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The legal basis and the transferability of passenger rights

The legal basis and the transferability of passenger rights

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The European Court of Justice (ECJ) ruled in case C-11/23 that the entitlement to compensation for flight cancellations stems directly from Regulation (EC) 261/2004 and is independent from a contract of carriage the parties may have or may have not entered into. This clarifies that passengers have a right to compensation regardless of contractual stipulations, provided that they meet the conditions set forth in the Regulation.

Additionally, the ECJ stated that clauses within an air carrier´s General Conditions of Carriage (GCC) that limit a passenger´s options to transfer his rights granted by Regulation (EC) 261/2004 constitutes an impermissible restriction of his rights and is, therefore, null and void. The ECJ highlighted that in order to ensure a high level of protection for passengers, it is necessary to guarantee those affected by a cancellation the freedom to choose the most effective way to defend his or her right, including (where provided for by the relevant national law) to transfer his or her claim to a third party.

More detailed information on the use of GCC in Austria can be found in our article “General Conditions of Carriage in Austria“.

Don’t hesitate to contact our Aviation Team to learn more about passsenger claims in Austria.

Urteil zu ABB

Ruling on the GCC of a Hungarian Airline

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The Austrian Supreme Court recently issued a new ruling (4 Ob 222/22h) on the General Conditions of Carriage (GCC) of a Hungarian airline, declaring numerous clauses therein as unlawful. This decision is the latest in a series of judgments against air carriers and their GCC.

The proceedings were initiated by the “Bundeskammer für Arbeiter und Angestellte”, an association authorized to litigate under the Austrian Consumer Protection Act and aimed to prohibit the airline from using certain clauses in their GCC. In its decision, spanning over 100 pages, the Austrian Supreme Court addressed numerous clauses, providing significant guidance for all air carriers operating in Austria.

Since authorized associations, especially the “Verein für Konsumenteninformation” (VKI) and the Bundeskammer für Arbeiter und Angestellte, can (and regularly do) file such lawsuits against airlines operating in Austria, it is advisable for air carriers to use this new ruling on GCC as an opportunity to review their own GCC. More detailed information on the standard procedures of associations authorized to file such lawsuits, the system of reviewing GCC in Austria, and the criteria applied can be found in our article “General Conditions of Carriage in Austria“.

The clauses whose use has now been prohibited by the Austrian Supreme Court include:

  • Liability exclusion for fragile luggage
  • Choice of law clause in favor of Hungarian law
  • The possibility of rebooking to an alternative means of transportation
  • Restriction of rights under Regulation (EC) 261/2004 (“Air Passenger Rights Regulation”)
  • Submission of compensation claims exclusively via the airline’s website

Our experienced Aviation Team is happy to answer your questions about the use of General Conditions of Carriage in Austria, review your GCC to reduce the risk of legal proceedings, and represent you in court.

General Conditions of Carriage in Austria

General Conditions of Carriage in Austria

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Besides the handling of Passenger Claims and the challenges related thereto, airlines are often confronted with complaints from consumer protection organizations regarding their General Conditions of Carriage (GCC). In Austria, especially the Verein für Konsumenteninformation (“VKI”), is very active in this regard and routinousely examines General Terms and Conditions of several companies, including GCC used by airlines that are active in Austria.

If an airline´s GCC contains clauses that the VKI deems to be unlawful, it will request the airline to sign a cease and desist declaration preventing it from using these specific clauses and to pay a contractual penalty to the VKI for every breach.

If the airline refuses to sign such declarations, the VKI files a lawsuit demanding the stop of the use of certain clauses and the publishing of the ruling against the airline in Austria´s most read newspaper at the airline´s expense.

During its proceedings, the competent court assesses every clause of the challenged GCC based on the following criteria:

Unusual clauses that are surprising and disadvantageous

§ 864a of the Austrian Civil Code states that in General Terms and Conditions (like GCC) clauses of an unusual content that are surprising and disadvantageous for the other party are not regarded to be part of contracts based on these GTC.

However, such clauses can be valid if the party using them in its General Terms and Conditions has specifically notified the other party of their use.

Grossly disadvantageous clauses

§ 879 (3) of the Austrian Civil Code states that clauses contained in General Terms and Conditions which do not specify one of the main services to be provided by either party shall be void if they are grossly disadvantageous for one party.

Austrian courts interpret the exception set forth regarding main services very narrowly, which leads to the provision being applicable to basically all clauses that do not concern the individual description of the type, scope and quality of the main services. The assessment whether a clause is grossly disadvantageous is, in general, being made by comparison with the codified provisions of Austrian civil law together with a balancing of the parties´ interests.

Intransparent clauses

The Austrian Consumer Protection Act sets forth several types of clauses that are not binding for consumers. § 6 (3) of this Act additionally stipulates that clauses contained in General Terms and Conditions shall be invalid if they are intransparent. This is, in particular, the case if the wording of such clauses is unclear, if their content is not easily comprehensible to the consumer or if they incorrectly present the average consumer´s legal position.

