Cancellation due to pandemic: Are passengers entitled to compensation? | In Principle

Since 15 March 2020, Poland has had a ban on civil aircraft landing on international passenger flights. Since 16 March, domestic passenger flights have also been banned, except for flights in the public or state interest. Do passengers whose flights have been cancelled as a result of this ban have the right to compensation from the air carriers that were to operate those flights?

Right to compensation for cancelled flights

Under Art. 5(1)(c) of the EU’s Flight Compensation Regulation (261/2004), passengers whose flights were cancelled may request flat-rate compensation from the air carrier operating the flight in the amount of:

• For intra-Community flights, EUR 250 for flights of 1,500 km or less and EUR 400 for flights over 1500 km
• For other flights, EUR 250 for flights of 1,500 km or less, EUR 400 for flights of 1,500–3,500 km and EUR 600 for flights over 3,500 km.

The air carrier’s liability for compensation does not arise when passengers are informed of the flight cancellation two weeks in advance of the scheduled departure (in some cases, this period is reduced to less than seven days).

The carrier may also be relieved of the obligation to pay compensation if it can prove that the cancellation was caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken (Art. 5(3) of Regulation 261/2004).

Therefore, the air carrier will not pay compensation if it can demonstrate that:

• There are „extraordinary circumstances”
• There is a link between the existence of the extraordinary circumstances and the flight cancellation
• The flight cancellation could not have been avoided even if all reasonable measures had been taken.

The concept of “extraordinary circumstances” is not defined in Regulation 261/2004. However, circumstances that may exclude the air carrier’s liability for compensation are referred to in the preamble. These include political instability, meteorological conditions incompatible with operation of the flight, safety risks, unexpected flight safety shortcomings, and strikes affecting operation of the carrier. Extraordinary circumstances should be deemed to exist where the impact of an air traffic management decision in relation to a particular aircraft on a particular day gives rise to a long delay, an overnight delay, or cancellation of one or more flights by that aircraft, even though all reasonable measures were taken by the carrier to avoid the delays or cancellations.

Therefore, the regulation does not explicitly mention among “extraordinary circumstances” the occurrence of an epidemic in a given area (although it does mention a “threat to safety”). But this list is only illustrative and cannot be regarded as exhaustive.

However, the issue of “extraordinary circumstances” in air traffic is the subject of extensive case law from the Court of Justice of the European Union. For example, in C-549/07, Wallentin‑Hermann, the court stated that circumstances relating to an event may be considered “extraordinary” within the meaning of Art. 5(3) of the regulation only if they relate to an event that is not inherent in the normal exercise of the activity of the air carrier and cannot be effectively controlled as to its nature or origin. The court stated similarly in C-12/11, McDonagh. In that case, the Court of Justice also held that closing of part of European airspace following the eruption of the Eyjafjallajökull volcano was an “extraordinary circumstance” within the meaning of the regulation.

Therefore, it must be considered that a top-down flight ban imposed in connection with the COVID-19 pandemic may also be recognised as an “extraordinary circumstance” within the meaning of Regulation 261/2004, as it is difficult to attribute responsibility for the occurrence of such circumstances to air carriers even on the basis of assumption of the risk. Moreover, in Art. 14(2) of the Special Coronavirus Act of 2 March 2020, the Polish parliament indicated that the exceptional circumstances referred to in Regulation 261/2004 also include justified actions aimed at preventing COVID-19 (but in light of the discussion above, it should be considered that the parliament only did so “just in case”).

Since the occurrence of “extraordinary circumstances” leads to a departure from the general principle of the air carrier’s liability for flight cancellation, that concept must be interpreted narrowly and on a case-by-case basis. The situation is different when the air carrier concluded a contract of carriage with a passenger to or from Poland before the outbreak of the pandemic, than when it concluded it after announcement of the ban on carriage. In the latter case, at the time the contract was concluded the air carrier knew (or, as a professional, should have known) that it would not be able to fulfil its obligation under the contract.

Right to reimbursement or re-routing in the event of flight cancellation

Notwithstanding the right to compensation referred to above, a passenger whose flight is cancelled may, in accordance with Art. 8(1) of Regulation 261/2004, choose between:

• Withdrawal from the contract of carriage, which entails a refund of the cost incurred in connection with purchase of the ticket (or part of it). The refund is to be made within seven days in cash, by electronic bank transfer, bank order or bank cheque, and may be made in travel vouchers or other services only with the passenger’s written consent. If a passenger decides to withdraw from the contract, he is also entitled (if he made a part of his journey on a connecting flight) to return to his first place of departure free of charge at the earliest possible date.
• Re-routing under comparable conditions at the earliest possible date or at a later date convenient to the passenger.

Significantly, the passenger is entitled to this right regardless of the reason for cancellation (including the occurrence of extraordinary circumstances).

The air carrier may not withdraw or limit the passenger’s right of choice. As the Court of Justice stated in C-354/18, Rusu, this provision obliges an air carrier to provide passengers with full information on all options provided for, and passengers are not obliged to participate actively in searching for information to that end. It is the air carrier’s responsibility to assist passengers, in particular by offering them a choice under the conditions laid down in Art. 8(1) of Regulation 261/2004.

