According to EU regulation 261/2004, if an EU flight is delayed for three hours or is cancelled and if the delay is not caused by an ‘extraordinary circumstance’, then the airline is liable to pay the passengers on that flight, up to €400 as compensation.
Now the question is, what constitutes ‘extraordinary circumstance’? The Information Document of the EU Director General of Energy and Transport says that ‘extraordinary circumstance’ are situations that cannot be avoided even after all reasonable measures are taken. These include strikes, adverse weather, acts of God, terrorism and political unrest.
EC rules and regulations do not explicitly say that flight mechanical defects constitute an extraordinary circumstance. The silver lining (for the airlines) is, the rule book says that safety and security objectives will override anything else, and here technical deficiencies can be considered. So the burden of proving that a delay or cancellation was caused by an extraordinary circumstance lies with the operator or the airline.
Grey areas in the definition opens avenues for litigation
There seems to be a grey area in the definition of extraordinary circumstances. Many airlines routinely hide behind this excuse (that all flight mechanical defects are extraordinary circumstances) when their flights are delayed or cancelled. Until now, they had conveniently cited ‘extraordinary circumstances’ to refuse refunds or compensation claims, sometimes even when no flight mechanical defects or technical problems actually existed.
But last year, the UK Supreme Court threw out Jet2’s appeal that technical defects were extraordinary circumstances. As a result of the judgement, the airlines were hit with a barrage of claims for refunds and compensation from the last six years. The total claims run into billions of dollars. If all such claims are paid, many budget airlines will go out of business, with the profit margin on each ticket being so small.
So the only thing that can save many airlines from taking steep losses or even going into insolvency is the extraordinary circumstance clause. If they can prove that technical defects also constitute an extraordinary circumstance, they will be saved and they can then fleece fliers for perpetuity.
Which is why four budget airlines have approached a Liverpool County Court to stay the claims until the CJEU decides whether technical defects are extraordinary circumstances in a case pending before it (Van der Lans Vs KLM). KLM is contending that technical defects are extraordinary circumstances and so it must be given relief from paying compensation in such cases.
UK airlines get breather while Liverpool County Court deliberates on issue
The CJEU case will take several months to be resolved. If the Liverpool County Court accepts their appeal to stay the claims, the UK airlines will get a breather. Their argument is that unless the CJEU makes a decision, it would be improper to pay refunds or compensation.
It is likely that the CJEU will rule against KLM, but it is also possible that it might set some checks to decide the circumstances under which technical defects can be called extraordinary circumstances. Such a judgement will open up another can of worms. The best course of action for the Liverpool court is to refuse the budget airlines appeal. But the time when the court will give that decision is still far away. Until then, UK airlines do not have to pay any compensation.
In effect, there is a virtual freeze on disbursing refunds and compensation for flight delays and cancellations caused by technical defects. But the ground below the airlines is slipping and even they seem to know this. They have overused the flight mechanical defects excuse and now they have nowhere to run.