Collection of clauses that were deemed to be violating Austrian law

Since there have already been numerous court proceedings regarding GCC in Austria, we have an extensive collection of clauses that Austrian courts deemed to be violating Austrian law. This includes especially the following clauses:

  • No-Show Clauses[1] that are not limited to passengers intentionally circumventing the ticketing system[2],[3],[4]
  • Complaints from passengers are only accepted if the are made via e-mail, an online form or fax[5]
  • Scheduled departure times may change after the booking (without precising under which circumstances)[6]
  • Ticket refunds shall only be paid to the person or travel agency that booked the flight or only to the bank or credit card account that was used to pay the ticket fare[7]
  • Transport is denied if the flight coupon is severely damaged or altered[8]
  • Complaints must be made by the passenger himself and he must wait at lest 28 days for a response before instructing third parties to assert his claims on his behalf[9]
  • Passengers must pay an additional fee in cases of an offline check-in at the airport[10]
  • Deadline of two years for compensation claims regarding damages of any kind[11]
  • Claims must only be assigned to other passengers of the same booking or travel group[12]
  • Clauses that incompletely inform a passenger about his rights under the Montreal Convention or Regulation 261/2004[13],[14]

The consequences of a clause being deemed to be in violation of Austrian law are, on the one hand, that the airline loses the proceedings and is, therefore, obliged to stop using this clause, to reimburse the other party´s legal fees and to pay for a publication of the ruling in an Austrian newspaper. On the other hand, the clause is regarded to be null and void, which means that passengers are not bound by it.

Airlines must stay vigilant

Due to the routinely reviews of General Conditions of Carriage by consumer protection agencies, airlines have to pay specific attention to the content of their GCC when they are active in Austria in order to avoid court proceedings, costs and negative publicity.

Our Aviation Team at Weisenheimer is experienced in handling such cases and happy to answer your questions related to the use of General Conditions of Carriage in Austria, to review your GCC to mitigate the risk of legal proceedings and to represent you in court proceedings.

Click here for the pdf version of our article on General Conditions of Carriage in Austria.

 

[1] You can find our more detailed analysis of No-Show Clauses in Austria based on court proceedings our Aviation Team was involved in by clicking here.

[2] Brussels Airlines, Higher Regional Court Vienna, 10.07.2019, 129 R 56/19g.

[3] KLM, Higher regional Court Vienna, 11.06.2019, 1 R 73/19s.

[4] Lufthansa, Austrian Supreme Court, 20.04.2021, 4 Ob 63/21z.

[5] Laudamotion, Higher Regional Court Vienna, 23.2.2021, 2 R 48/20y.

[6] Laudamotion, Austrian Supreme Court, 18.03.2022, 6 Ob 127/21a.

[7] SWISS, Higher Regional Court Vienna, 04.11.2022, 2 R 106/22f.

[8] Lufthansa, Austrian Supreme Court, 20.04.2021, 4 Ob 63/21z.

[9] Laudamotion, Higher Regional Court Vienna, 23.2.2021, 2 R 48/20y.

[10] Laudamotion, Austrian Supreme Court, 27.02.2020, 8 Ob 107/19x.

[11] Lufthansa, Austrian Supreme Court, 20.04.2021, 4 Ob 63/21z.

[12] Laudamotion, Higher Regional Court Vienna, 23.2.2021, 2 R 48/20y.

[13] Lufthansa, Austrian Supreme Court, 20.04.2021, 4 Ob 63/21z.

[14] Laudamotion, Austrian Supreme Court, 18.03.2022, 6 Ob 127/21a.

No-Show Clauses in Austria

Is there a future for No-Show Clauses in Austria?

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Over the last years, consumer protection agencies throughout the European Union have made continued efforts to prevent the use of so called No-Show Clauses, which are commonly used by airlines in their general conditions of carriage. In Austria, this led to several court proceedings in which rulings effectively restricting the use of No-Show Clauses were issued. This, in turn, prompted many airlines to adapt their clauses in order to comply with the court practice. This article seeks to give a brief overview of the topic and the future of No-Show Clauses in Austria against the backdrop of the most recent ruling of the Austrian Supreme Court in case 4 Ob 63/21z.

What is a No-Show Clause?

Airlines use complex pricing systems to allocate specific ticket fares to individual passengers. The ticket fare a passenger is charged depends, inter alia, on the specific itinerary he or she chooses. This is because, on the one hand, passengers are willing to pay higher fares for direct flights; on the other hand, fares are generally dependent on the respective place of departure. As a result, the ticket fare for a flight booked e.g. from Warsaw to New York with a stopover in Vienna will probably be offered for a lower fare than a direct flight from Vienna to New York. Another example would be roundtrips (e.g. with the flight legs Vienna – New York – Vienna), which are often offered for a lower price than one-way tickets.

