Abstract
The aim of this article is to identify why air passengers travelling in the European Union, endowed with the highest standard of consumer protection in the world under EU law, are still being denied their rights and finding it difficult to seek effective legal redress. This article argues that the principal cause of airlines’ non-compliance is the poor regulatory design of Regulation 261/2004, which has been compounded by inadequate application by the Member States and regulatory resistance by the airlines. This contribution will then demonstrate how the European Commission (‘Commission’) has responded through the adoption of both deterrence and compliance-based enforcement strategies, and maps out the mechanisms, tools and actors harnessed by the Commission to create a complex hybrid, multi-layered system of enforcement. The article reveals that enforcement gaps persist and argues that the effectiveness of the regime is unlikely to improve without legislative reform.
1. Introduction
Air passenger rights as set out in Regulation 261/2004 (also known as EC261) 1 are routinely portrayed as one of the EU’s flagship policies for citizens, along with the Mobile Phone Roaming Regulation 2 and, more recently, the General Data Protection Regulation (GDPR). 3 Regulation 261/2004 is ambitious and confers an unprecedented standard of consumer protection on air passengers who have their travel disrupted in the EU. 4 It reflects the EU’s commitment to a high standard of consumer protection 5 which cuts across all policy sectors, including transport. 6 This ambition is reflected in the regulatory design of the Regulation, since it explicitly grants passengers a minimum range of consumer rights with corresponding legal obligations imposed on airlines through automatically binding legislation. In essence, where air travel is disrupted through denied boarding, 7 involuntary up-grading and down-grading, 8 delay, 9 or cancellation, 10 EU rights are triggered which are directly applicable and enforceable before a national court. 11 Air passengers may have a right to care and assistance in the form of, for example, meals, drinks, telephone calls and hotel accommodation, 12 a right to reimbursement or re-routing, 13 and a right to compensation of up to €600 per passenger. 14 The liability of the airlines to pay compensation may be limited if passengers are given sufficient notice 15 and if a cancellation (or long delay) is due to ‘extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken. 16 Passengers also have a right to full and accurate information about their rights at the start of a journey, and when travel is disrupted. 17
Despite what appears to be a robust legal regime for the conferral of EU rights, in practice, the experience of air passengers can be very different. 18 Air passengers experience flight disruption for reasons as varied as volcanic eruptions, snowstorms, strikes, air traffic control shortages, drones, climate change protesters 19 and, more recently, the outbreak of COVID-19. Yet, there have been repeated reports of airlines not respecting the consumer protection rights which air passengers are entitled to under EU law in these circumstances. 20
The purpose of this article is to identify why air passengers endowed by EU law with the highest standard of consumer protection in the world are still being denied their rights and finding it difficult to seek effective legal redress. The scale of non-compliance with these EU rights by the airlines raises important questions not just about the operation of Regulation 261/2004, but also about its regulatory design, including its enforcement policy. This article makes an important contribution in three ways. First, it identifies the three inter-connected factors which drive non-compliance (poor regulatory design, inadequate implementation and application by the Member States and regulatory resistance by the airlines) and argues that extensive litigation concerning Regulation 261/2004 before national courts has arisen by default rather than by design and should not be taken to signify that rights are being effectively enforced (Section 2). Second, it explores how the Commission has sought to counter non-compliance in the absence of legislative reform and in light of its limited legal competence where enforcement is decentralized to the Member States. The article identifies three strands to the Commission’s enforcement strategy and maps out the mechanisms, tools and actors harnessed by the Commission to create a complex hybrid, multi-layered regime of enforcement (Section 3). Third, the article will argue that enforcement gaps persist and that the effectiveness of the regime is unlikely to improve without legislative reform (Section 4).
2. A story of non-compliance
Regulation 261/2004 has been beset by non-compliance since it came into force in 2005. Three interlinked drivers of non-compliance have been identified. 21 First, there are flaws in the regulatory design of the original Regulation. These have been compounded, initially, by poor implementation by the Member States and by inadequate application by the national enforcement authorities. A third factor has been the hostility of some airlines to the operational and financial burden placed on them in a highly competitive market.
A. The existence of ‘grey zones’
The drafting of rights (and corresponding legal obligations) in broad terms which are open to different interpretations by the main stakeholders (so called ‘grey zones’) has led to large volumes of litigation before the courts. The ‘extraordinary circumstances’ exception is a good example of a grey zone and is discussed below. While it may be assumed that a ruling by the CJEU would provide a final and definitive interpretation of the relevant EU law provision, controversial and broadly worded judgments have led to further preliminary reference requests from the national courts. 22
B. Complexity of the legal provisions
Another difficulty arises from the complexity of the Regulation itself and its provisions conferring rights on passengers. For example, the right to compensation for cancellation and the amount to be paid differ according to the flight’s distance, and may not be payable at all, depending on the reason for the disruption and whether airlines give passengers advance notice in line with three different possible time-frames. 23 As a result, passengers find it difficult to know accurately their rights, to assess whether there has been an infringement, and if so, how to enforce them.
