Bloomberg News

Lufthansa Loses Court Challenge Over Delays Compensation

October 23, 2012

Airlines including Deutsche Lufthansa AG (LHA) and British Airways lost challenges at the European Union’s top court over paying compensation to passengers delayed by more than three hours.

“Where passengers reach their final destination three hours or more after the scheduled arrival time, they may claim fixed compensation from the airline, unless the delay is caused by extraordinary circumstances,” the EU Court of Justice in Luxembourg said in a ruling today that confirms an earlier, precedent-setting decision by the court.

The ruling on two separate cases also involves EasyJet Plc (EZJ), TUI AG (TUI1)’s TUI Travel Plc unit and the International Air Transport Association. It upholds a 2009 decision that airlines have to compensate passengers who reach their final destination that much later because of a flight delay. Carriers are exempt from compensation in cases of extraordinary circumstances, such as a strike or bad weather conditions.

Lufthansa extended earlier declines to lose as much as 2.6 percent after the decision, and was trading 2.2 percent lower at 10.865 euros as of 3:07 p.m. in Frankfurt. Company spokesman Boris Ogursky declined to comment until Lufthansa has seen the full text of the ruling.

British Airways, a unit of International Consolidated Airlines Group SA (IAG), said it was aware of the ruling and would continue to comply with the regulations, according to an e- mailed statement. IAG shares fell 2.3 percent to 156 pence at 2:02 p.m. in London.

Fair Treatment

Mike Ward, a spokesman for TUI Travel, said the company would work for a revision of the underlying legislation so that it strikes the right balance for passengers and airlines.

“We are committed to treating our customers fairly,” Ward said in an e-mailed statement. TUI Travel shares fell 0.8 percent at 2:07 p.m. in London trading.

EasyJet spokesman Paul Moore said that while the company was “disappointed at the outcome,” it welcomed the judgment because it provided “much-needed clarity on this matter,” according to an e-mail.

EasyJet lost as much as 1.4 percent after the ruling, and was down 0.5 percent at 2:06 p.m. in London. Ryanair Holdings Plc fell 2.5 percent at 2:06 p.m. in Dublin trading.

Passenger Compensation

The 2009 ruling clarified that under EU law passengers whose flights are delayed have the same rights to compensation as passengers whose fights are canceled. The law doesn’t specify this. Previous rulings have also made clear that airlines must compensate passengers in cases of delays due to mechanical problems.

London’s High Court and a German court referred separate disputes pending before them to the EU court, seeking clarification on exactly when compensation is due. The EU court gives guidance for their judgments without deciding on the specifics of the cases.

TUI Travel, EasyJet, British Airways and IATA are challenging the Civil Aviation Authority in the U.K. after the CAA confirmed it was bound by the EU court’s 2009 ruling and couldn’t exempt them from the obligation of compensation in cases of delays.

IATA declined to immediately comment on today’s ruling.

In the German case, a family is challenging Lufthansa after a delay due to technical problems on their plane on a 2008 trip brought them more than 24 hours later than expected to Frankfurt from Lagos, Nigeria. The German tribunal had suspended the case pending the EU court’s 2009 ruling and then decided to refer further questions to the Luxembourg-based court.

The cases are: C-581/10, Emeka Nelson, Bill Chinazo Nelson, Brian Cheimezie Nelson v Deutsche Lufthansa AG; C-629/10, TUI Travel Plc, British Airways Plc, easyJet Airline Co. Ltd, International Air Transport Association, The Queen v Civil Aviation Authority.

To contact the reporters on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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