Airline costs to mount after ECJ judge ruling

The European Court of Justice (ECJ) has dealt the aviation industry a massive blow that could cost airlines billions of pounds in compensation.

Lawyers acting on behalf of two major airline associations suffered disappointment in the ECJ as Advocate General Leendert Geelhoed found that airlines are liable for compensating passengers in case of any delay - no matter what the circumstances.

The International Air Transport Association (IATA) and the European Low Fares Airline Association (ELFAA) asked the High Court to refer the case to the ECJ in May 2004, shortly after the regulation's implementation.

IATA, represented by Brick Court Chambers' Mark Brealey QC and Clyde & Co partner John Balfour, led the case. It argued that the Montréal Convention, which regulates airline liability for compensation and excludes liability where there are circumstances beyond an airline's control, was contravened by European Regula-tion 261. The regulation requires an airline to offer compensation and care to delayed passengers even if the delay was caused by bad weather or other "extraordinary circumstances".

ELFAA, represented by Monckton Chambers' Christopher Vajda QC and Covington & Burling Brussels partner Georg Berrisch, supported the case, adding that low-cost airlines are unduly discriminated against because they have to pay the same amount of compensation to passengers.

But Geelhoed endorsed the UK Government's view, as laid out in a written submission from 11 King's Bench Walk barrister Clive Lewis, that the regulation did not contravene the Montréal Convention.

The ECJ's decision is expected later this year. An advocate general's opinion is not binding on the court, but the ECJ usually abides by it in the final judgment.