C. A weak decentralized enforcement regime
It is argued that a major impediment to the effective enforcement of air passenger rights is the regulatory design of Article 16, the provision which sets out the legal framework for enforcement at national level. Article 16 requires each Member State to appoint a national enforcement body (NEB). However, it does not define the competences of these national bodies. Article 16 states rather vaguely that ‘where appropriate, this body [NEB] shall take the measures necessary to ensure that rights of passengers are respected.’ Individual passengers can complain to this body, or any other competent body designated by the Member State, about an alleged infringement of the Regulation ‘at any airport situated on the territory of a Member State or concerning any flight from a third country to an airport situated on that territory.’ The NEBs clearly have a monitoring role, but the Regulation does not specify that passengers should be awarded redress by the NEBs. Indeed, the CJEU has explicitly ruled that NEBs are not required by EU law (that is, under the Regulation) to confer individual redress; this is a matter for national law. 24 Neither does the Regulation require the NEB to force the airline to confer redress. This gives rise to an enforcement gap. In terms of sanctions, Article 16(2) requires the Member States to adopt national penalties for infringements committed by airlines which are ‘effective, proportionate and dissuasive.’ Member States have considerable discretion in enacting penalties, which has led to the implementation of legislation which is too weak to deter non-compliance by the airlines in practice. In Member States where a criminal procedure rather than an administrative procedure is applicable, the legal thresholds can be too high to lead to any sanctions being imposed. Moreover, in some Member States, the sanctions are too low to have any real deterrent effect. For example, in Estonia and Romania, the maximum sanction per incident (not per passenger) is less than €1,000. 25 Furthermore, legal barriers arise for NEBs when applying sanctions to airlines based in other Member States or collecting sanctions from non-domestic carriers. There can also be difficulties in the application of a national enforcement policy: NEBs may lack sufficient resources and/or operational/technical expertise to assess the factual evidence or validity of the claims of airlines, and tend to be reactive rather than pro-active. Many NEBs fail to systematically monitor compliance by the airlines and simply react to complaints. There can be differences across the Member States in how the ‘grey zones’ are interpreted by the NEBs and the extent to which they investigate the defence of ‘extraordinary circumstances.’ Furthermore, not all infringements of the Regulation are penalized. In its 2014 report, the Commission found that the NEBs were not routinely punishing non-compliance, and sanctions were only applied in 1%-2% of cases, which is extraordinarily low.
D. Hostility by airlines to the regulatory burden
Air carriers, particularly the low-cost airlines, fail to adhere in full to the legal obligations set in Regulation 261/2004 because of the operational and financial burdens it imposes on them. An early challenge to the Regulation’s validity was brought by the International Air Transport Association (IATA), though it was unsuccessful. 26 The Commission has acknowledged that airlines have found it difficult to bear the costs and/or risks that emanate from their duty to provide assistance, care and/or compensation in exceptional situations. A good illustration of this are the practical and financial repercussions arising from the 2010 Icelandic volcanic eruptions, which led to the closing of European air space. Although this natural event fell within the definition of ‘extraordinary circumstances’, the airlines were still liable under the Regulation to provide (unlimited) care and assistance. The Commission has estimated that the combined costs of the airlines would have increased by approximately 1.5 times compared to a ‘regular’ year if the Regulation had been fully complied with by the airlines, amounting to €960 million. 27 The Commission has also accepted that the regulatory burden may be disproportionately greater than the price of the airfare for smaller, often regional air carriers, operating short-distance flights with small aircraft. Most hostility from airlines arises from their obligation to pay financial compensation for cancellations, and particularly since the Court’s Sturgeon judgment extended the right to compensation to long delays over three hours on the basis of the principle of equal treatment. 28 Further disapproval stems from the Court’s narrow interpretation of the ‘extraordinary circumstances’ exception in the Wallentin-Hermann judgment, which excluded a large number of technical faults from the scope of the derogation. 29 It held that the application of the exception should be assessed on a case by case basis, and only applies where two cumulative conditions are satisfied: (i) the circumstances are not inherent in the normal exercise of the activity of the air carrier concerned; and (ii) are beyond the actual control of the carrier on account of their nature or origin.
