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The European Court of Justice has said that liability for delayed flights under Regulation EC 261/2004 doesn’t extend to airlines that wet lease/ACMI aircraft and crew to other carriers.

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Lessors don’t count as “operating air carriers” under Reg 261, ECJ rules

News – 05 July 2018 by Naomi Smith




The European Court of Justice has said that liability for delayed flights under Regulation EC 261/2004 doesn’t extend to airlines that wet lease aircraft and crew to other carriers.


The 4 July judgment came in response to a question from the Hamburg regional court in Germany, which is currently hearing a dispute between Thomson Airways and several passengers seeking compensation for a delayed flight from Hamburg to Cancún in Mexico.


German carrier TUIfly had wet leased the aircraft and crew for the flight from Thomson and was referred to in the flight number and in the passengers’ booking reference as the issuer of the reservations. The confirmation, however, said the flight was “operated” by Thomson.


After the flight was significantly delayed, the passengers claimed compensation from Thomson under regulation 261 in the District Court of Hamburg. Thomson refused to pay on the grounds that it was not the operating air carrier – defined in 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” – arguing instead that TUIfly was the proper subject of the claims.


The Hamburg court sided with the passengers, finding that both Thomson and TUIfly qualified as operating carriers, and that it was irrelevant whether the carrier owned or had leased the aircraft used to operate the flight.


The court also held that the booked confirmation sent to passengers explicitly defined Thomson as the operating air carrier. Regulation 261 is intended to ensure consumer protection, the court said, which includes being able to trust the information provided in a booking confirmation.


Thomson appealed the decision in the regional court, arguing that TUIfly was responsible for the route and completion of the flight, while Thomson merely leased the plane and the crew. The regional court decided at this point to stay the proceedings and ask the ECJ how it should interpret the definition of operating air carrier in regulation 261.


The ECJ said the “predominant” condition that had to be satisfied for an airline fit the definition of an operating air carrier under the regulation related to the concept of a flight, which it had previously held to be “an air transport operation, being as it were a ’unit’ of such transport, performed by an air carrier which fixes its itinerary.”


With this in mind, the court found that a carrier that decides to perform a particular flight, including fixing its itinerary, and therefore enters into a contract of air carriage with members of the public in the process, must be considered the operating air carrier for the purposes of compensation under regulation 261.


If the purpose of the regulation is to ensure “a high level of protection for passengers”, then it is the air carrier which actually planned and operated the flight which should be held responsible for delays, the court said.


Clyde & Co partner John Balfour told ALN the judgment “makes it clear that passengers in a wet lease situation in the event of non-compliance can claim against the wet lessee (the contracting carrier), and this certainty may be welcome as passengers might well find it difficult to claim against the wet lessor, particularly if from another country.”


However, he pointed out that the decision could result in “undesirable contortions” over its interpretation of the concept of “performance” in regulation 261’s definition of an operating air carrier.


“Performance of a flight is a concept that has its origin in the 1961 Guadalajara Convention, and thus found its way into the Warsaw Convention and then the Montreal Convention. In that context it is used to define the ‘actual carrier’, as opposed to the ‘contracting carrier’, and the meaning of these terms, assisted by case law on the Conventions, is now fairly clear,” he said. “The European Court has now introduced another concept – that of “operational responsibility” – which risks muddying the waters.”



About Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow

I am a Canadian and EU national with an MBA and 33+ years experience in aviation business development with 20 years overseas and work in 30+ countries. A former investment/merchant banker (mergers and acquisitions to corporate turnarounds). airline and OEM senior executive and past owner of 6 successful aviation companies in 3 countries (executive jet charter/management companies, aircraft sales, aircraft broker, airline/aerospace consulting to aircraft insurance). I have a very diverse aviation background with 75+ aviation companies (50+ airlines of all sizes, OEM's, airports, lessors, MRO to service providers) as consultant, executive management, business analyst and business development adviser. Excellent success track record in International Business Development. Most work with airlines is with new start-ups and restructuring of troubled carriers. I sold new business jets, turboprops and helicopters for Cessna, Raytheon, Gulfstream to Eurocopter as an ASR as well as undertaking sales and marketing of commercial aircraft for Boeing, de Havilland, Dornier, Saab and Beechcraft. Brokered everything from LET-410's to B747's and from piston PA31 to G550 business jets. I look beyond the headlines of the aviation news and analyze what the meaning and consequences of the new information really means. There is a story behind each headline that few go beyond. Picked the name Aviation Doctor, as much of my work has been with troubled companies or those that want and need to grow profitably. I fix problems in the business for a better tomorrow. You can reach me with comments or suggestions at: Tomas.Aviation@gmail.com I write a lot of Articles and Posts on LinkedIN: https://www.linkedin.com/in/tomas-chlumecky-3200a021/


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