The Weekly Roundup: to Fly or not to Fly? That is the Question

Articles | Mon 22nd Jun, 2020

As we edge ever closer to being able to go on holiday, the team at 1CL has been spending its time reading the recent Transport Select Committee Report on the Aviation Industry, waving a regretful goodbye to the Refund Saga, pondering some knotty insurance issues, and wondering how to turn defeat into victory (in the form of issues based costs orders). On 9^th July we will be giving the 1CL Thursday Morning Webinar, and readers are invited to contact Sarah Prager with any topics they would like us to cover, or ideas for format. Matt Gatenby at travlaw has suggested a 1CL debate between practitioners; Jatinder Paul at Irwin Mitchell wonders whether readers would like to hear more about insurance and insolvency issues; and we are often asked what we think the future holds for the industry in terms of sustainable tourism and the legal enforceability of representations as to environmental impact. As ever, we will be guided by you; we can’t promise to implement any particular idea, but we will try to cover as many issues as we can.

The Transport Select Committee Report on the Aviation Industry

On 13^th June 2020 the House of Commons Transport Select Committee, chaired by Huw Merriman MP, published a report entitled “The impact of the coronavirus on the aviation sector”. It is a genuinely interesting read (honestly), and I recommend that you immediately stop what you’re doing and go read it. However to accommodate those who can’t (or inexplicably don’t want to) give up hours of their precious time reading niche select committee reports, below I have extracted the most important and intriguing parts expressed as a bullet point list. If you must know, it was a laborious task; I do these things so you don’t have to.