It is difficult to identify the true scale of non-compliance, but it is clear that the lack of voluntary compliance by airlines continues. A recent survey of 10 Member States conducted by the European Court of Auditors (ECA 2018) reveals that the numbers of complaints handled by the NEBs are increasing. Most complaints relate to the right to compensation for delays and disputes over whether the ‘extraordinary circumstances’ exception applies (on average, 45% of all claims) and cancellations (19%). 30 An analysis of the complaints made to the UK’s newly appointed Aviation ADR bodies since they came into operation in 2016 also shows a rise in complaints, with the majority of complaints relating to the right to compensation for cancellation, long delays and denied boarding (see Figure 1 below). 31
Source: Adapted from the annual reports of the UK aviation ADR entities.
More recently, considerable resistance from airlines in paying compensation is evident where cancellations and long delays have been caused by strikes. Recital 14 states that ‘strikes that affect the operation of an operating air carrier’ could be considered ‘extraordinary circumstances’ and exempt an airline from liability. This interpretation is arguably correct where the strike affects services run by a third party such as ground handlers or air traffic control. Where the strike action causing the disruption is taken by the airlines’ own staff, the CJEU has been less sympathetic. In Krüsemann, 32 the CJEU held that a ‘wildcat strike’ by TUIfly staff in response to surprise proposals to restructure the business could not be regarded as beyond the actual control of the air carrier concerned and therefore did not fall within the exception of ‘extraordinary circumstances’. 33 It held that restructuring is a normal management activity for airlines and that conflicts with staff may arise. Therefore, ‘the risks arising from the social consequences that go with such measures must be regarded as inherent in the normal exercise of the activity if the air carrier concerned.’ 34 The Court drew attention to the fact that the ‘wildcat strike’ ceased once an agreement with the staff representatives had been concluded. 35 Despite this ruling, airlines are still refusing to pay compensation for strike action by their own staff. There is also considerable inconsistency in how the derogation is being interpreted and applied in the national courts. 36
An increasing problem for airlines is the financial cost of providing care and assistance where the travel disruptions are due to the actions of third parties such as airports, or air navigation service providers (ANSPs), which includes air traffic control and ground handlers. The Commission acknowledges that the airlines may subsume these costs into ticket prices, but the current regime does not incentivize third parties to address the cause and severity of disruption. The airlines may seek to recoup their costs from third parties; indeed, the Regulation does not preclude this, but it may be difficult to do so in practice since it has been reported that national law may prevent this. 37 In 2018, the number of delays and cancellations increased considerably due to strikes by French air traffic control. Although such disruption falls within the scope of the ‘extraordinary circumstances’ exception, the airlines are still required to provide care and assistance. This prompted four major EU airlines to make a complaint to the Commission in June 2018 claiming that their right to free movement had been restricted. The airlines have based their complaint on the Commission v. France (Spanish Strawberries) judgment. 38 It remains to be seen whether the Commission will follow up this complaint by launching an infringement action against France. Should the Commission bring an action against France, a deciding factor will be whether it is proportionate for France to allow the exercise of the (fundamental) right to strike 39 by the air traffic control employees where it disrupts the right of free movement of the airlines and their passengers. 40
E. Weaknesses inherent in civil litigation before national courts
Weak public enforcement by the NEBs at national level has meant that many passengers have turned to the national courts to enforce their EU rights by bringing civil claims. Interestingly, a close examination of the Recitals to the Regulation reveals limited reference to the role to be played by the national courts in enforcing EU rights. Recital 22 states that the role of the national enforcement bodies in ensuring compliance ‘should not affect the rights of passengers and air carriers to seek legal redress from courts under procedures of national law.’ 41 There is no other reference to the role of national courts in the Regulation. With public enforcement by the NEBs envisaged as the main avenue for remedying non-compliance, high volume of litigation have arguably arisen by default rather than by design. The lack of an explicit role for private enforcement may have emboldened some actors to try to close the door on this important path of redress for individuals to enforce their EU rights. In McDonagh v. Ryanair, 42 the Council of the EU intervened in the case and argued that the individual litigant did not have legal standing to bring a civil claim before the courts against Ryanair. This litigant sought damages for breach of her right to care after she had been left stranded in Portugal for several days, following the Icelandic volcanic eruption. The CJEU firmly rejected the Council’s argument and confirmed that Article 16 could not be interpreted as allowing only the national enforcement bodies to sanction the failure of air carriers to comply with their obligations under the Regulation, and that air passengers can invoke the failure of an airline to comply with their obligations under the Regulation before a national court. 43
The re-regulation of the internal market (here the aviation sector) which incurs the creation of individual rights enforceable through the courts combined with weak central enforcement by the European Commission and fragmented national enforcement has been termed ‘Eurolegalism’ by Keleman. 44 Garben argues that Eurolegalism is the root cause of the large volume of litigation in relation to Regulation 261/2004, exacerbated by judicial activism on the part of the CJEU in Sturgeon, which stimulated further preliminary references from some Euro-sceptic national courts resistant to the perceived emergence of a US style ‘compensation culture’. 45 Other commentators have attributed the high volume of litigation to the contentious relationship between the Regulation and international law, in particular the Montreal Convention, and the lack of acceptance by national courts of the CJEU’s position in its IATA 46 judgment. 47
Yet, while instigating legal proceedings to protect EU rights is constitutionally an important pillar of the EU’s traditional enforcement regime, it is no panacea for protecting consumer rights. First, it should be recalled that, despite the emergence of claims management firms, not all passengers are willing or can afford to pursue complex and often expensive court proceedings. Second, significant diversity in the application of the Regulation and subsequent case law has been identified in the national courts of the different Member States, so that a successful claim is by no means guaranteed. 48 Third, in some Member States such as the UK, passengers have been obliged to turn to debt recovery agents to enforce domestic court judgments which have awarded them compensation where the airlines still fail to pay.
