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Aviation

How to handle claims for ticket refund or compensation due the coronavirus

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Legal news
calendar 3 March 2020
globus Denmark

As the Coronavirus, COVID-19, continues to tighten its grip on many popular travel destination, air carriers and travel agencies face anxious passengers wanting to cancel or postpone their flight or package travel. The question is: Under what circumstances will that be possible? And is the passenger entitled to a refund? The laws that apply for air carriers and travel agencies differ in this regard.   

Package travels: Termination possible, but it depends

According to EU Directive 2015/2302, a passenger has the right to terminate the package travel contract before the beginning of the journey without paying any termination fee in the event of:

  • unavoidable and extraordinary circumstances
  • occurring at the place of destination or its immediate vicinity
  • which significantly affects the performance of the package, or which significantly affects the carriage of passengers to the destination.

Under such circumstances, the passenger is entitled to a full refund of any payments made for the package travel, but shall not be entitled to additional compensation, e.g. compensation in accordance with EU Regulation 261/2004.

Unavoidable and extraordinary circumstances are linked to the definition of force majeure. This may cover for example warfare, other serious security problems such as terrorism, significant risks to human health such as the outbreak of a serious disease at the travel destination, or natural disasters such as floods, earthquakes or weather conditions, which makes it impossible to travel safely to the destination as agreed in the package travel contract. The key issue is the safety aspect: is it actually safe to travel to the destination in question – or not? If answered affirmatively, it will then have to be assessed whether or not the “unavoidable and extraordinary circumstances” were present when the package travel was purchased, or if the circumstances significantly has worsened after the conclusion of the contract.

If the passenger was aware or should have been aware of e.g. the current threat level of a pandemic disease in a major European city, and decided in spite thereof to purchase a flight ticket to said city, he will not be entitled to receive a full refund of the ticket price or terminate the package travel contract without paying a termination fee to the package travel agency. However, if it can be proved by the passenger, that the situation at the destination in question has significantly worsened since the package travel was purchased, he might still be able to cancel his travel free of charge and receive a full ticket refund. The burden of proof in this scenario lies with the passenger.

Governmental guidelines requesting travelers to be cautious when travelling to a certain destination is usually not enough on its own for a passenger to be entitled to terminate his package travel contract without paying a termination fee. However, a travel warning advising passengers “to avoid unnecessary travel” to a certain destination would under most circumstances be classified as an “unavoidable and extraordinary circumstance, which significantly affects the performance of the package, or which significantly affects the carriage of passengers to the destination” in accordance with Article 12.2 of EU Directive 2015/2302. Thus, travel guidelines requesting “general alertness” is different from a travel warning, the biggest difference between the two being the urgency of the situation. A warning will only be issued when it is considered unsafe to travel to a certain destination. However, in all circumstances it must be sufficiently and objectively proven that the “unavoidable and extraordinary circumstances” at the destination in question severely hampers the safety of the passenger or has the ability to do so.

Air Carriers: No obligation to reimburse or pay compensation

For air carriers that have only issued a flight ticket and not offered any package travel services, the situation is more uncertain. It is up to each individual Member State to stipulate what rules apply for an air carrier that has issued a flight ticket, when a passenger wishes to cancel his trip due to a governmental travel warning.

In Denmark, the passenger will normally not be entitled to cancel his travel and receive a full refund of the price of the flight ticket under such circumstances, unless the refund policy of the air carrier provides for this. If travel insurance has been taken out (e.g. by purchase with a major credit card) the passenger may be entitled to insurance cover, depending on the circumstances and the wording of the policy.

What if the flight is cancelled?

As we have seen over the last weeks, air carriers may also themselves decide to cancel flights to some destination due to concerns for crew safety. As to a claim for compensation under EU Regulation 261/2004, a cancellation by the air carrier due to a governmental travel warning would be considered as an extraordinary circumstance in accordance with Article 5.3. Thus, passengers travelling from or to a Member State will only receive a ticket refund but will not be further compensated, should the air carrier decide to cancel a flight due to e.g. the destination being in a state of emergency.