If the air carrier has not complied with this obligation and has only offered to reimburse passengers the costs of the ticket without offering re-routing or return under comparable transport conditions at the earliest possible date, it shall bear the re-routing costs and reimburse the costs incurred by the passenger on his own (see Interpretative Guidelines on Regulation 261/2004).

There may be some doubt whether re-routing under comparable conditions is involved if the air carrier offers carriage (in whole or part) using a means of transport other than aircraft. This is particularly relevant now, when it is only possible to cross the Polish border using road transport. At first glance, a proposal to travel by coach hardly seems like a journey made under comparable conditions, for example because of the duration. But Regulation 261/2004 does not seem to prohibit this type of substitute transport (see judgment of the Province Administrative Court in Warsaw of 4 October 2017, case no. VII SA/Wa 2183/16), especially if execution of transport using aircraft is significantly impeded or, as is currently the case in Poland, impossible. It should be borne in mind that this shift of the mode of transport does not result from a decision by the air carrier alone, but results from a consensus between the air carrier and the passenger. The passenger always has an alternative right to withdraw from the contract of carriage. Moreover, a passenger who resigns from the onward journey and applies to the air carrier for reimbursement of the ticket cost does not have to make any showing that the onward journey no longer serves his original plans (see Supreme Administrative Court judgment of 29 October 2009, case no. I OSK 781/08).

This interpretation of Regulation 261/2004 is also supported by the position of the European Commission expressed in interpretative guidelines. In accordance with the good practices recommended by the Commission, among others, re-routing should be offered to a passenger at no additional cost even if the re-routing uses a different air carrier or another mode of transport or a higher class or price than the original one. The Commission also recommends when using another air carrier or alternative means of transport that for the part of the journey not completed as planned, the total travel time should, as far as possible, be reasonably close to the planned time of the original journey.

It should be noted here that Regulation 261/2004 neither prohibits “substitute” transport nor confers such a right on the passenger. Therefore, he cannot require the air carrier to re-route him in such a way that carriage is performed by another air carrier or using an alternative means of transport, even if this enables him to arrive at his destination much earlier.

Right to care in the event of a cancelled flight

Under Art. 5(1)(b) of Regulation 261/2004, in the event of a flight cancellation, the passengers are entitled at all times pending re-routing or a return flight:

• To receive from the air carrier operating the flight meals and refreshments in reasonable relation to the waiting time
• To make two telephone calls free of charge and send two emails (also two telex and two fax messages)
• In the case of re-routing, where the reasonably expected time of a new flight departure is at least one day after the scheduled departure of the cancelled flight, hotel accommodation and transport between the airport and place of accommodation.

It is understood that the extent to which an air carrier takes care of a passenger whose flight has been cancelled should be assessed on a case-by-case basis, taking into account the waiting time for the return flight or re-routing. The price the passenger paid for the ticket should not affect the right to care.

The regulation does not preclude an air carrier from taking care of a passenger even when the flight cancellation is caused by extraordinary circumstances. As the Court of Justice stated in C-12/11, McDonagh, the obligation to provide care to airline passengers must be met even if the extraordinary circumstances preventing the flight from taking place are prolonged (in the circumstances of that case they lasted 8 days).

Where an air carrier has failed to fulfil its obligations and has not offered the passenger care, passengers who have incurred the cost of meals, refreshments, telephone calls, accommodation and transfers between the place of accommodation and the airport may claim reimbursement of costs which under the circumstances were necessary, appropriate and reasonable to remedy the lack of care by the carrier.

However, the requirements imposed on the carrier must be reasonable. The carrier should not be required to take impossible measures (e.g. accommodate passengers when hotels are closed due to pandemic) or measures generating an unacceptable burden on its part (hotel accommodations for many months). Similarly, the European Commission has concluded that actions of air carriers which can prove they made every effort to comply with their obligations under the regulation should not be sanctioned, taking into account the exceptional circumstances and the principle of proportionality.

So how is it with compensation?

So, are passengers whose flights have been cancelled as a result of the ban imposed by the Polish government in connection with the COVID-19 pandemic entitled to compensation? The answer is: it depends on the circumstances of the case, but in general no.

Excluding cases where air carriers entered into contracts of carriage when they already knew (or ought to have known) that an operating ban would be imposed, the circumstances caused by the outbreak of the COVID-19 pandemic and the related restrictions on operating air services constitute “extraordinary circumstances,” a basis excluding the air carrier’s obligation to pay compensation under Art. 7 of Regulation 261/2004.

While in the current situation it may be debatable whether and to what extent passengers are entitled to care by air carriers (in particular due to hotel operating restrictions), there are certainly no restrictions on their right to assistance. Thus, any passenger whose flight has been cancelled, irrespective of the provisions of the general conditions of carriage, may either re-route or withdraw from the contract of carriage and receive an amount corresponding to the ticket price paid.

Marcin Sobkowicz, Reprivatisation & Private Client practice, Aviation practice, Wardyński & Partners