3. The emergence of a multi-layered hybrid enforcement policy
Since 2007, and quite separate to the legal battles being played out before the courts between air passengers and airlines, the European Commission has taken multiple steps to address non-compliance with Regulation 261/2004. It is not just the airlines which can be non-compliant, but the Member States and the NEBs themselves. Moreover, the Commission has limited legal competence to address directly the failings of the airlines and the Member States. The Commission cannot directly sanction the airlines. It must direct its oversight towards the Member States and their designated NEBs. Soon after the Regulation had come into force, a number of infringement proceedings were initiated against several Member States for failing to designate an NEB, or enact national sanctions. 49 Nevertheless, the broad enforcement provisions in the Regulation arguably complicate the instigation of further infringement proceedings against countries where the national enforcement policy is weak. 50
Without the stick of Article 258 TFEU action, and notwithstanding the Commission’s rather belated strategic focus on the enforcement of EU rights under the Juncker Commission (2014-2019), 51 the Commission has adopted a range of non-legislative actions under its general administrative function set out in Article 17 TEU. 52 This type of ‘enforcement’ activity by the Commission is not always visible and is often overlooked, or perhaps not given sufficient emphasis, by legal scholars since it takes place away from the courts. 53 The Commission has sought to monitor more closely the actions or inaction of the Member States through a mix of enforcement (deterrence-based) strategies and management (compliance-based) strategies. 54 As argued by Tallberg, these strategies should be seen in the EU context as complementary and mutually reinforcing. 55 A third strand to the Commission’s approach has been to draw non-governmental actors into the enforcement regime to bolster capacity and coordination. The Commission’s approach reflects a wider, more contemporary trend in regulatory enforcement, 56 as it follows ‘tried and tested’ mechanisms and tools adopted in other fields such as its ‘trail-blazing’ EU environmental policy. 57 Indeed, although the regulation of airlines and their obligations to their passengers falls ostensibly within the remit of DG MOVE (Mobility and Transport), the Commission has turned to its general consumer protection enforcement framework which falls under DG JUST (Justice, Consumers and Gender Equality). By drawing these strands together, this article identifies an enforcement regime which is hybrid in nature and acts as a valuable case study into the EU’s broader enforcement policy. Nevertheless, the fact remains that, as will be evidenced below, there is still a staggeringly large and growing number of complaints by individual passengers. This indicates that enforcement gaps and non-compliance persist, undermining regulatory standards and the overall regulatory goal of the EU.
A. Strengthening the original deterrence-based approach
The legal framework originally set out in Regulation 261/2004 reflects the deterrence-based decentralized enforcement strategy commonly adopted by the EU institutions when regulating the EU’s internal market. 58 The strategy aims to root out non-compliance with EU law by monitoring the behaviour of regulatees, investigating potential breaches, and imposing sanctions as punishment. This approach works on the basis of two assumptions: first, that regulatees are rational actors who weigh up the costs and benefits of compliance, and are capable of responding to incentives, and second, that if non-compliance is detected and punished with adequate frequency and severity, the regulatees and others will be deterred from breaching the rules in the future. 59 The Commission has taken multiple steps to strengthen the following three prongs of the enforcement regime: (i) the monitoring, investigating and sanctioning functions of the NEBs; (ii) private enforcement before the courts; (iii) alternative and more cost effective paths of legal redress.
1. Public enforcement by the NEBs
The cross-border nature of air travel renders the monitoring, investigating and sanctioning of infringements outside the jurisdiction of a NEB difficult, if not impossible. To counteract this enforcement gap, the Commission has harnessed the support of the European Consumer Centres (ECC-Net). 60 The role of ECC-Net is to act as a central point for the collation of complaints and to assist the NEBs by offering an independent complaint-handling service, forwarding unresolved complaints to them, as well as assisting with the collation of data for follow-up and monitoring purposes. 61 The Commission has also brought the Consumer Protection Cooperation (CPC) Network into its institutional framework, although with limited effect. 62 This network specifically links national authorities responsible for the enforcement of consumer law to jointly address breaches of Union laws, thus protecting consumers’ interests in cases where the trader and the consumer are based in different countries.
