March 13, 2020

COVID-19 Aviation: Compensation and assistance rights during Coronavirus

The outbreak of COVID-19 in our country is having catastrophic effects on the aviation sector. As the Airlines Association (ALA) reported on March 11th, 4,400 flights will be cancelled in Spain during the second half of March alone, leaving more than 700,000 passengers on the ground. Given that the peak of the virus infection will take place on the first weeks of April, it is expected that millions of passengers will be affected by this crisis in Spain.

The purpose of this article is to analyze the effect that these cancellations will have, and in particular, the potential claims passengers may make against airlines under the Regulation (EC) No. 261/2004 1, which as we know, governs flights from EU airlines departing from or arriving in the EU, as well as those of non-EU airlines departing from European soil.

Before going any further, it is worth recalling that under the Regulation cited above, airlines must pay compensation to passengers who are affected by cancellations made without good cause. These compensations vary from 250 euros (for flights of less than 1.500 km), 400 euros (between 1,500 km and 3,500 km, or intra-EU flights of more than 3.500 km), and 600 euros for non-EU flights of more than 3,500 km.

It is also important to remember that according to Article 5.3. of the Regulation, the airline may be exempted from paying these compensations if it proves that the cancellation was due to extraordinary circumstances that could not have been avoided even if all reasonable measures had been taken.

Accordingly, the first question we must ask is whether cancellations resulting from COVID-19 will be deemed to have the nature of an “extraordinary circumstance”, in which case, the airlines will be exempted from their duty to compensate passengers.

In our opinion, given that the cancellations have been imposed as a preventive measure to ensure public health at a global level, there is no doubt that we face an extraordinary circumstance that airlines could not have avoided, and therefore, there would be no right of compensation for the millions of passengers affected by such extraordinary circumstance.

As a similar case to the current situation, it is worth mentioning the eruption of the Icelandic volcano Eyjafjallajökull on 20 March 2010, which affected millions of passengers whose flights were cancelled in the following weeks, and in relation to which, the European Union Court of Justice (ECJ) regarded as an “extraordinary circumstance” in its Judgment of 31 January 2013 (case C-12/11). The Court pointed out that all circumstances that escape the control of the airline would be regarded as extraordinary, regardless of its nature and gravity.

Therefore, this ECJ's judicial decision supports our argument, as it deems as “extraordinary” any circumstance beyond the airline's control (regardless of its nature) – which would be the case of the pandemic caused by COVID-19. That said, we must also remember that the airline will have the burden of proof to show that such extraordinary circumstance exists, and therefore, it must take all measures to ensure the custody of the documentation necessary to prove the cause of cancellation for each flight.

On the other hand, Articles 8 and 9 of Regulation (EC) No. 261/04 include the right of passengers to receive information, meals and refreshments, telephone calls, accommodation - if necessary - and, where appropriate, reimbursement or alternative transportation to their final destination.

As far as accommodation is concerned, it is clear that the assistance required by Article 9 of Regulation (EC) No. 261/04 was not designed to deal with a situation such as the one caused by COVID-19 – especially if we consider the contents of the whereas 14 of the Regulation - which, as we pointed out, is likely to result in millions of passengers being trapped, away from their homes, and unable to return because of the virus uncontrolled outbreak and the pertinent restrictions imposed by governments.

Furthermore, under Article 4.3.2. of the "Interpretation Guidelines on Regulation (EC) No. 261/2004 2”, and the proposal for the amendment of the Regulation published on 12 March 2020 3, there is a clear desire on the part of the European legislator to restrict the obligation to provide accommodation, limiting it in time and taking into account the relevant circumstances and the principle of proportionality.

It is no coincidence that both documents were published after the event caused by the Icelandic volcano mentioned above. As we recall, in that case, the ECJ understood that the airlines had to bear the cost of providing accommodation for the passengers affected for as long as necessary, because they were unable to return home from Iceland, as the railway and maritime means were overloaded for weeks.

However, we are now facing a completely different situation – not only because the decision is being made by governments in the face of an extreme situation of force majeure, but because the passengers in this virus crisis - unlike those who were affected by the volcano eruption - can now make a responsible and conscious decision not to travel and/or postpone their trip, until the situation is normalized. (#Iamstayinghome).

Indeed, it is clear that passengers flying to/from countries affected by the pandemia today - on their way out - will be unilaterally assuming the risk of facing an airspace closure before their return, which will potentially force  them to remain at their destination for an undetermined period of time that could last for weeks, or even months.

Given these circumstances, we ask: should the airlines bear the consequences of this unilateral decision made by passengers? The answer should be a clear “no”. In our opinion, the cost of the decisions of those passengers who –  in a situation of obvious risk of airspace closure – decide to fly cannot, and should not, be imposed on the airlines, who will not and need not know the travel plans of each passenger who decides to fly.

All this being said, and based on our experience, we are certain to predict claims from passengers, who will claim that they do have such a right, even doing so in court; and therefore, from Clyde & Co. we are helping our clients to implement – along with the rest of the flexibility policies that are currently being offered (such as change of dates, destinations, etc.) – measures that will help inform passengers of the limited assistance they could receive in the event they decide to fly, ending up trapped in the middle of their trip, as a result of the decisions that governments may take during the next few days or weeks.

1   Regulation (EC) No. 261/2004 from the European Parliament and of the Council, February 11, 2004, establishing common rules on compensation and assistance for passengers in the event of denied boarding and cancellations, or long delays of flights; in derogation of Regulation (CEE) No. 295/91.2

2   Official Communication from the European Commission – Interpretation Directives for Regulation (CE) No. 261/2004 from the European Parliament and of the Council, establishing common rules on compensation and assistance for passengers in the event of denied boarding and cancellations, or long delays of flights; in derogation of Regulation (CEE) No. 2027/97 of the Council on air carrier liability in the case of an accident, in its version modified by Regulation (CE) No. 889/2002 from the European Parliament and of the Council (C/2016/3502).

3   Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No. 261/2004, establishing common rules on compensation and assistance to passengers in the event of denied boarding and cancellation, or long delay of flights; and Regulation (EC) No. 2027/97 on air carrier liability in respect to the carriage of passengers and their baggage by air.