The Civil Aviation Authority v Ryanair DAC

The question raised by this appeal is whether the appellant, Ryanair DAC (“Ryanair”), is obliged by Parliament and Council Regulation (EC) No 261/2004 (“the Regulation”) to pay passengers compensation in respect of flights that were cancelled in 2018 as a result of strike action by employees of the airline. It is Ryanair’s case that the cancellations were caused by “extraordinary circumstances” within the meaning of article 5(3) of the Regulation and, hence, that compensation is not payable. HH Judge Gerald (“the Judge”), sitting as a Judge of the High Court, rejected that contention in a judgment given on 29 April 2021, but Ryanair now challenges that decision in this Court.

The claim is brought by the respondent, the Civil Aviation Authority (“the CAA”), pursuant to part 8 of the Enterprise Act 2002. That allows the CAA to apply for an “enforcement order” if it thinks that there has been a contravention of the Regulation which harms the collective interests of consumers. In the present case, the Judge made an enforcement order requiring Ryanair to pay affected passengers compensation in the amounts set out in article 7 of the Regulation.

In the past, Ryanair would negotiate staff terms and conditions using a system of employee representative committees. In December 2017, however, Ryanair decided to recognise trade unions for its pilots and cabin crew. During subsequent negotiations with Fórsa, an Irish trade union, over the terms of a recognition agreement, Fórsa sent Ryanair a letter in May 2018 setting out 11 minimum requirements for an agreement governing seniority among Irish pilots. In unchallenged evidence, Mr Darrell Hughes, the People Director at Ryanair, has explained that the airline could not accede to the demands without significantly jeopardising its business model. However, pilots voted in favour of industrial action in a secret ballot and, despite Ryanair putting forward proposals of its own and attending meetings with Fórsa, strikes were held on a number of days in July and August of 2018. Eventually, following intensive mediation between 13 and 23 August 2018, the two sides reached agreement. Ryanair accepted certain of Fórsa’s demands, Fórsa gave way on a number of points, others were the subject of compromises and, in one case, a working group was formed to seek to find a solution. The resulting agreement was ratified by Fórsa’s Ryanair members in September 2018.

There were also strikes between July and September of 2018 in other European countries. Mr Hughes said in his witness statement:

In consequence of the various strikes, Ryanair cancelled a number of flights, including some which had been scheduled to depart from an airport in the United Kingdom.

The Regulation imposes obligations on air carriers to provide assistance and compensation to passengers who are denied boarding or whose flights are cancelled or seriously delayed. Where a flight is cancelled, article 5 entitles the passengers concerned to reimbursement or re-routing in accordance with article 8; to meals, refreshments and, sometimes, hotel accommodation pursuant to article 9; and also, potentially, to compensation of €250, €400 or €600 per passenger, depending on the distance of the flight in question, under article 7.

So far as relevant to the payment of compensation, article 5 provides:

Some of the objectives of the Regulation emerge from its first four recitals. These are in these terms:

It can be seen that there was concern to ensure “a high level of protection for passengers” and that the numbers of passengers denied boarding, of cancellations and of flights subject to long delays were considered to remain too high notwithstanding the predecessor Regulation, Council Regulation (EEC) No 295/91. With regard to the latter point, the Commission’s proposal for what became the Regulation said this in paragraph 5:

Recital (14) to the Regulation is also material. It states:

We were referred to various decisions of the Court of Justice of the European Union (“CJEU”) as well as several domestic cases. The earliest decision to which we were taken was Case C-549/07 Wallentin-Hermann v Alitalia EU:C:2008:771, [2009] Bus LR 1016 (“Wallentin-Hermann”). That established the following principles:

The preamble to a Regulation may explain its content and, in the case of the Regulation, recitals (1) and (2) show that article 5 was intended to provide a high level of protection for passengers (paragraph 18 of the judgment);

Since article 5(3) of the Regulation derogates from the principle that passengers have a right to compensation if their flight is cancelled, it must be interpreted strictly (paragraph 20 of the judgment);