2. Private enforcement through the national courts
As a legislator, the EU has limited competence in the field of civil justice, but it has adopted a number of measures which have direct relevance for claims based on Regulation 261/2004 which are often cross-border in nature. Passengers may pursue a claim following the European Small Claims Procedure (ESCP). 63 It offers a less formal and expedited judicial procedure for cross-border claims below €2000 through the use of a standard form, removing lawyers from the preliminary steps. This reduces time and costs associated with bringing a claim and increases access to justice. 64 The availability of collective redress as another mechanism for collating multiple low-value claims into a single legal action at national level is mixed, and there has been significant resistance to the introduction of an EU instrument to facilitate such claims. This may change with the introduction of new EU-wide legislative measures. In its New Deal for Consumers 2018, 65 the Commission seeks to introduce representative actions for mass harm to consumers, including air passengers. Despite its promotion by the Commission as a mechanism for addressing instances of mass harm to consumers similar to the ‘Dieselgate’ scandal, 66 the original draft proposal contained a rather ambiguous re-evaluation clause providing that one year after the Directive has come into force, its application to air (and rail) passenger rights will be evaluated and may be withdrawn. 67 Consumer groups welcomed the basic proposal but called for the re-evaluation clause to be removed. 68 Unsurprisingly, the reaction of the airline industry to an EU-wide measure that could expose them to further financial claims is hostile. It is unclear whether the clause will survive the legislative process. In its first reading, the European Parliament removed the clause and inserted a new provision which stated that three years after the Directive comes into force the Commission should explore the option of establishing a European Ombudsman for collective redress for cross-border mass claims. 69
The conferral upon individuals of EU rights which yield a monetary benefit has attracted other actors into the enforcement framework in some Member States: claim management agencies. These private actors offer to claim compensation on behalf of passengers who have had their travel plans disrupted. In this sense, the EU has created a new market for the enforcement of EU rights which is transnational in nature. It is a development that is not welcome in all Member States. Indeed, some Member States are hostile to the emergence of such outfits and, in some, they are actively discouraged. The Commission’s position appears to be more ambivalent. However, having been made aware by the NEBs of incorrect practices and misbehaviour by some claims agencies, it issued new guidance in 2017 to draw passengers’ attention to the legal obligations with which the claims agencies (including solicitors and lawyers acting as claim agencies) must comply in relation to consumer protection, 70 marketing and data protection. 71 It also reiterated its preferred route to redress (that is, passengers should contact the relevant airline before considering any other means of redress), drew attention to the role of NEBs ‘for enforcing overall compliance’ with the Regulation, and highlighted the possibility of ADR as an alternative means of resolving disputes.
It could be argued that the emergence of claims agencies is a byproduct of the EU’s Passenger Rights regime and its focus on ‘rights’, but it also reflects the levels of compensation which make this business model viable. 72 Their existence has also been encouraged by the failure of the decentralized public enforcement model as the primary means of enforcement of these new ‘rights’ and has contributed to the increasing number of complaints to the NEBs and the high volumes of litigation before national courts . Some academics have argued that the claims agencies have played an important role in raising passenger awareness and filling the enforcement gap left by inadequate public enforcement and expensive court systems. 73 There is evidence to suggest that this is a popular option with passengers despite the substantial fees. In the ECA 2018 report, interviews with airlines suggested that as many as 50% of claims are made by claims management agencies. 74 In 2017, the Association of Passenger Rights Advocates (APRA), a non-profit body, was established to promote air passenger rights and to represent the interests of their members in the policy and law-making process. It also sees its role as defending the business model of claims management agencies which enables air passengers to exercise their EU rights and obtain redress, and countering criticism of poor practice by, for example, making membership conditional on acceptance of and adherence to a code of ethics.
3. Extra-judicial redress
In recent years, the Commission’s general enforcement strategy in consumer policy has focused on the promotion of alternative dispute resolution (ADR) and on-line dispute resolution (ODR). The ADR Consumer Directive 75 came into force in 2015 to develop ADR across the EU in a more consistent manner. ADR is regarded as a simple, speedy and low-cost method of resolving disputes between traders and consumers (including passengers and airlines) as opposed to more expensive and complex court actions. The promotion of consumer ADR means that new aviation-specific ADR bodies have emerged as important actors in the enforcement framework for air passenger rights, and there have even been calls to involve these bodies in the informal NEB network and the meetings between the Commission and the NEBs. Importantly, since 2016, the Commission has expressly called for passengers to first complain to the airline and, if they fail to receive an adequate response, to contact the designated ADR. 76 The main weakness of ADR is that it may not be compulsory for airlines to engage with the ADR entities. In Member States where ADR is compulsory for the aviation sector such as Germany, ADR bodies are seen as playing an important role in enhancing the protection of air passenger rights. 77 Furthermore, not all ADR opinions are legally binding. These enforcement gaps mean that passengers may still have to turn to the courts to obtain redress at a later point. 78
B. Compliance-based (or management) strategies
The second strand of the Commission’s approach has been the adoption of a range of management strategies to improve the enforcement of Regulation 261/2004. The aim of these strategies is (i) to close knowledge gaps among stakeholders through the promotion of greater awareness, legal certainty, and gathering of data; (ii) to build capacity by bringing new actors into the regulatory framework; and (iii) to promote greater co-ordination between the different actors through the establishment of networks.