• This first report covers the near-medium term; the immediate crisis, consequences for businesses, and how the sector can restart and recover. The Committee will return at a later date to examine the longer term implications for air travel.
• The UK has the largest aviation network in Europe and the third largest in the world, and has 230,000 workers. It is also estimated that within Europe, every person directly employed by the aviation sector, and in aviation-enabled tourism, supports another 4.7 jobs. It is a hugely important strategic sector.
• There has been a 97% reduction in air travel, comparing April 2019 and April 2020, with estimated losses of £20bn.
• Industry estimates suggest that passenger numbers may remain below 2019 levels until at least 2022.
• The 14-day border quarantine policy introduced by the Government on the 8^th June has received extensive criticism, including from parliamentarians and the aviation industry. IAG, Easyjet and Ryanair have initiated legal action against the Government challenging the blanket quarantine policy.
• There are a number of alternatives to the current 14 day ‘blanket’ quarantine policy. One suggestion is that the UK should target its quarantine policy based on a regularly updated list of countries with clear higher incidence than the UK. Another is an “air bridge” or “travel corridor” which would enable people to travel between two countries with similar relative levels of infection without the need to quarantine.
• More vigorous health screening at airports have been proposed as an alternative or accompaniment to quarantine measures. For example airports in South East Asia have used temperature checks on incoming passengers, and Heathrow Airport launched a temperature screening trial on 21^st Another proposal is “health passports” whereby facial biometrics are used to provide a digital certificate to verify whether the passport holder has had Covid.
• The Committee’s view on the blanket 14-day quarantine is thus: “We are not persuaded that a blanket quarantine policy is the right policy option at this time compared to the alternatives. We support a more targeted and nuanced border control policy that would allow people travelling from countries where the infection rate of Covid-19 is relatively low to enter the UK on a less restrictive basis…. In responding to this Report, the Government should clearly explain the reasons for its current quarantine policy and the evidence base it used to make its decision.”
• As it stands there are no common health standards for international air travel set in response to the coronavirus pandemic, for instance relating to temperature checks at airports or the use of face masks. The Committee stressed the need for such standards, and pressed the Government to lead the way in developing them.
• The airline industry is suffering a combination of drastically reduced revenues and high fixed costs. Heathrow Airport reports losing £200m per month.
• There has been widespread public debate about the provision of government support for aviation. To date the UK Government has not provided an industry-wide package, although it has waived air traffic control charges for 14 months and the Civil Aviation Authority (CAA) has introduced a payment plan facility to cover the payment of annual charges. The Government’s focus has instead been to offer “bespoke” support to individual companies, and only once other sources of financial support have been exhausted. The Government rejected a bid for support from Virgin Atlantic on this basis. The Minister for Aviation told the House on 3 June that “a bail-out by the taxpayer or any other Government support would need to comply with state aid rules and require us to meet our legal obligations, particularly on climate change.”
• Companies in the aviation sector have primarily accessed generic Government support schemes to deal with the pandemic, such as the Job Retention Scheme (CJRS), VAT deferrals, the Covid-19 Corporate Financing Facility (CCFF) and the Coronavirus Business Interruption Loan Scheme (CBILS). For example Ryanair and easyJet each accessed £600m from the CCFF, while British Airways and Wizz Air each accessed £300m from the same.
• Despite the support available, several UK-based airlines—including British Airways, Ryanair,75 easyJet and Virgin Atlantic—have announced actual or potential large-scale redundancies, changes to staff terms and conditions, and cancelled or delayed orders for new aircraft.
• The Committee recommends the provision of support measures for the aviation industry, principally a 12-month business rates relief for airlines and airports and a six-month temporary suspension of Air Passenger Duty payments.
• Several aviation companies including British Airways, Virgin Atlantic, easyJet, Ryanair, Rolls Royce and Airbus have announced thousands of redundancies. This is despite many of these companies accessing the Government’s Job Retention Scheme (CJRS), for example BA which had received close to £35m from the CJRS as of 14^th
• British Airways is consulting on cuts of up to 12,000 jobs and to downgrade the terms and conditions of approximately 35,000 employees. BA’s consultation on T/Cs include changes to redundancy pay obligations, employment procedures (disciplinary, grievance etc), restructuring its cabin crew into a single fleet, and altering rostering/scheduling.
• The motivations of some airlines in announcing redundancies has been questioned, having been accused of seeking to exploit the crisis to restructure their organisations and emerge more profitable. Evidence was also received that many of the decisions (both in the UK and abroad) made about redundancies were being made prematurely, in isolation, and without clear information from governments about when air travel can resume.
• Government guidance states employers can make employees redundant while they are on the CJRS, although the Prime Minister and the Minister for Aviation both disapproved of this practice.
• The Committee urged UK-based aviation employers not to proceed hastily with largescale redundancies or T/Cs restructuring until the Job Retention Scheme ends in October 2020 and they’ve had a chance to consider the Government’s plans to help the sector recover.
• BA said in correspondence with Unite the Union that if the company was unable to reach agreement on the proposals in the consultation process, it would essentially “hire and rehire” a proportion of the workforce under the new T/Cs.
• The Committee gave the following, defiant and scathing, summary: “Some redundancies at British Airways, as with other airlines, may be sadly inevitable in the current crisis. Having questioned the Chief Executive of British Airways’ parent company and trade unions and received hundreds of submissions from British Airways employees, our view is that British Airways’ current consultation on staffing changes is a calculated attempt to take advantage of the pandemic to cut jobs and weaken the terms and conditions of its remaining employees. The behaviour of British Airways and its parent company towards its employees is a national disgrace. It falls well below the standards we would expect from any employer, especially in light of the scale of taxpayer subsidy, at this time of national crisis.”
• The Committee urged BA to extend its consultation period, and recommended that the Government revise the rules of the Coronavirus Job Retention Scheme to prevent, or strongly penalise, companies for making large-scale redundancies, while in receipt of funds from the taxpayer.
• The regulatory background to flight refunds is thus: “Under EU regulation 261/2004 (referred to as EC261) customers who have made a flight-only booking are entitled to a full cash refund within seven days of the departure date of any flight cancelled by the airline. The CAA, the UK’s aviation regulator, is responsible for enforcing this regulation. Flight-only bookings are not ATOL (Air Travel Organiser’s License) protected, meaning there is no protection in the event an airline ceases trading and is unable to pay a customer their refund. Under the UK’s Package Travel Regulations, customers who have booked package holidays are entitled to a full refund within 14 working days of cancellation if any part of a holiday, including flights, is cancelled. This booking is ATOL-protected should the package holiday firm in question cease trading.”
• Generally speaking airlines are not meeting their legal obligations to provide refunds. In April 2020 ABTA estimated that UK package travel operators and airlines owed £6-7bn in unpaid refunds to customers. The Committee recommended that before the Government brings forward its planned Airline Insolvency Bill, it consults on whether protections should be introduced for airline passengers in the event of pandemic or other extraordinary circumstances.
• Airlines and travel operators have issued vouchers and credit notes as substitutes for cash refunds. The Government should provide reassurance to passengers by setting out clearly the circumstances under which a Refund Credit Note or a voucher issued by an airline is protected by the ATOL scheme.
• Other countries (e.g. Germany and the Netherlands) have suspended time limits for airlines to issue refunds, though this has not happened in the UK. The CAA expressed concerns that the exercise of its current powers (the enforcement of which involves timely and costly court actions) is difficult. The CAA’s powers should be reviewed to ensure it can enforce the rights of passengers in an effective and expedient way.

About the Author

One of the more junior members of the team, Richard Collier was called to the Bar in 2016. Before that, he had worked as a Judicial Assistant to Lord Justice Jackson in the Court of Appeal. He is now instructed by solicitors for both Claimants and Defendants in cross border disputes, package travel and other related claims.