Circumstances are to be characterised as “extraordinary” within the meaning of article 5(3) “only if they relate to an event which … is not inherent in the normal exercise of the activity of the air carrier concerned and is beyond the actual control of that carrier on account of its nature or origin” (paragraph 23 of the judgment);

The list of events given in recital (14) is neither exhaustive nor definitive. “Extraordinary circumstances” can arise without any such event having taken place and, on the other hand, the fact that such an event has given rise to a cancellation need not mean that there were “extraordinary circumstances”. The Court explained in paragraph 22 of its judgment in Wallentin-Hermann:

In Wallentin-Hermann, the relevant flight had been cancelled because an engine defect had been discovered. The Court held that “technical problems which come to light during maintenance of aircraft or on account of failure to carry out such maintenance cannot constitute, in themselves, ‘extraordinary circumstances’ under article 5(3)” (paragraph 25 of the judgment), noting that “air carriers are confronted as a matter of course in the exercise of their activity with various technical problems to which the operation of those aircraft inevitably gives rise” (paragraph 24). The Court also observed, however, that “it cannot be ruled out that technical problems are covered by those extraordinary circumstances to the extent that they stem from events which are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond its actual control”, explaining:

There were also held to be no “extraordinary circumstances” in C-394/14 Siewert v Condor Flugdienst GmbH EU:C:2014:2377 (“Siewert”), where a plane had been damaged by a collision with mobile boarding stairs. The Court said in paragraph 19 of the judgment:

Domestic Courts concluded that there were no “extraordinary circumstances” in Huzar v Jet2.com Ltd [2014] EWCA Civ 791, [2014] Bus LR 1324 (“Huzar”), and Lipton v BA City Flyer Ltd [2021] EWCA Civ 454, [2021] 1 WLR 2545 (“Lipton”). In Huzar, where a plane had suffered a wiring defect, Elias LJ, with whom Laws and Gloster LJJ agreed, said in paragraph 42 that “the fact that a particular technical problem may be unforeseeable does not mean that it is unexpected”, adding, “[p]roblems of this nature frequently arise”. One factor weighing against attaching importance to the foreseeability of a problem was, Elias LJ considered, that it “would open up endless debate about whether a particular technical problem should have been foreseen or not”. Elias LJ went on in paragraph 46:

In Lipton, where the plane’s captain had fallen ill while off duty, Coulson LJ, with whom Haddon-Cave and Green LJJ agreed, concluded in paragraph 29 that “[t]he non-attendance of the captain due to illness was an inherent part of the respondent’s activity and operations as an air carrier, and could in no way be categorised as extraordinary”. In paragraph 35, Coulson LJ said:

In contrast, “extraordinary circumstances” were held to exist where a plane had collided with a bird (Case C-315/15 Pešková v Travel Service AS EU:C:2017:342, [2017] Bus LR 1134 (“Pešková”)), where a tyre of an aircraft had been damaged by a screw lying on the runway (Pauels), where petrol on a runway had resulted in its closure (Case C-159/18 Moens v Ryanair Ltd EU:C:2019:535 (“Moens”)), where there had been an air traffic management decision to suspend flights because of thunderstorms (Blanche v EasyJet Airline Co Ltd [2019] EWCA Civ 69, [2019] Bus LR 1258 (“Blanche”)) and where a flight had had to be diverted to disembark an “unruly passenger who had bitten a passenger and assaulted other passengers and members of the cabin crew” (Case C-74/19 LE v Transport Aéreos Portugueses SA EU:C:2020:460 (“LE”)). In Pešková, the CJEU said in paragraph 24 of the judgment:

Three CJEU cases have concerned strike action by employees of an air carrier: Joined Cases C-195/17 etc Krüsemann v TUIfly GmbH EU:C:2018:258, [2018] Bus LR 1191 (“Krüsemann”), Case C-28/20 Airhelp Ltd v Scandinavian Airlines System EU:C:2021:226, [2021] Bus LR 674 (“Airhelp”) and Case C-613/20 CS v Eurowings GmbH EU:C:2021:820 (“CS”). In Krüsemann, the CJEU ruled in the operative part of the judgment that article 5(3) of the Regulation:

In Airhelp, the CJEU (Grand Chamber) ruled in the operative part of the judgment, differing from the Advocate General, that article 5(3) of the Regulation:

The CJEU noted in paragraph 39 of the judgment that “events whose origin is ‘internal’ must be distinguished from those whose origin is ‘external’ to the operating air carrier”. After referring to, among other cases, Pešková, Pauels and Moens, the CJEU said in paragraph 41:

In CS, the strike giving rise to the cancellation had been called by a trade union in order to exert pressure in negotiations with the air carrier’s parent company. The CJEU ruled in the operative part of the judgment that article 5(3) of the Regulation:

The United Kingdom has now, of course, left the European Union. However, by virtue of section 6(3) of the European Union (Withdrawal) Act 2018 any question as to the meaning or effect of any “retained EU law”, including the Regulation, is in general to be decided in accordance with pre-withdrawal decisions of the CJEU. A domestic Court is not similarly bound by decisions made by the CJEU since the end of 2020, but section 6(2) states that the Court “may have regard to anything done on or after IP completion day by the European Court, another EU entity or the EU so far as it is relevant to any matter before the court or tribunal”.

Two of the CJEU cases to which I have referred, Airhelp and CS, were not decided until 2021. It follows that we are entitled to have regard to those decisions but are not bound by them.

In paragraph 35 of his judgment, the Judge identified “the broad principles to be adopted when considering the question of whether or not the circumstances are extraordinary” as follows:

With regard to strikes, the Judge said in paragraph 39:

The Judge thought the involvement of trade unions irrelevant. He said in paragraph 49:

The Judge went on in paragraph 50:

The Judge observed in paragraph 54 that “[t]here may be circumstances where, for example, an air carrier’s own staff go out on sympathy strike with others which are wholly unrelated to the air carrier’s own activities”. In general, though, “[t]he fact that there is a strike, whether or not called by a union, provided there is support from the employees, cannot be regarded as external” (paragraph 53). The Judge saw Airhelp “more of a confirmation or clarification of the pre-Brexit authorities and consistent with them” (paragraph 52).

Article 5(3) of the Regulation exempts an air carrier from paying the compensation for which article 7 provides if it can prove that the relevant cancellation was “caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken”. In the present case, the CAA does not suggest that Ryanair failed to take “reasonable measures” so the only issue is whether the strikes giving rise to the flight cancellations amounted to “extraordinary circumstances”.

For circumstances to be considered “extraordinary” for the purposes of article 5(3) of the Regulation, they must, first, “relate to an event which … is not inherent in the normal exercise of the activity of the air carrier concerned” and, secondly, be “beyond the actual control of that carrier”. With regard to the first element, Mr Brian Kennelly QC, who appeared for Ryanair with Mr Tom Coates, submitted that the strikes which affected the airline in 2018 were not inherent in the normal exercise of its activity because they had their origins in demands made by external and independent trade unions; because they were not a response to any particular action on the part of the airline; because they were “extraordinary” within the ordinary meaning of that word, especially since their very object was to disrupt normal activity; and because they were analogous to, say, the manufacturing defects, bird strikes and other one-off external events which the authorities show to constitute “extraordinary circumstances”. As for the second element, Mr Kennelly argued that Ryanair could not control the demands or actions of independent trade unions and that it can be seen on the basis of even a limited factual inquiry that the airline could not have averted the strikes which caused the flight cancellations. Mr Kennelly maintained that, when deciding whether a cancellation was caused by “extraordinary circumstances”, some factual inquiry is necessary, particularly where the situation is one listed in recital (14) to the Regulation.