1. Raising passenger awareness
A fundamental requirement for the success of the EU’s air passenger rights policy is for passengers to have accurate knowledge of their rights in the event of travel disruption. Article 14 requires airlines to inform passengers of their rights. While there is advice and assistance available at the national level from a range of outlets, the Commission has taken its own steps to promote passenger awareness, for example, by running several information campaigns. Passengers can seek advice and assistance from the Europe Direct Contact Centre and the Your Europe website which includes standard complaint forms and a useful app. Despite these initiatives, the ECA Report criticized the Commission for failing to provide adequate information to passengers on what to do when their travel has been disrupted, and who to turn to for redress. The ECA made several recommendations in its report which have been welcomed by consumer bodies.
2. Promoting legal certainty for stakeholders through post-legislative non-binding guidance
One of the key strategies of the Commission to promote legal certainty and to improve compliance is to issue non-binding post-legislative guidance. This practice is used extensively in other fields such as EU competition law where private actors are the main regulatees. In 2016, the Commission issued its Interpretative Guidelines, an interim and short-term measure following the stagnation of plans for legislative reform. 79 The Commission Notice explains more clearly the interpretation of the provisions of the Regulation in light of the case law of the CJEU and replaces any earlier interpretative guidance. Where there is currently no case law, it sets out its interpretation of certain provisions of the Regulation that can give rise to uncertainty. The Notice also suggests ways to facilitate better enforcement and includes guidance for passengers on how to complain and how the NEBs and air carriers should respond. As a result, there have been considerable improvements in complaint handling by airlines with contact details and complaints procedures available on websites. However, concerns persist about timescales and the detail and accuracy of information given to complainants.
3. Data gathering
It would be unfair to suggest that there is no compliance with passenger rights and that the EU policy is an abject failure. This is far from the truth. Airlines do comply with many of their obligations, particularly the right to care and assistance. Progress has been made, but it is still difficult to quantify the full extent of non-compliance. One key constraint has been the lack of data to assess the effectiveness of the operation of Regulation 261/2004. 80 Airlines do not make the data on the reasons for delays publicly available, as they view this data as confidential business information. 81 More recently, airlines have published data on how much they pay out, 82 but they do not give detailed information on the financial burden of complying with the Regulation. The Commission has taken a number of steps to collate the relevant data. In 2014, it conducted its own detailed studies to gather statistical data on complaint handling and enforcement by the NEBs (in the absence of reporting obligations) and to encourage the publication of sanctions imposed and/or airlines’ performance in complying with Regulation 261/2004. The Commission has also made funding available to third parties to collate data. For example, Lennoc is a private database that gathers and analyses publicly available flight information worldwide including information on cancellations and delays and makes it available on a commercial basis (that is, for a fee) to NEBs, claims management companies, law firms, travel agents and insurers. However, it does not analyse how many passengers may have had their travel disrupted and whether they were offered redress. A 2020 report compiled for the Commission by Steer makes a commendable attempt at collating data on the current state of compliance, but it is clear that gaps remain.
