Lufthansa, and Jet2’s Legal Matter

Dino D'Amore
By Dino D'Amore June 12, 2014 14:08

Lufthansa, and Jet2’s Legal Matter

As Lufthansa shares fall some 15% and many wonder if the Emirates A350 cancellation is clearing the way for an RR-powered A380Neo orders, Norwegian is effectively blocked from the USA and a UK court clears the way for increased passenger claims.

Yesterday the Royal Courts of Justice made a final decision on Huzar v, the landmark aviation case. Lord Justice Laws, Lord Justice Elias and Lady Justice Gloster held that when determining whether a delay or cancellation was caused by an extraordinary circumstance one must fundamentally bear in mind that the circumstances must be ‘out of the ordinary.’ For an event to be ‘out of the ordinary’ it must ‘stem from events which, by their nature or origin, are not inherent in the normal exercise of the activity of the air carrier concerned.’

In the context of technical problems one must crucially ask what caused the technical problem. If the cause of the technical problem is one which is ‘inherent in the normal exercise of the activity of the air carrier concerned’ then it necessarily follows that it is also within the control of the carrier and therefore not extraordinary.

The defining questions are therefore:-

1. What caused the problem, and
2. Was that cause out of the ordinary.

In Mr Huzar’s case the cause of the technical problem was simply wear and tear and the Court held that wear and tear is entirely ordinary and therefore not extraordinary.

This is massive news for the airline industry operating through the UK as 30% of all delays and cancellations are due technical defects, and you and I both know that there is not much that can be done about the same in the day to day running of an airline.

Now it is the case that passengers who had suffered delays up to six years ago but had not received a payout, were entitled to claim up to £484 in compensation from airlines.

This decision, if upheld at appeal, will no doubt lead to a rush of PPI-style compensation claims with many law firms sensing this as potentially a huge new revenue stream. For airlines the story is one of maintenance management and the need to have larger and better equipped teams at airfields and/or standby aircraft ready and waiting. In the UK it is no longer good enough to have an engineering team on call to fix a problem it seems.

The question is this: is it more cost effective to have the aircraft delayed and pay the compensation claims or to pay more in MRO costs for teams of maintenance storm troopers?

The answer might well be for airlines to get dynamic on the issue and come together to pay for increased maintenance trouble shooters and parts pooling at an airfield. In the event of a problem the maintenance teams would assist any aircraft on the airfield that was a member of the syndicate.

Of course this is a problem that goes back some six years and is not just a matter of protecting revenue for the future. For this reason all airlines will need to hope that the Jet2 appeal is successful or else airline share prices from BA through to Ryanair and EasyJet will all need to be put into check.

Dino D'Amore
By Dino D'Amore June 12, 2014 14:08
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