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Aviation

Are no-show clauses incompatible with consumer protection regulation?

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Legal news
calendar 9 April 2019
globus Denmark

Air carriers are being criticized for, allegedly, taking advantage of consumers through their use of no-show clauses, but is this actually the case?

Lately, no-show clauses have been met by a large amount of criticism from national consumer groups. The clauses are being criticized for being unfair consumer practice, and a way for carriers to increase profits at the expense of consumers. The question is whether this critique is justified.

What is a no-show clause?

Many carriers have a no-show clause in their general conditions of carriage.

If a passenger, who does not cancel his reservation before the check in deadline, for any reason misses his flight the no-show clause allows the carrier to cancel any onward or return reservations.

Carriers have been criticized for using the clause to gain an unjustified profit since the carrier often will try to re-sell the ticket, if they cancel a passenger’s reservations.

The clause is essential for maintaining low-fare rates

Nevertheless, the no-show clause is essential to ensure lower fares, better connectivity to smaller communities, and reduce wasted capacity and therefore, the carrier’s need for overbooking flights.

The clause is meant as a protection for the carrier against travelers that use hidden city ticketing, i.e. passengers that buy a layover ticket, but only travel on parts of the journey.

For instance: A flight from Copenhagen (CPH) to Beijing (PEK) with a layover in Stockholm (ARL) is often cheaper than a direct flight from Stockholm to Beijing because of the layover. This is because ticket pricing is based on the journey from departure to destination – not on the individual flight segments. Travelers from Copenhagen to Beijing will often be far more interested in buying a direct flight and consequently, to be able to sell layover flights carriers must lower the fares.

If a passenger buys the journey CPH  ARL  PEK, but only travels on the ARL  PEK part of the route it might have consequences for other travelers.

First, it might induce an increased need to overbook certain flights to ensure that the use of the plane’s capacity is maximized. Second, the carrier might abandon the indirect product, which will mean less competition and therefore increased fare prices as well as a reduced travel options for the consumer.

Incompatible with consumer protection regulation?

Regardless of the purpose of the clause some consumer groups are under the impression that the clause has a negative effect on consumer’s rights since the clause is applicable for all travelers even those that do not use hidden city ticketing.

EU consumer protection regulation is very extensive. In Denmark consumer protection is namely regulated in the Marketing Practices Act, implementing Directive 93/13/ECC on Unfair Commercial Practices. The question is whether no-show clauses are incompatible with these regulations.

Whether a clause is compatible with the consumer protection rules must be determined based on the wording of the clause as well as the carrier’s practice when a passenger misses a flight.

It is worth noticing that no-show clauses often are worded in a way that makes a cancellation of the reservation possible, but it is not given that a cancellation will happen. Whether a passenger’s journey will be cancelled will vary depending on the carrier’s practice and the general circumstances for the no-show.

Both German and Spanish courts have ruled that no-show clauses in some cases are incompatible with the member states’ implementation of the Directive on Unfair Commercial Practice. The EU Court of Justice has acknowledged that member states have a large measure of discretion and the directive on Unfair Commercial Practice only set out minimum standards.

Therefore, some member states may have more strict consumer protection regulations than others. Whether a no-show clause is incompatible with EU regulations and national law must be determined on a case-to-case basis.

Contact the carrier to know your rights

Several carriers have stated that they, if contacted by the passenger, will make sure that the ticket is not cancelled, if the reason for the no-show is that the passenger missed the flight by accident. Additionally, some carriers have stated that they will always try to rebook the passenger that has missed his flight.

IUNO’s opinion

IUNO recommends that all carriers review their conditions of carriage and consider if their wording is incompatible with consumer protection regulation. Carriers should also review their practice and see to that they have clear guidelines which ensure that the no-show clause will not have a negative impact on passengers who miss their flight by accident.

By following the above mentioned practice the clause should not have negative effects on passengers, but one cannot be too careful since the consequences of non-compliance can be very substantial.

