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The impact of the coronavirus outbreak on the airline industry has been severe, with estimated losses of approximately $113 billion. The challenge for air carriers is how to handle a high volume of claims with a reduced workforce for an indefinite period. In that respect, the automation and digitisation of the claims handling processes can help airlines to handle more claims in less time and be flexible concerning their headcount and the volume of cases to be processed on a daily basis.
Digitisation looks set to be a major trend in the German aviation industry in 2020 with respect to aircraft finance transactions, aircraft registration and mortgage registration. Further, Parliament has allocated funds to promote the development of synthetic fuels as part of the aviation sector's sustainability efforts. This video discusses these issues as well as the potential impact of the coronavirus outbreak on the German aviation industry.
As airlines must constantly strive to reduce maintenance costs, it is prudent to carefully review and negotiate contracts with maintenance, repair and overhaul organisations (MROs). As MROs often insist that contracts must be governed by the law of their home jurisdiction, this article addresses a selection of important issues that must be considered when negotiating so-called 'time and material' or 'power by the hour' contracts with German MROs.
The State Parliament of North Rhine-Westphalia recently decided to launch an airline passenger rights app. The new app is intended to promote consumer protection and help passengers to claim compensation easily via their mobile phones. It will be developed by the consumer advice centre and is expected to inform passengers of their rights, perform claim checks, offer suggestions on how and where to assert claims and actively support the process of claiming compensation.
Although aircraft repossession is used only as a last resort, it remains unfortunately inevitable in some cases. Under German law, there are no self-help rights available to owners in order to take possession of an aircraft. It is possible to obtain interim injunctions or arrest orders before the German courts; however, those require a substantial amount of time to prepare court documents, as the entitlement to the claim must be shown to be prima facie.
The State of Hesse has decided to implement the use of drones. For this purpose, the police acquired four drones to help with their work in the region starting in February 2018. In order to operate the drones, each of the eight future drone pilots must complete a two-week workshop containing theoretical and practical modules. The drones will be used at accident sites and crime scenes in particular.
The Berlin Regional Court recently upheld the application of a private German association for the advancement of consumer rights, which claimed that a German air carrier's online booking system had violated EU Regulation 1008/2008. Following the dismissal of the appeal brought by the carrier before the Berlin Upper Regional Court, the airline lodged a remedy of review before the Federal Court of Justice, which stayed the proceedings and referred the case to the European Court of Justice for a preliminary ruling.
Due to the fast-growing number of drone operations, the minister of transport recently announced the revision of the rules governing the use of civil drones in Germany. According to the minister, such use is not sufficiently regulated. The envisaged rules aim to reduce hazards in the airspace and on the ground, while new legislation is being drafted for commercial and private drone use.
The Landshut Regional Court recently dealt with the issue of calculating distance relevant to the amount of compensation pursuant to EU Regulation 261/2004. The court ruled that the decisive factor in determining compensation is the immediate distance between the point of departure of the delayed flight and the passenger's final destination. Possible flight routes to and from transit airports should not be considered.
The Federal Fiscal Court ruled on the taxation of pilots resident in Germany working for an Austrian carrier on board aircraft that are operated internationally. The court had to decide whether, and if so in what proportion, the salary of a pilot living in Germany must be taxed under the double taxation agreement between Austria and Germany based on either the exemption method or the imputation method.
Commercial passenger flights departing from German airports have been taxed since the implementation of the Air Traffic Tax Act in 2011. The tax is set according to the flight destination and the number of passengers transported. According to the legislature, the act is supposed to create incentives for environmentally friendly behaviour. The Federal Fiscal Court recently confirmed that the tax is in line with the Constitution and EU law.
The Dusseldorf Regional Court recently ruled that if a flight is delayed due to severe weather conditions and a connecting flight is missed as a result, passengers have no right to compensation because the extraordinary circumstances defence applies. The court does not regard the frequency of severe weather conditions as a decisive factor with regard to extraordinary circumstances.