However, airlines experienced some passengers using the pricing system to their advantage by e.g. booking a flight from Warsaw to New York with a stopover in Vienna instead of a (more expensive) direct flight from Vienna to New York despite their residence in Vienna and their intention to only be transported from Vienna to New York. Other passengers book a roundtrip and intentionally “miss” the second flight leg. Some travel agencies even specialize in getting the cheapest ticket fares possible for their customers by circumventing the pricing system in this way.

As a reaction, airlines implemented so called No-Show Clauses in their general conditions of carriage stipulating that passengers will be denied boarding or have to pay an adapted fare when they do not use all flight legs (i.e., in our examples: when the passenger does not board the flight from Warsaw to Vienna or misses his or her second flight leg from New York to Vienna).

How are No-Show Clauses challenged by consumer protection agencies?

Since No-Show Clauses are usually implemented in an airline´s general conditions of carriage, several organizations have the right to challenge them according to Austrian consumer protection provisions. Especially the “Verein für Konsumenteninformation, VKI” and the “Bundesarbeitskammer” are quite active in this regard.

These two organizations are regularly screening general terms and conditions used by several companies including general conditions of carriage used by airlines operating flights to or from Austria for clauses which they deem to be unlawful, especially by arguing that such clauses are surprising and disadvantageous for consumers or grossly disadvantageous. If a clause is deemed to be unlawful, the airline usually receives a letter from the consumer protection body or its lawyer demanding that the airline in question immediately refrains from using the “unlawful” clause, together with a cease and desist declaration secured by a contractual penalty.

One aspect that is often criticized by our clients is that normally the consumer protection agencies are neither willing to discuss the lawfulness of the respective clause nor to work together to find a solution that takes into account the positions of both the consumer and the airline. They rather only give airlines the options to either sign the cease and desist declaration within (usually) 14 days or be confronted with court proceedings.

How are No-Show Clauses viewed by Austrian courts?

Austrian courts regard No-Show Clauses to be void especially when they are deemed to be either surprising and disadvantageous for the consumer or grossly disadvantageous. While the “surprising” character of a No-Show Clause may be avoided by implementing certain measures in the booking process to ensure that passengers are duly informed, it is rather challenging for airlines to formulate No-Show Clauses that are not regarded as grossly disadvantageous but are still effective.

The Austrian Supreme Court first had to deal with No-Show Clauses in 2012 (4 Ob 164/12i, a case in which our partner, Martina Flitsch, was directly involved). While the Supreme Court explicitly acknowledged the airline´s legitimate interest to implement and protect its pricing system, it regarded the No-Show Clause the airline used to be too extensive and, therefore, grossly disadvantageous. This view was adopted and further developed in several other Supreme Court rulings with the latest one being 4 Ob 63/21z from 2021.

As a reaction, several airlines operating flights to and from Austria adapted their conditions of carriage in order to comply with the criteria set forth by Austrian court practice. Therefore, nowadays the consequence of not using all flight legs is usually a recalculation of the ticket fare or a lump sum that must be paid. Additionally, many No-Show Clauses now explicitly state that they do not apply in cases of force majeure, illness or, in general, when the reasons for the passenger not using all flight legs are not attributable to him or her.

What does the future hold for No-Show Clauses in Austria?

The latest decision of the Austrian Supreme Court (4 Ob 63/21z) dealt with a No-Show Clause that has obviously been designed to comply with the Austrian court practice. However, despite careful drafting, the clause was finally regarded as grossly disadvantageous to the consumer and, therefore, void. The Supreme Court emphasized the necessity to differentiate between passengers that are deliberately circumventing the pricing system and passengers that are not using all flight legs for any other reason.

In practice, it is foreseeable that it will be particularly challenging for airlines to successfully determine on a case by case basis if a passenger is circumventing the pricing system, especially when this decision must be made very quickly before boarding is denied. Especially with regard to the Regulation (EU) 261/2004 and the organizations specialized in representing passengers in cases of denied boarding, the risk of lawsuits and court proceedings, in which airlines have to prove that the denied boarding has been justified, is rather high.

Despite the many challenges airlines face when it comes to No-Show Clauses in Austria, it is, in our opinion, rather unlikely that airlines will refrain from using them. As explained, No-Show Clauses are an essential tool to ensure the functioning of an airline´s pricing system, which is a vital part of an airline´s business model.

Therefore, airlines must remain vigilant and keep an eye on ongoing developments such as new court decisions in order to avoid being confronted by consumer protection agencies or finding themselves in court proceedings which, while causing substantial workload and legal fees, have limited chances of success. In such cases, it is certainly not a mistake  to engage a reliable legal advisor who is experienced in dealing with consumer protection agencies and handling passenger claims.