4. Networks
The establishment of transnational horizontal networks between bodies responsible for the implementation and application of EU law and policy at national level is a key management strategy for the Commission. 83 Originating in the field of environmental policy, this technique has proliferated over recent years. 84 Since 2007, the Commission has committed to working more pro-actively with the NEBs in order to facilitate compliance. 85 An informal horizontal network between the NEBs working in conjunction with the Commission has been established to identify common issues and to promote cross-border cooperation. This is essential given the transnational nature of the regime, and the fact that an individual may make a complaint against an airline which is registered and licensed in another Member State. Key areas that have been addressed are the distinction between monitoring and applying sanctions as opposed to dealing with individual complaints, the timescale for dealing with individual complaints, the conditions under which complaints can be referred by to NEBs in other Member States; the languages acceptable for referred complaints, and the improvement in the quality of statistics. In 2018, the Commission introduced the APR NEB Wiki platform which allows the NEBs to obtain and exchange information more effectively. However, the informal nature and persuasive underpinnings of the NEB-NEB network has limitations. While the Commission can promote coordination, it has no legal power to force the NEBs to adopt legally binding decisions at meetings of the NEBs. 86 Interestingly, the Commission has also encouraged the formation of networks outside its institutional framework. In 2017, the DG JUST facilitated the establishment of a pan-EU network of ADR entities covering travel and public transport called TRAVEL-NET, which will act as forum for exchanging views and sharing best practices. 87
4. Remedying the enforcement gaps: the need for legislative reform
The EU aviation market is an important sector accounting for 2.1% of EU GDP and has seen unprecedented growth in recent years with a record 11 million flights in 2018. Notwithstanding a growing concern about the impact of aviation on the environment and measures being adopted to encourage passengers to use other forms of transport 88 or choosing not to fly at all (so called ‘Flygskam’), the sector is expected to grow. 89 However, this growth has been accompanied by an increase in the number of cancellations and delays. In 2018, flight delays more than doubled from the previous year. 90 It has been reported that across Europe, 60% of delays are due to air traffic control shortages, 25% are attributed to bad weather, and 14% are the result of strikes. 91 Plans for the establishment of a Single European Sky (SES) which would reduce the current fragmentation of air traffic control management and create a more streamlined airspace structure have yet to come to fruition. Consequently, the full enjoyment of air passenger rights is increasingly under threat and complaints are soaring as airlines fail to comply with their EU obligations.
Despite the multiple strategies, tools and mechanisms adopted by the Commission to counter non-compliance mapped out above, it is argued that the key drivers of non-compliance can only be properly addressed through legislative reform. In March 2013, the Commission issued a proposal for reform, 92 which stalled in the legislative process due to a dispute in the Council of the European Union between the UK and Spain over whether the Regulation should apply to Gibraltar. 93 The UK’s departure from the EU on the 31st January 2020 has enabled the legislative procedure to be relaunched. The Croatian Council Presidency is committed to working with the new European Parliament elected in 2019 to adopt a revised legislative framework based on the Commission’s 2013 proposal by the end of 2020.
There are three key features of the Commission’s proposal which increase the prospects of compliance by both the airlines and the Member States and their NEBs. First, the proposal seeks to remedy the flaws in the regulatory design. To address the ‘grey zones’, complexity, and lack of clarity caused by both the Regulation and the subsequent interpretive CJEU judgments, the proposal seeks to codify the interpretation of the ‘extraordinary circumstances’ exception in line with the Wallentin-Herman judgment. It introduces a non-exhaustive list of circumstances which can be regarded as extraordinary as well as a list of those that are to be regarded as not extraordinary. Second, the proposal takes significant steps to strengthen its decentralized enforcement regime. It places far more specific legal obligations on the NEBs. It clarifies their role by making a clear distinction between the task of general enforcement (monitoring, investigating and applying sanctions), and that of handling individual complaints. It confirms that these tasks can be undertaken by separate bodies provided reporting mechanisms are established to exchange information. The proposal also requires the NEBs to adopt a more proactive approach to the monitoring of compliance with Regulation 261/2004. To assist it in this role, airlines and airports are required (although rather vaguely) to provide the ‘relevant documents’ requested by the NEBs for this purpose. The NEB can also act on information received by the body responsible for passenger complaints, for example by initiating enforcement actions. The NEB is required to publish annual statistics on their activities, including sanctions applied. These more detailed reporting obligations make it easier for the Commission to commence infringement proceedings against a Member State for failing to comply with these obligations.
To ensure the effective handling of individual complaints, the proposals insert a new provision (Article 16a) which details how individual complaints should be handled by the airlines and by the NEBs. The proposal also imposes new obligations directly on the airlines to (i) inform passengers about their claim and complaint handling procedures at the time of reservation, (ii) provide electronic means to submit complaints, and (iii) give information about complaint-handling bodies. Passengers are required to make a complaint to the air carrier within three months, and airlines must provide a full answer to the complaint within two months. The Member States are required to designate a body or bodies responsible for out-of-court resolution of disputes between air carriers and passengers such as an ADR body. This entity would deal with an alleged infringement that took place at an airport within Member State territory or where a flight from a third country arrived in the territory of the Member State. Complaints should be submitted at the earliest two months after a complaint has been submitted to the air carrier unless the carrier has already replied in full to the complaint. The body receiving the complaint shall confirm receipt and send a copy to the NEB within seven days. A final reply should be given to the passenger within three months and a copy of the final reply sent to the NEB.