Speaking of Refunds: The Package Travel Regulations, Frustration, and Practical Difficulties

The saga over refunds for cancelled flights and holidays continues this week with some good news for consumers. Following a report to the Competition and Markets Authority from consumer body Which?, and after having previously rejected requests for refunds, Villa Plus has now relented and agreed to offer refunds for accommodation cancellations resulting from the Covid-19 pandemic. Previously they had asserted that consumers would have to claim on their travel insurance. Villa Plus maintains that they had nevertheless been acting lawfully, and that the CMA’s remit did not extend to the provision of overseas holidays.

The argument over refunds for accommodation-only holidays is an interesting one. Where flights and other aspects of the holiday are provided by other suppliers, Villa Plus argued that the Package Travel Regulations would not apply. Even where that is the true, however, where consumers cannot leave the UK it seems almost inevitable that the courts will consider the contract to have been frustrated. The “coronation cases”, relating to the postponement of Edward VII’s coronation when the King fell ill in 1902 (e.g. Krell v Henry [1903] 2 KB 740) appear perfectly analogous to the pandemic, in that the pandemic could not have reasonably been anticipated by the parties at the time the contract was made and yet it will defeat the purpose of the contract.

There may be some uncertainty as to the applicable law (i.e. whether English or foreign law) for holidays abroad, but within the EU and common law countries it is likely that consumers will be protected. Whilst liability may depend on the particular terms of the contract between provider and consumer, providers will usually have an uphill battle to escape liability.

As has been discussed previously, however, the difficulties faced by consumers are in practice more likely to be more anodyne. Unless consumers group together to bring their claims over the small claims limit of £10,000, they are unlikely to be able to recover their costs of litigating so that issuing proceedings may not be worthwhile (although the industry-wide recalcitrance over refunds where there can be no arguable defence might lead a court to conclude that providers have behaved unreasonably so as to justify a costs award even on the small claims track).

About the Author

Called in 2011, prior to pupillage Conor Kennedy spent two years working with a leading insurance law firm, gaining experience across regulatory, employment, leisure, travel and public sector teams. He has a varied civil practice and is accredited for Direct Access instruction, but has a particular interest and expertise in claims involving fundamental dishonesty.

Medical Insurance to Holiday Covid Infections: What if Sweeteners turn Sour?

There is no doubt that the holiday and leisure industries find themselves in a desperate situation as a result of the Covid-19 pandemic. There are few, if any, sectors of Europe’s now increasingly stricken economy more harshly hit, and few more in need of ideas to claw their way back to some form of normality. In this context, the spate of initiatives we have begun to see announced recently to lure the wary punter back to his or her favourite sun-soaked fleshpot is likely to grow torrential. One particularly intriguing sweetener was heralded earlier this week in the form of promise by Spanish company, Rui Hotels, to cover medical assistance which might be required by their guests, including that related to Covid-19 infections, during the course of their vacations.

Announcing the introduction of this new service, which, we are told, has been developed in conjunction with insurance firm Axa, Company Chief Executive, Luis Riu stated: “In these uncertain times, we want to offer our customers all the safety and peace of mind we can”, hence, the proposed package of cover which includes medical attention, surgery, hospitalisation and emergency medical transport, with up to E30,000 per guest. This should afford guests added reassurance “as they will know that if faced with infection by Covid-19 or any other medical condition, they will receive attention and care at no additional cost.”

Generous as these new sweeteners are no doubt designed to seem, they throw up numerous of questions for the legal practitioner in the event that things go wrong; questions replete with tricky jurisdictional knots, if only in light of the fact that a company like Ruis Hotels boasts operations across 19 countries.

The most obvious question is: what happens if the policy of insurance is not honoured? Other related questions stem from this: Would it cover pre-existing conditions? If not, who determines what is pre-existing? How and in which forum would such a determination be challenged and by what standard? Do the terms of these policies incorporate guarantees as to minimum standards of care? What if those standards cannot be met owing to limitations in local medical resources? What if the medical care provided is negligent? Would the insurer be under any obligation to support an action against a negligent party in a foreign jurisdiction, or to indemnify the policyholder for any consequential injury suffered? What would be the appropriate law and standard of proof by which to assess such negligently caused injuries? Who would decide such questions? Finally, what if a policyholder falls ill, say with Covid-19, and his or her medical treatment exceeds the E30,000 threshold, but she/he is too ill to repatriate? Is the company under a duty of care to keep funding the treatment? If not, how would the relevant exclusions be triggered and how and where could they be challenged?

And those are just the most obvious questions. Maybe the sweetener is only sweet on an initial taste; it seems it could grow sour very quickly.

About the Author

Dr Russell Wilcox was called to the Bar in 2000, and before joining chambers enjoyed an illustrious career in academia. He was an associate member of McNair Chambers in Qatar, where he worked on a number of large-scale cross-jurisdictional commercial disputes and on international arbitral proceedings, and acted as disclosure counsel in Athenasios Sophocleus & Others v Secretaries of State for Foreign and Commonwealth Affairs and Defence, relating to the actions of the Colonial Administration in Cyprus during the Cyprus Emergency of 1956 to 1959. He now accepts the full range of work undertaken by the travel team at 1 Chancery Lane.

