by Joanna Kolatsis, partner at Hill Dickinson LLP
The Court of Appeal had some sympathy with the position put forward by Thomson Airways on whether Mr Dawson was time barred from bringing his claim for compensation for a six-hour delay on a flight to the Dominican Republic.
But the court found in favour of Dawson. The judges held that they were bound to apply the decisions of the Court of Justice of the European Union (CJEU).
The Montreal Convention, which provides for a two-year limitation period, could not be applied to claims for compensation under Regulation 261.
The decision has the potential to create a fresh headache for airlines in terms of costs, unless Thomson is successful in turning this around on appeal to the Supreme Court.
If Thomson loses the appeal, it opens the door to claims being made within a six-year time period. If Thomson wins an appeal, the two-year limitation under Montreal will apply.
The CAA welcomed the ruling as providing clarity in relation to how far back passengers can go when claiming compensation for disrupted flights.
It acknowledged Thomson is seeking leave to appeal to the Supreme Court but made no reference as to whether claims can continue to be stayed pending the outcome.
It is worth noting some airlines have been applying the six-year limitation period despite Thomson’s attempts to maintain the position under Montreal. For those airlines, the judgment in Dawson will mean business as usual.
However, many smaller airlines do not have the funds to fight through the courts and the aviation community has been extremely supportive of Thomson’s efforts to preserve the two-year limitation.
A win for Thomson on appeal would be a win for the aviation industry in general.
The importance of this decision should not be underestimated. If airlines in the UK are forced to accept claims within a six-year period it opens the door to a number of claims they believed were time barred.
Other European States have different limitation periods – for example, Spain has a 10-year limitation period while Germany’s is three years.
This gives rise to inconsistency among European states in handling Regulation 261 claims as opposed to those under the Montreal Convention.
Either way, the cost implications for airlines continue to grow.
Regulation 261 has increased claims across the board as a result of several damaging CJEU judgments.
Now the aviation industry has been hit by two costly cases – in the form of Huzar v Jet2 and now Dawson.
As the costs of handling these claims increases, it is inevitable that air fares will rise.
There is simply no other way for airlines to recover these costs than by adding them to the price of airline tickets.
Ryanair currently puts a Regulation 261 levy on all tickets sold. While it was unpopular within the aviation community when first advertised, Ryanair’s move has gathered growing sympathy among airlines.
As the financial burden grows, carriers will seek valid ways to bankroll some of the costs associated with air passenger rights’ regulations.
What will happen next?
It is evident the airline industry’s battle with Regulation 261 will continue for some time, with both cases possibly heading to the Supreme Court.
However, the ongoing review of Regulation 261 in Europe means it is entirely possible these cases will be old news and, more important, old law within 18 months or so.
It is becoming increasingly important for the aviation industry to focus its attention on the lobbying process in Europe to ensure the legislators do not incorporate these decisions within the proposed amendments to the regulation.
The proposals to date are not as severe as some of the case law in Europe and would offer some respite to carriers and some clarity regarding the handling of Regulation 261 claims in future.
However, the proposed measures are far from perfect and the industry will have to focus its efforts on the proposals in order to protect its interests in light of the recent judgments.