Significantly, the proposal seeks to put on a legislative footing the non-legislative actions taken by the Commission to improve enforcement, and includes granting new implementing powers to the Commission under Article 291 TFEU. 94 The proposal also includes a new Article 16b which regulates co-operation between the Member States and the Commission. The aim of this co-operation is to promote dialogue both vertically (between NEBs and the Commission) and horizontally (between NEBs) on the interpretation and application of the Regulation at national level via a Passenger Rights Committee (see new Article 16c). This Committee would comprise of two representatives of each Member State, at least one representing an NEB. Under Article 16b, Member States would be required to provide an annual report on their activities to the Commission. On the basis of these reports, the Commission may decide to adopt implementing acts. The Member States would also be required to send information on the interpretation and application of Regulation 261/2004 at national level to the Commission. The latter would make this information available to all Member States in electronic form. Furthermore, at the request of a Member State, or on its own initiative, the Commission would be able to examine instances where a difference in application and enforcement had arisen, particularly in relation to the interpretation of the ‘extraordinary circumstances’ exception. The role of the Commission here would be to clarify the provision to promote a common approach. It may be necessary to adopt a recommendation following consultation with the Passenger Rights Committee. This would be non-binding, with the CJEU having the final say. The Commission may also instruct the NEBs to investigate a specific suspected malpractice by one or several air carriers and report their findings to the Commission within four months.
Third, the proposal seeks to maintain the EU’s commitment to a high standard of consumer protection while at the same time reducing the financial burden on the airlines. It attempts this precarious balancing act by codifying the right to compensation for long delay set out in the controversial Sturgeon judgment, but reducing the level of consumer protection by extending the trigger for payment of compensation for long delay to five hours from three hours for flights within the EU. It simplifies the right to care and assistance which is to be triggered by a two-hour delay for all flights, but it caps the liability of the airlines if the delay or cancellation is due to extraordinary circumstances. It also removes the duty to provide accommodation if travelling on a smaller aircraft over a short distance (except on a connecting flight). The proposal also requires airports, air carriers and other actors in the air transport chain to set up contingency plans to optimize the care and assistance to stranded passengers, and importantly prohibits national law from restricting the right of air carriers to seek compensation from third parties responsible for delays or cancellations.
Although the legislative process has been unlocked by the UK’s departure from the EU, there will be fierce disagreements between the main stakeholders and extensive lobbying of the EU institutions by the airline industry as well as consumer and other interest groups. Wherever the balance is eventually struck between maintaining a high standard of consumer protection for air passenger rights in the EU and alleviating the financial and operational burden that the current Regulation places on the airlines, it is argued that the success of the reforms will depend on strengthening and simplifying the enforcement regime. The revision presents the EU with an opportune moment to explore the benefits that technology could bring including automatic compensation. 95
5. Concluding remarks
This article explores why air passengers whose travel is disrupted are unable to fully enjoy their EU rights and are still finding it difficult to seek redress. To find the answer to this question, it has been necessary to explore beyond the original legal framework set out in Regulation 261/2004 and the jurisprudence of the CJEU. It is important to recognize that poor regulatory design is a key driver of non-compliance, together with ineffective and inconsistent national implementation and application at national level, and resistance by the airlines to the financial and operational burden imposed on them by the Regulation. The large volume of court litigation and the increasing number of disputes brought before ADR entities and NEBs signal a failure in policy rather than a healthy attitude to the exercising of new rights. The article charts the different strategies, tools and actors employed by the Commission to improve the effectiveness of the enforcement regime without legislative amendment of the Regulation itself. The article explains that both deterrence and compliance-based strategies have been used by the Commission to reshape the enforcement regime in order to make it more effective. The Commission has been proactive in taking steps to reinforce the traditional deterrence-based regime. It has clarified the monitoring and punitive role of the NEBs, provided new tools to streamline court action and encouraged the use of extra-judicial redress such as ADR. Compliance-based tools have been introduced which include information campaigns, post-legislative interpretative guidance, data collation, and the establishment of networks to improve compliance with, and the enforcement of the law. Across the regulatory framework, new actors, including consumer associations (ECC-Net, CPC Network) and ADR bodies, have been drawn in by design. Others actors have emerged to fill gaps: claims management agencies, APRA Europe and TRAVEL-NET. As a consequence, a complex, multi-layered enforcement regime has developed. There are signs that compliance with Regulation 261/2004 is improving, yet there are still significant gaps. Moreover, the EU aviation market is changing, and placing the operation of the Regulation 261/2004 under strain. The article demonstrates that the Commission’s 2013 draft legislative proposal goes a considerable way in addressing the failures of the original Regulation 261/2004. If adopted by the EU institutions in its current form, it would likely address the main causes of non-compliance and improve the enforcement of EU passenger rights in the field of air travel. It remains to be seen whether the EU legislators will successfully employ revised legislation to tackle the powerful vested interests involved in this field in a meaningful way, for the benefit of all concerned, especially EU consumers. In the absence of this proposed legislative reform, it is argued that the existing hybrid enforcement policy will continue to evolve and become more complex, with increasing gaps and overlaps (for example, multiple routes for consumer redress) but possibly without being any more effective.
