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Aviation

Strike in the sister company

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Legal news
calendar 12 June 2024
globus Denmark

In a new ruling, the Danish Western High Court has determined that a strike in an air carrier's sister company can indeed be considered an extraordinary circumstance beyond the air carrier's control – even if the companies share a common name.

A group of passengers was to travel from Aalborg to Oslo via Copenhagen. Their flight was canceled due to an unlawful strike by ground handling staff, who were employed by a sister company associated with the air carrier, and which had partially the same name as the air carrier. The question was whether the strike could be considered an extraordinary circumstance beyond the air carrier's control that could exempt the air carrier from a compensation claim.

Internal or external

The court concluded that the cancellation was due to external events beyond the air carrier's control. The court emphasized that:

  • The strike was unannounced
  • The air carrier and the ground handling company had the same parent company but no influence on each other
  • The ground handling staff also handled baggage for a number of other air carriers on equal terms with the defendant air carrier

Therefore, the Western High Court found that it was an extraordinary circumstance. The Eastern High Court had previously reached the opposite conclusion in a similar case. The difference was that in this case, sufficient evidence was presented to convince the court that the two companies operated independently of each other – even though they partially shared the same name.

IUNO’s opinion

The case shows that even if an air carrier purchases ground handling services from a sister company, a strike in the sister company should still be considered an external strike if the companies operate independently of each other.

IUNO recommends that air carriers ensure that when they purchase services from affiliated companies, it should be done on an arm's length basis and in such a way that the companies operate independently of each other. If this is adhered to, a strike in a sister company will constitute an extraordinary circumstance. In this way, the air carrier will be exempt from the obligation to pay compensation as a result of the strike.

[The Danish Western High Court's ruling of April 23, 2024, in case BS-31914/2023-VLR]

A group of passengers was to travel from Aalborg to Oslo via Copenhagen. Their flight was canceled due to an unlawful strike by ground handling staff, who were employed by a sister company associated with the air carrier, and which had partially the same name as the air carrier. The question was whether the strike could be considered an extraordinary circumstance beyond the air carrier's control that could exempt the air carrier from a compensation claim.

Internal or external

The court concluded that the cancellation was due to external events beyond the air carrier's control. The court emphasized that:

  • The strike was unannounced
  • The air carrier and the ground handling company had the same parent company but no influence on each other
  • The ground handling staff also handled baggage for a number of other air carriers on equal terms with the defendant air carrier

Therefore, the Western High Court found that it was an extraordinary circumstance. The Eastern High Court had previously reached the opposite conclusion in a similar case. The difference was that in this case, sufficient evidence was presented to convince the court that the two companies operated independently of each other – even though they partially shared the same name.

IUNO’s opinion

The case shows that even if an air carrier purchases ground handling services from a sister company, a strike in the sister company should still be considered an external strike if the companies operate independently of each other.

IUNO recommends that air carriers ensure that when they purchase services from affiliated companies, it should be done on an arm's length basis and in such a way that the companies operate independently of each other. If this is adhered to, a strike in a sister company will constitute an extraordinary circumstance. In this way, the air carrier will be exempt from the obligation to pay compensation as a result of the strike.

[The Danish Western High Court's ruling of April 23, 2024, in case BS-31914/2023-VLR]

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