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Christopher Bisping on the legal action facing Ryanair over their refusal to compensate passengers

Christopher Bisping from the University of Warwick’s School of Law, shares his views on the enforcement action being taken against the airline Ryanair for refusing to compensate passengers for strike disruption.

“The European Air Passenger Rights regime quite generously provides passengers with extensive rights to alternative transportation, refreshments and accommodation, and compensation in case of denied boarding, cancellation or long delay of flights. Airlines, sometimes understandably, try to avoid having to make the pay-outs and provide the services required by the Air Passenger Rights Regulation (261/2004/EC). The main reason why an airline can avoid payment of compensation to passengers is where the cancellation or long delay was due to “extraordinary circumstances” that are beyond the carrier’s control. A significant amount of litigation has tried to more precisely define what type of circumstances are extraordinary.

“The Air Passenger Rights Regulation itself mentions strike as an example of an extraordinary circumstance; but this reference is not contained in the operative, that is legally binding, part of the text but is a statement in the recitals only. Ryanair claims that courts in other EU member states (Germany, Spain and Italy) have already decided that strike action by an airline’s own staff constitutes extraordinary circumstances that exempt them from liability for long delays and/or cancellations. As far as I can verify, this statement is only partially correct: German courts, for example, have in the past decided that strike action can amount to extraordinary circumstances, but the reported decisions pre-date a decision by the European Court of Justice of April this year, in which that court held that a “wild cat strike” by airline staff did not constitute extraordinary circumstances. In that case, Krüsemann v TUIFly (Case C-195/17), airline staff had taken unprecedented amounts of sick days in protest against a corporate restructuring; that industrial action was not a lawful strike as it had not been organised by an accepted trade union.

“This decision is of importance to the currently lodged claims for compensation against Ryanair. The European Court of Justice points out that the mention of strike in the recitals of the Air Passenger Regulations does not automatically mean that any strike is an excuse for the airline. In my view, a distinction has to be made between strikes of third parties, such as airport security, ground staff, etc., and strikes of the airline’s own staff. The former type of strike is more likely to fall within the concept of extraordinary circumstances. After all, as the European Court of Justice has pointed out, strikes can arise as consequence of measures that must be regarded as inherent in the normal exercise of the activity of the air carrier, and are also not beyond the actual control of the carrier. In the case of April 2018 the European Court of Justice reiterated that it is an assessment on a case by case basis whether these two elements of extraordinary circumstances are met: the event claimed to constitute an extraordinary circumstance must not be inherent in the normal operation of an airline and it must be beyond the actual control of that airline.

“In light of the strike action of Ryanair staff over the summer it would appear that it was inherent in Ryanair’s operation as the dispute is about pay and workload structures, which are part of regular corporate decision making. Due to the prolonged nature of this industrial dispute and the earlier strike action last winter, it would also appear that Ryanair could have done more to pre-empt the effects of the strike action on passengers.

“According to the European Court of Justice it is irrelevant whether the strike is lawful or not. This is for the reason that the conditions for lawful industrial action are defined differently in the various Member States. The Air Passenger Regulation’s aim is to provide a high level of passenger protection though which should not depend on national conceptions of lawfulness of industrial actions.

“In the coming winter months cancellations and delays are likely to increase due to adverse weather conditions, Ryanair’s decision to terminate its subscription to the arbitration service Aviation ADR is thus even more regrettable.”

Professor Loizos Heracleous, expert in business strategy from Warwick Business School, comments: 

“Ryanair’s financial success derives from a pure cost leadership strategy and aggressive growth, that is for the most part well executed (barring the pilot roster mix-up of last year for example). This strategy led to a 20% net margin on revenues of Euros 7.15 billion during the 2018 financial year. The cost leadership strategy demands robust and often ruthless cost reductions and cost vigilance, while delivering an acceptable level of service that is safe and responds to customer expectations.

"The issue in this case is that even if courts in particular European countries have ruled that strikes are exceptional circumstances and therefore Ryanair does not need to pay compensation to flyers who suffered financial and personal inconvenience, customers still do not think this is fair for them. Further, there is a chance that UK courts do not follow these particular judgements of European courts.

"Ryanair certainly has the financial resources to compensate these customers if the company chooses to do so. Otherwise, we will need to wait and see what the UK courts decide. But in any case, Ryanair will not be doing itself any favours reputation-wise if this issue has to be adjudicated by the UK courts.”

Contact:

Kim Ingram, Assistant Press Officer

E:K dot Ingram dot 1 at warwick dot ac dot uk

T: 02476 (5) 75601