Challenge to Flight-Cancellation Fees Advances

(CN) – Cracking down on an airline’s flight-cancellation fees, the European Court of Justice ruled Thursday that pricing freedom does not preclude Germany from enforcing its consumer-protection laws.

A federal consumer-protection agency in Germany brought the underlying challenge in 2010 against Air Berlin, taking issue with a term in the airline’s general terms and conditions that makes passengers responsible for a 25 euro handling fee if they seek reimbursement for any canceled or otherwise missed flight booked at an economy rate.

Citing a German law transposing the EU directive on unfair terms, regulators challenged the scheme as unduly burdensome on customers.

The federal court weighing the case meanwhile sought clarification from EU authorities on whether regulators would be precluded from applying its national law since air carriers enjoy pricing freedom by way of the regulation on the operation of air services.

Citing precedent from a 2014 case about Vueling Airlines, Europe’s highest court, the Court of Justice, sided Thursday with regulators.

“The court did not in any way state that pricing freedom precludes, in general, the application of any consumer protection rule,” the ruling states. “On the contrary, the court noted that, without prejudice to the application, in particular, of rules enacted in the field of consumer protection, EU law does not preclude member states from regulating aspects of the contract of carriage by air, in order, in particular, to protect consumers against unfair practices, provided that the pricing provisions of Regulation (EC) No 1008/2008 are not affected.”

Later the ruling continues: “To answer otherwise would be to deprive consumers of rights derived from Directive 93/13 in the field of pricing of air services and to enable air carriers, in the absence of any control, to include unfair terms concerning pricing in contracts concluded with passengers.”

In a separate section of the ruling, the court addressed a challenge to how Air Berlin displays prices on its website.

Regulators complained that the airline displayed taxes and charges in a simulation much lower than those actually collected by the airports concerned, but the federal court sought clarification of the EU law concerning price transparency.

Thursday’s ruling specifies that, “when publishing their air fares, air carriers must specify separately the amounts payable by customers in respect of taxes, airport charges and other charges, surcharges or fees … and may not, as a consequence include those items, even partially, in the air fare.”

Air Berlin’s point about the fluctuating nature of some of these fees held little sway.

“It should be noted that, when purchasing a ticket, the customer must pay a final and not a provisional price,” the ruling states. “Consequently, although the amount of certain charges or certain surcharges or fees, such as those relating to fuel, can only, as Air Berlin claims, be known exactly when the flight has taken place, and sometimes even several month later, the amounts of the taxes, airport charges and other charges, surcharges and fees listed in subparagraphs (b) to (d) of the third sentence of Article 23(1) of Regulation No 1008/2008, to be paid by the customer, correspond to the estimate made by the air carrier at the time the flight was booked.

“To that effect, the second sentence of Article 23(1) of Regulation No 1008/2008 indeed provides that the components of the final price to be paid by the customer are, in addition to the air fare or air rate, all applicable taxes, and charges, surcharges and fees which are ‘foreseeable at the time of publication.”

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