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Key ruling of the EU Court of Justice on the interpretation of Regulation (EC) No. 261/2004

On 4 July 2018, the Court of Justice of the European Union (CJEU) delivered its ruling in the awaited case C-532/17 Wirth and Others v. Thomson Airways Ltd, with respect to the interpretation of the definition of "operating carrier" given by article 2(b) of Regulation (EC) No. 261/2004. The Court has ruled that in the event of long delay at the flight arrival (therefore exceeding 3 hours) the airline that must pay compensation under the Regulation (EC) No. 261/2004 is the operating air carrier and not the airline which leased the aircraft on the basis of a wet lease agreement (i.e. the lessor, that must provide – and is responsible for – the aircraft, crew, maintenance and insurance to the lessee).

By way of background, TUIFly has chartered an aircraft from Thomson Airways for a certain number of flights under a wet lease agreement. According to the contract TUIFly was responsible for 'ground handling, passenger welfare at all times, cargo handling, security in respect of passengers and baggage, arranging on-board services, etc.'. In order to operate those flights, TUIFly was also responsible for marketing the flight capacity and obtaining slots and operating authorisations.

In respect of the subject dispute, the claimants (Wirth and others) had a booking confirmation for a flight from Hamburg (Germany) to Cancún (Mexico) bearing a flight number referred to TUIFly, while the booking confirmation stated that that the flight was 'operated' by Thomson Airways. Since the flight was significantly delayed, the claimants summoned Thomson Airways for the compensation under Articles 5 (headed "Cancellation") and 7 ("Right to Compensation") of Regulation (EC) No 261/2004.

Thomson Airways refused to pay compensation arguing that it only acted as a wet lessor, and so that it was not the operating air carrier within the meaning of Article 2(b) of the Regulation. Accordingly compensation owed to passengers in the event of delay was on the account of TUIFly, to be considered as the operating carrier according to the wording of the Regulation.

The Regional Court of Hamburg decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling: "Is the concept of "operating air carrier" in [Regulation No 261/2004] to be interpreted as meaning that an air carrier which leases to another air carrier an aircraft, including crew, for a contractually-stipulated number of flights under a so-called wet lease, but which does not bear the principal operational responsibility for the individual flights, and where it is stated in the passengers' booking confirmation that the flight is "operated by" that very carrier, is the operating air carrier within the meaning of that regulation?".

In relation to the question submitted by the Regional Court of Hamburg, the CJEU has clarified the notion of the 'operating carrier' by affirming that "an air carrier which, in the course of its air passenger carriage activities, decides to perform a particular flight, including fixing its itinerary, and, by so doing, offers to conclude a contract of air carriage with members of the public must be regarded as the operating air carrier. The adoption of such a decision means that that air carrier bears the responsibility for performing the flight in question, including, inter alia, any cancellation or significantly delayed time of arrival". According to the CJEU it follows that: "an air carrier, such as Thomson Airways in the main proceedings, which leases an aircraft and its crew to another air carrier under a wet lease, cannot, in any event, be regarded as an 'operating air carrier' within the meaning of Regulation No 261/2004 and, in particular, of Article 2(b) thereof.". In such context the CJEU has also added that it is de facto irrelevant if during the booking confirmation process the passengers are informed that the flight is to be operated by the airline leasing the aircraft (wet lessor).