Thought leadership from our experts

Judgment of the German Federal Court of Justice: Non-refundable tickets are non-refundable

On 20 March 2018, the German Federal Court of Justice (the highest civil court in Germany) rendered a landmark decision. It held a clause in an airline's Terms and Conditions valid according to which a ticket is non-refundable.

In the case decided by the Federal Court, the passengers claimed for refund of the full ticket price from Lufthansa after they had cancelled their booking due to the illness of one of the passengers. In the Terms and Conditions of Lufthansa, it said concerning these tickets "A cancellation of the booking is not possible. The unused taxes and charges are refundable. The international/national charges are not refundable." Upon the cancellation of their booking, Lufthansa refunded the taxes and charges but not the fare to the passengers.

The passengers insisted on the refund of the full ticket price, including the fare.

The Federal Court decided that the airline's clause in its Terms and Conditions excluding the full refund of the full ticket price is valid under German law. It held that the exclusion of the right to cancel the booking is not unfair for the passengers. The expenses an airline saves because of the booking cancellation are rather low as the costs of an airline are mainly fixed costs concerning the flight itself which are hardly reduced if an individual passenger does not take the flight. The Federal Court further takes the view that a passenger who does not wish to pay the higher ticket price for a flexible booking guaranteeing a refund of the fare in the case of a booking cancellation, can cover the risk of illness by taking out the relevant insurance.

The Federal Court concluded that the exclusion of the right to cancel the booking and the aim to facilitate the performance of a contract of carriage does not put the passenger at an unreasonable disadvantage.

The Federal Court thus decided in favour of the airlines and contrary to the previous decisions of the Regional Court in Frankfurt which had made high demands on airlines in terms of evidence on whether the flight was fully booked and which expenses the airline had saved because of the booking cancellation of the passenger.

The judgment itself including the grounds of the decision has not yet been made publicly available. So far, only a press release exists in which it is reported on the court hearing of 20 March 2018.

At any rate, the Federal Court has strengthened the position of the airlines.