Ryanair Ordered to Reimburse Travelers in Volcano Delay

Ryanair Holdings Plc (RYA) must pay passengers for expenses such as food and lodging after a flight cancellation due to a volcano eruption in 2010, the European Union’s top court said in a ruling the Irish carrier claimed would trigger higher fares.

Ryanair and other airlines are obliged to “provide care” to passengers whose flight was canceled, the EU Court of Justice in Luxembourg ruled today. While airlines must pay for passengers’ reasonable expenses, they don’t have to pay statutory compensation of as much as 600 euros ($813) in such “extraordinary circumstances,” the court said.

The eruption of the Eyjafjallajokull volcano in Iceland almost three years ago caused airlines to cancel more than 100,000 flights on concern that glass-like particles spewed into the atmosphere might have clogged aircraft engines. The shutdown of airspace cost carriers at least $1.7 billion, while European transport ministers took five days to agree that airports could open with the dust still in the air.

Ryanair “regrets the decision of the European Court, which now allows passengers to claim for flight cancellations which are clearly and unambiguously outside of an airline’s control,” the company said in an e-mailed statement.

The ruling “will materially increase the cost of flying across Europe and consumer airfares will increase as airlines will be obliged to recover the cost of these claims from their customers,” Ryanair said.

Hotel Accommodation

A Ryanair passenger appealed after the airline refused to reimburse her costs for meals, refreshments and hotel accommodation. Ryanair argued the extended closure of the European airspace went beyond even the “extraordinary circumstances” such as a strike or bad weather conditions for which airlines are exempt from compensation under EU law.

After flight cancellations, EU rules oblige airlines to pay passengers compensation of 250 euros to 600 euros, depending on the distance of the flight.

The court today said that while airlines are exempt from their obligation to pay compensation if they can prove a flight was canceled due to extraordinary circumstances, they remain obliged to take care of passengers who find themselves stranded in an airport.

Airlines “must provide care to passengers whose flight has been canceled due to extraordinary circumstances such as the closure of airspace,” the court said in a statement on today’s ruling. “EU law does not recognize a separate category of ‘particularly extraordinary’ events” that would exempt the airline.

‘Test Case’

The decision in today’s “test case has no retrospective impact” for the company because “all other ‘ash’ related claims have been settled with passengers,” Ryanair said today.

Ryanair canceled about 9,400 flights during the eruption. It refunded all of the passengers’ tickets and settled all “reasonable expense claims” at a cost of about 32 million euros, according to a November 2010 regulatory filing.

Denise McDonagh sued Ryanair in Ireland after the airline refused to pay her back about 1,130 euros in costs for meals, accommodation and transport when her flight from Faro, Portugal, to Dublin was canceled. She was stranded for a week, without any care provided by Ryanair, the court said. The Irish tribunal handling the case sought guidance from the EU court in 2011 and will have to give a final decision on McDonagh’s case in line with today’s ruling.

The EU court said that “when an air carrier has failed to comply with its obligation to provide care to an air passenger” the person can be reimbursed only “of the amounts which proved necessary, appropriate and reasonable” and that the national court will have to define what this would be.

The case is: C-12/11, Denise McDonagh v. Ryanair Ltd.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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