Germany has recently transposed the EU Energy Efficiency Directive into national law. Affected airlines must undergo an energy audit by December 5 2015. For airlines operating flights to and from Germany, fuel consumption must be taken into account. Airlines which fail to carry out or perform an energy audit (or which do not conduct it properly, completely or in time) may be fined up to €50,000.
The Minimum Wage Act lacks an answer to the question of whether it applies to foreign airline personnel who are not based in Germany. The wording suggests that crews are entitled to the German minimum wage when deboarding and boarding passengers, but the act does not apply in certain cases. The act remains open for interpretation and case law has yet to be established.
The Hamburg Local Court has recently ruled on a case where passengers missed a connecting flight outside the European Union because the feeder flight from Germany to the airline's hub outside the European Union was delayed. The court stated that it makes no sense to treat cases in which a community carrier operates both flights differently from those in which the operating carrier for both flights is not a community carrier.
The Federal Court of Justice recently deemed two clauses in the terms and conditions of a tour operator regarding flight time changes to be invalid. The court found the clauses to be unreasonable to the traveller. However, it did not determine what a valid clause would look like or what a reasonable timeframe for amendments to flight times would be.
In a recent case, the Federal Court argued that EU Regulation 1008/2008 does not specify an exact time when the final price of air services must be indicated when booking on a computerised booking system. The regulation aims to enable consumers to effectively compare prices of different air carriers. The provision is meant to guarantee information and transparency and strengthen consumer protection.
The Energy Tax Law provides that fuel supplied to commercial aircraft may be granted tax-exempt status. However, Germany is the only EU country in which exemption is not automatically granted to all commercial flights. Instead, customs permits are expressly required. Recent audits of EU air carriers have shown that airline accounts departments are often unaware of the need to apply for an exemption from the tax.
The Federal Court of Justice recently deemed two clauses in the general terms and conditions of a tour operator regarding flight time changes to be invalid. The defendant tour operator's terms and conditions stipulated that the determination of flight times rested with the tour operator issuing the travel documents. The court deemed the clauses invalid, as they put passengers at an unfair disadvantage.
The Kassel Higher Administrative Court recently announced its ruling on claims filed by local government authorities and inhabitants of South and Rhine Hessen affected by the decision in favour of a southerly bypass. The court ruled that independent operation of the southerly bypass by means of a radio navigation system was not feasible and there was no evidence that it would become feasible in the foreseeable future.
Pilots' union Cockpit recently lodged a petition with Parliament regarding the abolition of air traffic tax. The tax has led to significant distortion of competition, to the detriment of German airlines and airports. The petition has been successful, and as a result Parliament's Petition Committee may schedule a public debate on the petition.
The Landshut Regional Court recently ruled that each segment of a flight involving a scheduled stopover had to be regarded separately for the purposes of determining the applicability of EU Regulation 261/2004. The decision is important for third country (non-EU) air carriers which offer flights from EU countries via a hub outside the European Union to the rest of the world.
There has been a string of successful decisions in Germany regarding the requirement for delayed departure within the meaning of Article 6 of EU Regulation 261/2004 in order to seek compensation under the regulation further to the European Court of Justice (ECJ) decision in Sturgeon. A recent ECJ ruling in a case referred to it by the German Federal Court of Justice has thus come as something of a blow.
The Federal Court of Justice has ruled that if an airline's flight schedule cannot be operated in full or to a significant extent due to a strike, passengers have no right to compensation pursuant to EU Regulation 261/2004 because the 'extraordinary circumstances' defence applies. However, the airline must take reasonable measures to minimise the effects of a strike.
The Federal Cabinet has adopted draft legislation on the introduction of conciliation bodies for airline passengers, with the aim of allowing passengers to make claims against airlines in a fast, cheap and straightforward manner. However, the plans would be yet another setback for the industry, particularly because airlines would have to bear the costs.
