Originally appeared in Aviation Finance on 12, July 2018.
On 4 July 2018, the Court of Justice of the European Union (the “CJEU”) delivered a preliminary ruling under Article 267 TFEU in the case of Wolfgang Wirth and others v Thomson Airways Ltd 1.
The CJEU was asked by the Regional Court, Hamburg to provide a preliminary ruling on the interpretation of an “operating air carrier” under Regulation (EC) No 261/2004 (“the Regulation”) regarding flight delay compensation (the “Request”).
The ruling provides clarity on who will be considered an operating air carrier under the Regulation and liable for flight delay compensation.
Background to the dispute and Request
TUIfly GmbH (“TUIfly”) had entered into a“wet lease” with Thomson Airways regarding the provision of aircraft, crew, maintenance and insurance for a stipulated number of flights. That lease provided that TUIfly was responsible for “ground handling including passenger handling, passenger welfare at all times, cargo handling, security in respect of passengers and baggage, arranging on-board services, etc.”
The plaintiffs held a booking confirmation issued by TUIfly for a flight from Hamburg, Germany to Cancún, Mexico. The booking confirmation bore a flight number code which referred to TUIfly, who leased staff and aircraft from Thomson Airways under the wet lease, however the flight was “operated” by Thomson Airways.
The flight was significantly delayed, therefore the plaintiffs issued proceedings against Thomson Airways in the German Courts for compensation under the Regulation claiming that Thomson Airways was the “operating air carrier” as defined under Article 2 (b).
However, Thomson Airways refused to pay compensation arguing that it was not in fact the “operating air carrier” within the meaning of the Regulation.
The Local Court, Hamburg held that both Thomson Airways and TUIfly should be regarded as operating air carriers as both fell under the definition provided in the Regulation and that it was irrelevant whether the operating air carrier performed the flight with its own aircraft or under a “dry” or “wet” lease.
The Local Court also stated that the booking confirmation issued to the plaintiffs expressly referred to Thomson Airways as the operating air carrier and that it was necessary for a consumer to rely on the information in the booking confirmation in order to ensure consumer protection.
Thomson Airways subsequently appealed the judgment to the Regional Court, Hamburg on the grounds that only the air carrier which bears the operational responsibility for the flight is in the position to undertake, in full, the duties placed on air carriers under the Regulation, given that that carrier has the necessary ground presence at airports and holds all the passenger information.
The Regional Court therefore decided to stay the proceedings in order to ask the CJEU to make a preliminary ruling on the concept of “operating air carrier” under the Regulation.
The CJEU’s decision
The CJEU referred to the definition of an “operating air carrier” under Article 2(b) of the Regulation as an “air carrier that performs or intends to perform a flight under a contract with a passenger or on behalf of another person, legal or natural, having a contract with that passenger”.
The CJEU noted that this definition requires two interconnected conditions to be satisfied in order to determine if a company should be regarded as an “operating air carrier”, relating to (i) the performance and operation of the flight and (ii) whether there is a contract between the air carrier and passenger.
The CJEU stated that it was common ground that Thomson Airways merely leased the aircraft and the crew which performed the flight at issue in the main proceedings, but that the fixing of the itinerary and the performance of the flight were determined by TUIFly.
The CJEU therefore determined that in those circumstances Thomson Airways could not be held to be an operating air carrier within the meaning of the Regulation.
Commentary
In delivering its ruling, the CJEU stated that its decision is consistent with the objective of “ensuring a high level of protection for passengers” as set out in the Regulation enabling “the passengers carried to be ensured compensation or that they will be cared for, without needing to take account of arrangements made by the air carrier which decided to perform the flight in question with another air carrier for the purposes of actually performing that flight.”
Consequently, the lessor of the “wet lease”, in this case Thompson Airlines, will not be considered an operating air carrier for the purposes of the Regulation.
The ruling provides greater clarity as to with which party liability for compensating delay rests and offers an important reminder for those engaged in drafting aircraft leases to have regard to the definition of an “operating air carrier” under the Regulation and the two interconnected conditions outlined by the CJEU.
1 Case C-532/17
Contributed by Sarah Twohig
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