Lately, no-show clauses have been met by a large amount of criticism from national consumer groups. The clauses are being criticized for being unfair consumer practice, and a way for carriers to increase profits at the expense of consumers. The question is whether this critique is justified.

What is a no-show clause?

Many carriers have a no-show clause in their general conditions of carriage.

If a passenger, who does not cancel his reservation before the check in deadline, for any reason misses his flight the no-show clause allows the carrier to cancel any onward or return reservations.

Carriers have been criticized for using the clause to gain an unjustified profit since the carrier often will try to re-sell the ticket, if they cancel a passenger’s reservations.

The clause is essential for maintaining low-fare rates

Nevertheless, the no-show clause is essential to ensure lower fares, better connectivity to smaller communities, and reduce wasted capacity and therefore, the carrier’s need for overbooking flights.

The clause is meant as a protection for the carrier against travelers that use hidden city ticketing, i.e. passengers that buy a layover ticket, but only travel on parts of the journey.

For instance: A flight from Copenhagen (CPH) to Beijing (PEK) with a layover in Stockholm (ARL) is often cheaper than a direct flight from Stockholm to Beijing because of the layover. This is because ticket pricing is based on the journey from departure to destination – not on the individual flight segments. Travelers from Copenhagen to Beijing will often be far more interested in buying a direct flight and consequently, to be able to sell layover flights carriers must lower the fares.

If a passenger buys the journey CPH  ARL  PEK, but only travels on the ARL  PEK part of the route it might have consequences for other travelers.

First, it might induce an increased need to overbook certain flights to ensure that the use of the plane’s capacity is maximized. Second, the carrier might abandon the indirect product, which will mean less competition and therefore increased fare prices as well as a reduced travel options for the consumer.

Incompatible with consumer protection regulation?

Regardless of the purpose of the clause some consumer groups are under the impression that the clause has a negative effect on consumer’s rights since the clause is applicable for all travelers even those that do not use hidden city ticketing.

EU consumer protection regulation is very extensive. In Denmark consumer protection is namely regulated in the Marketing Practices Act, implementing Directive 93/13/ECC on Unfair Commercial Practices. The question is whether no-show clauses are incompatible with these regulations.

Whether a clause is compatible with the consumer protection rules must be determined based on the wording of the clause as well as the carrier’s practice when a passenger misses a flight.

It is worth noticing that no-show clauses often are worded in a way that makes a cancellation of the reservation possible, but it is not given that a cancellation will happen. Whether a passenger’s journey will be cancelled will vary depending on the carrier’s practice and the general circumstances for the no-show.

Both German and Spanish courts have ruled that no-show clauses in some cases are incompatible with the member states’ implementation of the Directive on Unfair Commercial Practice. The EU Court of Justice has acknowledged that member states have a large measure of discretion and the directive on Unfair Commercial Practice only set out minimum standards.

Therefore, some member states may have more strict consumer protection regulations than others. Whether a no-show clause is incompatible with EU regulations and national law must be determined on a case-to-case basis.

Contact the carrier to know your rights

Several carriers have stated that they, if contacted by the passenger, will make sure that the ticket is not cancelled, if the reason for the no-show is that the passenger missed the flight by accident. Additionally, some carriers have stated that they will always try to rebook the passenger that has missed his flight.

IUNO’s opinion

IUNO recommends that all carriers review their conditions of carriage and consider if their wording is incompatible with consumer protection regulation. Carriers should also review their practice and see to that they have clear guidelines which ensure that the no-show clause will not have a negative impact on passengers who miss their flight by accident.

By following the above mentioned practice the clause should not have negative effects on passengers, but one cannot be too careful since the consequences of non-compliance can be very substantial.

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Aage

Krogh

Partner

Anna

Aagaard Andersen

Head of Stockholm Office

Subhana

Abghari

Associate

Sofie

Aurora Braut Bache

Associate

Ida-Elise

Tommerup

Associate

Nina

Kumari

Associate

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