-ordinary situations include poor weather conditions (common), unexpected civil strife (less common) or herds of wildebeest crashing through the airport's perimeter fence and having an impromptu sit-in on the runway (rare).

The 'extraordinary circumstances' exemption is also commonly relied upon by airlines when technical faults to aircraft occur. Given the complexity of aircraft—an Airbus A380 contains about 4 million individual components—this is perhaps not a surprise.

However, a Court of Appeal case last week, Huzar v Jet2.com, has put a spanner in the works of this legal loophole, at least so far as the airlines are concerned.

Whilst the relevant test to be used when determining whether the exemption can be relied upon can be tricky to apply (for those with a LexisPSL subscription, see further analysis here), the upshot of the case is that most technical faults are likely to no longer be considered as being 'extraordinary circumstances' even where that fault was not visible on prior inspection or during routine maintenance. The CAA has admitted as much.

So are the proverbial floodgates for claims being opened?

Perhaps. In any event, this case will present massive challenges to the industry.

The EU's figures state that compensation is payable on potentially 1.5%, 1% and 0.4% of long, medium and short-haul flights respectively. Although these Commission figures include data on flights that may be delayed due to ‘extraordinary circumstances’ (eg for which airlines do not need to pay compensation) it is clear that, with hundreds of millions of Europeans taking to the air every year and the exemption for 'extraordinary circumstance' being more tightly construed, compensation for delays is not a minor issue.

It is equally clear that the flying public may need to be careful what they wish for. Increased compensation levels could lead to more expensive flights in the future. In 2013 the international airline industry had a net profit margin of 1.2%. There isn't much room for wriggle there. The money to pay compensation has to come from somewhere.

Would a family of four be happy to pay more for their annual trip to the Algarve to fund increased pay-outs for delays? I think that I know the answer to that. Then again, they may have no choice.

So where do we go from here?

If the airline industry had its way, it would undoubtedly do away with the current system and replace it with globally harmonised core principles on consumer protection. In its 2013 annual review IATA stated:

Contrast that with the following extract from the Commission's press release on revised air passenger rights:

Europe's success in securing and upholding passenger rights is one of the resounding achievements of EU transport policy

Evidently, in the 'market forces' v 'consumer protection' battle, the latter is winning. Moreover, the EU is currently proposing to update the 'Denied Boarding Regulations' to provide even further protection to European air travellers.

Perhaps, ultimately, the European authorities and the airlines need to be more sophisticated with the compensation levels that are paid to passengers when things go awry? Is the current system too much of a blunt instrument?

If, for example, a traveller is delayed for more than two hours on a short-haul flight, they are entitled to €250 (about £200) even if their flight cost considerably less. On the other hand a €600 (about £480) pay-out for a cancelled long-haul flight may amount to peanuts if a critical meeting or family event is missed.

Are these amounts not a tad arbitrary? How did these figures come about in any event? That said, if a more nuanced system was designed would it not cost too much to administer?

... and in the meantime?

Legal guru Richard Susskind has said that the challenge for lawyers in a world of increasingly computerisation is to innovate, eg ‘to practise law in ways that [they] could not have done in the past’. Well, here is an example of law firms doing just that, delivering legal services in ways that were unimaginable a few years ago.

I doubt that the airline industry will be as enthusiastic about this somehow....

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.