In an opinion requested by the Cologne Local Court and a UK court, the advocate general of the European Court of Justice (ECJ) has confirmed the ECJ's much-debated Sturgeon decision, which held that passengers whose flights are delayed, and who reach their final destination three hours or more after the arrival time originally scheduled by the air carrier, may rely on the right to compensation pursuant to EU Regulation 261/2004.
The Nürtingen local court recently confirmed that, in relation to claims for compensation brought pursuant to EU Regulation 261/2004, a delay can have the same legal consequences as a cancellation only in cases where delays occurred both on departure and on arrival.
The forthcoming air traffic tax cuts represent a good opportunity to even out the playing field for German airports and passengers. However, in light of the imminent inclusion of aviation in the European Emissions Trading Scheme, the German legislature would be well advised to consider abandoning the tax all together.
In recent months many flights have been cancelled due to freezing temperatures and the fact that aircraft could not be de-iced by ground-handling operators because they had run out of de-icing fluid. This raises the question of whether carriers can claim compensation from ground-handling companies in order to cover the cost of expected compensatory claims from passengers, and for loss of profit.
Parliament has passed the Accompanying Budget Act 2011, which not only comprises multi-faceted plans to cut public spending, but also introduces the Air Travel Tax Act. It is likely that several German carriers will challenge their tax assessments under the act, because the financial repercussions will be unacceptable.
The government has introduced its recently announced plans for an air travel tax. The new law, which is currently subject to the approval of Parliament and the Federal Council, will enter into force at the beginning of 2011. However, flights booked for that year are already taxable. The involvement of the courts in disputes arising from the new tax seems highly likely.
From 2011 airlines will be charged a levy of €13 per passenger for European travel and €26 per passenger for intercontinental travel. The plan has already proved controversial, as the new air travel tax will be imposed on airlines still struggling to return to profitability after the financial downturn and the losses from the Icelandic ash cloud. Moreover, the tax arguably violates Article 15 of the Chicago Convention.
To the dismay of the airline industry, the Supreme Court has confirmed a preliminary ruling of the European Court of Justice on the distinction between flight delays and cancellations. The courts also allowed the so-called 'extraordinary circumstances' defence – hitherto applicable only to cancelled flights – to be applied to delayed flights.
The Cologne Upper Regional Court has ruled that the trend among passengers of so-called 'non-sequential use of coupons' or 'cross-border selling' undermines airlines' tariff structures and is not permitted. It is hoped that the decision will establish a precedent for the Federal Supreme Court, which will likely be obliged to look into 'smart-ticketing' practices in the near future.
The Data Collection Ordinance 2020 has become effective. The Emissions Trading Authority has issued advice to aircraft operators on the new ordinance and its consequences. The ordinance forms the legal basis for the submission of emissions monitoring plans. Furthermore, the deadline for aircraft operators to submit their monitoring plans has been extended again.
From 2012 aviation will be included in the EU Emissions Trading Scheme. Although this date may seem distant, carriers offering services to or within the European Union must act now. The German Emissions Trading Authority has requested that carriers involved submit documents detailing the procedures they plan to use to monitor emissions and gather tonne-kilometre data in August 2009.
After the Spanair crash in Madrid, the debate resumed as to whether passengers whose aircraft is stranded on the tarmac have the right to return to the gate once the doors have closed and the aircraft has pushed back. In this context the question arises as to whether the captain of an aircraft has legitimate powers to deny deboarding and, if so, how the limits of such powers can be determined.
Air passengers expect to be allowed to check in a reasonable amount of luggage free of charge, regardless of the price of their ticket. A German appeals court has confirmed that where a flight is advertised at a certain price "including taxes and fees", but an additional tariff will be levied for each item of hold baggage, the airline must refer to these additional costs in its advertisements.
The European Commission has opened investigations into state subsidies allegedly paid to Flughafen Frankfurt-Hahn GmbH and into agreements with the low-cost carrier Ryanair. The investigations focus on capital increases from 2002 and 2004 and a profit and loss transfer agreement between the airport and its parent company Fraport AG.