Insights

On 21 March 2024, the European Court of Justice (“ECJ”) gave a preliminary ruling on the interpretation and scope of Regulation No 261/2004 of the European Parliament and of the Council establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights (the “Regulation”) in relation to case C-76/23 pertaining to the method of reimbursement following a flight cancellation.

Background to the request for the preliminary ruling

A passenger booked a connecting flight with TAP Air Portugal which was scheduled to depart on 1^st July 2020 from Fortaleza, Brazil to Frankfurt am Main, Germany, with a layover in Lisbon, Portugal. The airline in question however cancelled the connecting flight from Portugal to Germany.

In May 2020, TAP Air Portugal had introduced a process for reimbursements for cancelled flights on its website. Passengers have the option of immediate reimbursement in travel vouchers through an online form or reimbursement via another method, such as a monetary refund, provided they contact the airline’s customer service beforehand for review. The conditions of acceptance stipulate that if a passenger chooses reimbursement via a travel voucher, monetary reimbursement for the ticket cost is not permitted.

The passenger in question requested reimbursement by a travel voucher on 4^th June 2020, and received a voucher via email which covered both the original ticket price and a supplement. On 30^th June 2020, the passenger assigned her rights in relation to the cancelled flight to Cobult, which, on the same day, requested monetary reimbursement for the cancelled flight. TAP Air Portugal refused this reimbursement request and in response Cobult initiated legal proceedings against the said airline.

The initial court dismissed Cobult’s claim, stating that the rights of the assigning passenger had been fulfilled through the travel voucher reimbursement. Cobult appealed this decision to the Regional Court of Frankfurt am Main, Germany (the “Referring Court”). The Referring Court had its doubts as to whether the procedure of compensation adopted by TAP Air Portugal through its website complied with the relevant provisions of the Regulations. Consequently, the Referring Court sought a preliminary ruling from the ECJ to gain additional insight into the interpretation of the Regulation.

Applicable remit of the Regulation

The Regulation applies to (i) passengers departing from an airport located in the territory of an EU Member State; or to (ii) those passengers departing from airports in third countries to airports within the territory of an EU Member State, under the condition that such passengers have not received benefits or compensation in the third country, and only if the operating air carrier of the flight is an EU carrier.

An understanding of Articles 7 and 8 of the Regulation

Article 7 of the Regulation provides for the mechanism of compensation when flights are delayed or cancelled. The compensation amount varies depending on the distance of the flight. For flights up to 1500 kilometres, passengers are eligible for EUR 250. Intra-Community flights exceeding 1500 kilometres, as well as other flights spanning between 1500 and 3500 kilometres, warrant EUR 400 compensation. Of particular interest for this report, is Article 7(3) of the Regulation which provides that the compensation shall be paid in cash, by electronic bank transfer, bank orders or bank cheques, or, with the signed agreement of the passenger, in travel vouchers and/or other services.

Article 8 establishes the right to re-imbursement or re-routing and this when a flight is cancelled or when a passenger is denied boarding. Article 8(1)(a) provides that passengers shall be offered reimbursement within seven days of the full cost of the ticket at the price at which it was bought, for the part or parts of the journey not made, and for the part or parts already made if the flight is no longer serving any purpose in relation to the passenger’s original travel plan, together with, when relevant, a return flight to the first point of departure, at the earliest opportunity. Furthermore, under Article 8(1)(b) and Article 8(1)(c) of the Regulation, passengers have additional options and can be rerouted to their final destination under similar transport conditions, either promptly or at a later date for their convenience, contingent upon seat availability.

The ECJ’s consideration

By its question to the ECJ, the Referring Court asked whether Article 7(3) of Regulation, read in conjunction with Article 8(1)(a) of that same Regulation, must be interpreted as meaning that in the event of the cancellation of a flight by the airline, the passenger is deemed to have given his or her ‘signed agreement’ to reimbursement of the cost of the ticket by a travel voucher where he or she has filled in an online form on the website of that airline, by which he or she chose such a means of reimbursement, to the exclusion of reimbursement by a sum of money, whereas that latter method of reimbursement was subject to complying with a procedure including supplementary steps to be carried out with the customer service department of that air carrier.

The ECJ considered that the main method established under the Regulation for reimbursing ticket costs after flight cancellation was primarily through cash reimbursement. In the Regulation, travel voucher reimbursement is presented as an alternative, contingent upon the “signed agreement of the passenger.” The ECJ however noted that the Regulation does not define what constitutes the “signed agreement of the passenger.”

Various language versions of the Regulation differ regarding whether the agreement must be “signed” or “written.” In such instances, the provisions of EU law mandate interpreting and applying provisions uniformly across all languages. Therefore, when there’s a discrepancy, interpretation should align with the overall purpose of the regulation in question. In this respect, the ECJ gave significant important to the spirit of the Regulation that passengers should be fully informed of their rights in the event of denied boarding and of cancellation or long delay of flights.

The ECJ considered that for a passenger’s agreement to be valid, the airline must provide clear and comprehensive information about available reimbursement options. Without such information, the passenger cannot effectively consent to travel voucher reimbursement. On the other hand, the exclusion of online form submissions as a valid means of agreement would burden airlines administratively and delay passenger reimbursements, contrary to passenger interests.

Based on the above factors, the ECJ concluded that the relation provisions of the Regulation, should be interpreted such that a passenger is deemed to have agreed to travel voucher reimbursement if they have filled out an online form on the airline’s website, provided the passenger has received clear and comprehensive information about reimbursement options from the airline.

Concluding remarks

In this preliminary ruling, the ECJ’s consideration emphasised that the primary method of reimbursing ticket costs is through cash reimbursement, with travel vouchers being presented as an alternative. However, the interpretation of what constitutes the “signed agreement of the passenger” became pivotal. The ECJ stressed the need for airlines to provide clear and comprehensive information to passengers regarding reimbursement options. Without such information, passengers cannot effectively consent to travel voucher reimbursement. Balancing administrative efficiency for airlines with passenger interests, the ECJ concluded that passengers who fill out online forms on the airline’s website are deemed to have agreed to travel voucher reimbursement, provided they have been duly informed. This ruling highlights the paramount importance of transparency and passenger empowerment within the framework of the Regulation, ensuring that passengers are fully aware of their rights and options in the event of flight disruptions.

Disclaimer: Ganado Advocates is responsible for contributing this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report.

This article was first published in ‘The Malta Independent’ on 03.04.2024.