Flight compensation in “extraordinary circumstances”: The Supreme Court has its say

On Wednesday 10 July, judgment was handed down by the Supreme Court in Lipton and another (Respondents) v BA Cityflyer Ltd (Appellant) [2024] UKSC 24. The judgment will be a blow to BA and will be carefully noted by other airlines who have refused to pay out compensation in similar circumstances. The Supreme Court noted in a summary of the judgment that “although the sum at stake is small, the decision has the potential to affect tens of thousands of claims which are made annually”.

The case marks the latest episode in the struggle between Mr and Mrs Lipton and BA Cityflyer (Cityflyer), a subsidiary of British Airways, concerning the availability of £220 in compensation for a delay caused by flight cancellation from Milan to London City Airport in 2018 due to a pilot’s (undisclosed) illness. The point in issue was whether pilot’s illness falls under the definition of “extraordinary circumstances” meaning that the airlines are not required to pay compensation to passengers under the relevant EU regulation.

Cityflyer’s appeal to the Supreme Court, after prior loss in the Court of Appeal, was ultimately unsuccessful.

The legal background

Compensatory protection for airline customers is afforded by The Air Passengers Rights Regulation 2004 (Regulation (EC) No 261/2004) (Regulation 261), an EU law regulation providing protection to airline passengers who experience flight boarding issues, delays and cancellation. Regulation 261 was previously adopted into English law by virtue of EU law direct effect prior to Brexit and retained by subsequent legislation during the UK’s transition process out of the EU.

Regulation 261 provides for a framework of compensation (at Article 7) in the event of flight cancellation, with one crucial caveat being that compensation is not due in “extraordinary circumstances”. Article 5(3) of Regulation 261 specifically provides:

“An operating air carrier shall not be obliged to pay compensation in accordance with Article 7, if it can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.”

Regulation 261 applies to Cityflyer because it is an “operating air carrier”. Upon receipt of a claim, Cityflyer relied upon the “extraordinary circumstances” defence to deny Mr and Mrs Lipton compensation for their delayed fight.

Problematically, “extraordinary circumstances” is an undefined term in Regulation 261, although the recitals of the regulation guided the Supreme Court in determining just how unusual an event had to be in order to qualify as “extraordinary”. The Supreme Court considered that the first limb of the relevant legal test, namely demonstrating that the event is not “inherent in the activity of the carrier”, was not met by Cityflyer. The illness of the pilot was “a matter which the airline would be expected to cope with in the ordinary course of managing its business”. The fact of the pilot’s central importance to the flight (given that, at present, planes cannot fly themselves) was another of several factors indicating that the wellness of the pilot was inherent to the activity of the carrier.

What about Brexit?

Although the Liptons’ case was decided under pre-Brexit EU law, the protections afforded to aviation passengers are retained (in lightly amended form) by the Air Passenger Rights and Air Travel Organisers’ Licensing (Amendment) (EU exit) Regulations 2019. Accordingly, the case can be relied upon by passengers who have experienced a flight cancellation in similar circumstances, irrespective of whether such cancellation predated Brexit.

Mr and Mrs Lipton can finally receive their £220 compensation, after a delay far exceeding that of their initial flight. The case is arguably far more significant for airline carriers, who now find themselves potentially exposed to a multitude of claims for compensation where flights have been cancelled due to pilot illness/inability to fly.

The case is a reminder of the continuing significance of EU consumer protection law in the UK following Brexit. It will have been met with disappointment by the airlines, delight by frustrated airline passengers, and perhaps serves as a warning to pilots regarding their pre-flight dietary choices!

Many thanks to trainee Daniel Pearce for their help in writing this article.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, July 2024