Recent Guidance on Issues Based Costs Orders

In the recent case of George Hugh Pigot v Environment Agency [2020] EWHC 1444 (Ch) the Claimant sued the Defendant and succeeded in its claim in nuisance. The Defendant sought an issue-based costs order on the basis the Claimant, albeit successful on the claim overall, failed on a number of issues principally whether the Defendant was in breach of statutory duty. Hence it was right, the Defendant said, that the Claimant should only recover a proportion of its costs.

Given this article is being written primarily for the benefit of travel litigators, I will limit my description of the facts (as can be deduced from this judgment) to saying that it was about a fish pass being kept open at low water.

The matter was decided by Stephen Jourdan QC (sitting as a judge of the High Court), who gave a succinct and instructive judgment. The procedural purview for the Court was CPR 44.2(6)(a) which lists the various alternative costs orders a court may make under CPR 44.

The Judge cited a wealth of case law, and summarised the principles:

“(1) The mere fact that the successful party was not successful on every issue does not, of itself, justify an issue-based cost order. In any litigation, there are likely to be issues which involve reviewing the same, or overlapping, sets of facts, and where it is therefore difficult to disentangle the costs of one issue from another. The mere fact that the successful party has lost on one or more issues does not by itself normally make it appropriate to deprive them of their costs.

(2) Such an order may be appropriate if there is a discrete or distinct issue, the raising of which caused additional costs to be incurred. Such an order may also be appropriate if the overall costs were materially increased by the unreasonable raising of one or more issues on which the successful party failed.

(3) Where there is a discrete issue which caused additional costs to be incurred, if the issue was raised reasonably, the successful party is likely to be deprived of its costs of the issue. If the issue was raised unreasonably, the successful party is likely also to be ordered to pay the costs of the issue incurred by the unsuccessful party. An issue may be treated as having been raised unreasonably if it is hopeless and ought never to have been pursued.

(4) Where an issue based costs order is appropriate, the court should attempt to reflect it by ordering payment of a proportion of the receiving party’s costs if that is practicable.

(5) An issue based costs order should reflect the extent to which the costs were increased by the raising of the issue; costs which would have been incurred even if the issue had not been raised should be paid by the unsuccessful party.

(6) Before making an issue-based costs order, it is important to stand back and ask whether, applying the principles set out in CPR r.44.2, it is in all the circumstances of the case the right result. The aim must always be to make an order that reflects the overall justice of the case.”

Applying those principles to the facts, and most importantly: “the claim for breach of statutory duty was simply a different legal basis for putting the Claimant’s case. It was not a discrete issue which caused additional costs to be raised.” Moreover the Claimant was not unreasonable in raising any of the issues it did; they were all reasonably raised and there is a reasonable prospect of the Court of Appeal disagreeing with the first instance decision regarding the points on which the Claimant lost (hence permission to appeal was granted, to both parties). Accordingly an issue-based costs order was not, in all the circumstances of the case, the right result. As such the general rule (as per CPR 44.2(2)(a)) applied and the Defendant was ordered to pay the Claimant’s costs, with a payment on account of £50,000 (of an overall schedule for £74,758.77).

The decision is a helpful reminder that in appropriate cases an issues based costs order can be made; but that those cases are few and far between. Nevertheless, where a case raises a number of discrete questions (for example: is it necessary to prove breach of local standards in gastric claims? has a Claimant proven personal injury but not more general quality complaints?) consideration should be given to whether such an order is appropriate.

About the Author

One of the more junior members of the team, Richard Collier was called to the Bar in 2016. Before that, he had worked as a Judicial Assistant to Lord Justice Jackson in the Court of Appeal. He is now instructed by solicitors for both Claimants and Defendants in cross border disputes, package travel and other related claims.

…And Finally…

Those of us whose mental health has been tested to the limit by the GDPR rules over the last couple of years will feel some sympathy for the Belgian, French and Dutch airport authorities. Brussels Airport has been warned by the Belgian data protection authority that its temperature checks, designed to assist in the fight against Covid-19, may violate the nation’s privacy rules. Ironically the checks were instigated as part of a European Union Aviation Safety Agency pilot scheme, but it appears that they may fall foul of the provisions enacted by Belgium in response to the European Data Protection Directive. The French and Dutch data protection authorities have also warned against plans to deploy thermal imaging in a bid to identify and track passengers with symptoms of Covid-19. It may raise a wry smile that member states who have surrendered the right to free movement, to education and to healthcare in the fight against Covid-19 have been rendered powerless in the face of the GDPR legislation which has caused so many of us so many sleepless nights.