IUNO’s opinion

When handling ticket refund claims or – when the air carrier has cancelled the flight due to the coronavirus – claims that concern compensation under EU Regulation 261, air carriers and travel agencies must look into the nature of the official governmental warnings that have been issued regarding the destination in question. In relation to claims for refund of a package travel, the time of purchase is also important.

Package travels: Termination possible, but it depends

According to EU Directive 2015/2302, a passenger has the right to terminate the package travel contract before the beginning of the journey without paying any termination fee in the event of:

  • unavoidable and extraordinary circumstances
  • occurring at the place of destination or its immediate vicinity
  • which significantly affects the performance of the package, or which significantly affects the carriage of passengers to the destination.

Under such circumstances, the passenger is entitled to a full refund of any payments made for the package travel, but shall not be entitled to additional compensation, e.g. compensation in accordance with EU Regulation 261/2004.

Unavoidable and extraordinary circumstances are linked to the definition of force majeure. This may cover for example warfare, other serious security problems such as terrorism, significant risks to human health such as the outbreak of a serious disease at the travel destination, or natural disasters such as floods, earthquakes or weather conditions, which makes it impossible to travel safely to the destination as agreed in the package travel contract. The key issue is the safety aspect: is it actually safe to travel to the destination in question – or not? If answered affirmatively, it will then have to be assessed whether or not the “unavoidable and extraordinary circumstances” were present when the package travel was purchased, or if the circumstances significantly has worsened after the conclusion of the contract.

If the passenger was aware or should have been aware of e.g. the current threat level of a pandemic disease in a major European city, and decided in spite thereof to purchase a flight ticket to said city, he will not be entitled to receive a full refund of the ticket price or terminate the package travel contract without paying a termination fee to the package travel agency. However, if it can be proved by the passenger, that the situation at the destination in question has significantly worsened since the package travel was purchased, he might still be able to cancel his travel free of charge and receive a full ticket refund. The burden of proof in this scenario lies with the passenger.

Governmental guidelines requesting travelers to be cautious when travelling to a certain destination is usually not enough on its own for a passenger to be entitled to terminate his package travel contract without paying a termination fee. However, a travel warning advising passengers “to avoid unnecessary travel” to a certain destination would under most circumstances be classified as an “unavoidable and extraordinary circumstance, which significantly affects the performance of the package, or which significantly affects the carriage of passengers to the destination” in accordance with Article 12.2 of EU Directive 2015/2302. Thus, travel guidelines requesting “general alertness” is different from a travel warning, the biggest difference between the two being the urgency of the situation. A warning will only be issued when it is considered unsafe to travel to a certain destination. However, in all circumstances it must be sufficiently and objectively proven that the “unavoidable and extraordinary circumstances” at the destination in question severely hampers the safety of the passenger or has the ability to do so.

Air Carriers: No obligation to reimburse or pay compensation

For air carriers that have only issued a flight ticket and not offered any package travel services, the situation is more uncertain. It is up to each individual Member State to stipulate what rules apply for an air carrier that has issued a flight ticket, when a passenger wishes to cancel his trip due to a governmental travel warning.

In Denmark, the passenger will normally not be entitled to cancel his travel and receive a full refund of the price of the flight ticket under such circumstances, unless the refund policy of the air carrier provides for this. If travel insurance has been taken out (e.g. by purchase with a major credit card) the passenger may be entitled to insurance cover, depending on the circumstances and the wording of the policy.

What if the flight is cancelled?

As we have seen over the last weeks, air carriers may also themselves decide to cancel flights to some destination due to concerns for crew safety. As to a claim for compensation under EU Regulation 261/2004, a cancellation by the air carrier due to a governmental travel warning would be considered as an extraordinary circumstance in accordance with Article 5.3. Thus, passengers travelling from or to a Member State will only receive a ticket refund but will not be further compensated, should the air carrier decide to cancel a flight due to e.g. the destination being in a state of emergency.

IUNO’s opinion

When handling ticket refund claims or – when the air carrier has cancelled the flight due to the coronavirus – claims that concern compensation under EU Regulation 261, air carriers and travel agencies must look into the nature of the official governmental warnings that have been issued regarding the destination in question. In relation to claims for refund of a package travel, the time of purchase is also important.

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