For his part, Mr Kevin de Haan QC, who appeared for the CAA with Mr Michael Coley, supported the Judge’s decision. The key questions to ask where a cancellation was attributable to a strike are, he suggested, simply whether it was employees of the air carrier who went on strike and, if so, whether the strike concerned the employees’ pay or working conditions. Should the answer to both questions be “Yes”, the strike will not normally amount to “extraordinary circumstances”, although the position might be different if the employees had, say, been trying to ensure that flights on which they were due to work were routed away from an area in which they believed that there was a threat from terrorism. Here, Mr de Haan argued, Ryanair employees were striking over aspects of their working conditions and it could not be appropriate for there to be an inquiry into whether the demands made on their behalf by trade unions were reasonable or quite why it had been considered right to resort to strike action. Breakdowns in negotiations, Mr de Haan said, come with the territory, and the fact that trade unions were involved cannot matter.

Relying on recital (3) to the Regulation and, especially, the European Commission’s proposal for the Regulation, Mr Kennelly submitted that the original intention behind the Regulation was to deter air carriers from overbooking and from cancelling flights for commercial reasons. As, however, was noted in Wallentin-Hermann, it can be seen from recitals (1) and (2) that the Regulation was also designed to provide a high level of protection for passengers and, from the point of view of a passenger whose flight is cancelled, it will be unimportant whether the cancellation was for “commercial reasons”. Moreover, the CJEU pointed out in both Wallentin-Hermann and Krüsemann that article 5(3) is to be strictly interpreted.

As was observed by Mr Kennelly, it is apparent from the authorities that, when determining whether an event was inherent in the normal exercise of an air carrier’s activity, it is relevant to ask whether it stemmed from an external source. Wallentin-Hermann shows that a problem arising from sabotage, terrorism or a hidden manufacturing defect can qualify as “extraordinary circumstances”. In Pešková, Pauels, Moens, Blanche and LE, where there were held to be “extraordinary circumstances”, there was in each case an external cause: a bird, a screw on the runway, an air traffic management decision, an unruly passenger.

However, a trade union representing employees of an air carrier cannot be viewed in the same way. It is true that the operative part of the CJEU’s decision in Krüsemann noted that the absence of flight crew staff was “spontaneous”, but it cannot be inferred that the spontaneity was necessary to the decision. It seems to me that, where employees of an air carrier have chosen to be represented by a trade union, the union must be seen as internal to the activity of the carrier rather than outside it. As Coulson LJ commented in Lipton, a carrier’s people are one of its two principal resources and, where staff elect to have a trade union speak for them, the union is an adjunct of that resource. In any event, the strikes at issue in the present case did not take place until after the employees had been balloted. In the circumstances, I do not think the fact that trade unions were involved is of any real significance. I agree with the Judge that it is a “red herring”.

Nor do I think it important whether the strikes took place in response to any particular action on the part of the airline. In Krüsemann, as was recorded in the operative part, there had been “a surprise announcement by an operating air carrier of a restructuring of the undertaking”, but a strike called without such a trigger need not amount to “extraordinary circumstances”. Suppose, for example, that an air carrier took no steps to increase staff wages. If, because, say, prices had risen or flight crew were being paid better by other carriers, there were a strike, it would not follow from the fact that the strike could not be attributed to an act of the carrier that it had to be characterised as “extraordinary circumstances”.

Nor again do I consider it of any great significance that Ryanair staff had not been on strike in earlier years. In Wallentin-Hermann, the CJEU said in paragraph 36 of the judgment that “the frequency of the technical problems experienced by an air carrier is not in itself a factor from which the presence or absence of ‘extraordinary circumstances’ … can be concluded”. In contrast, the CJEU spoke in Siewert at paragraph 19 of air carriers being faced “regularly” with situations arising from use of mobile stairs and, in Lipton, Coulson LJ said in paragraph 39 that, “as a matter of common sense, frequency will sometimes be relevant to whether or not the event in question could be categorised as being out of the ordinary”. However, the root question here is not whether it was unusual for Ryanair to experience strikes but whether they were “inherent in the normal exercise of the activity of the air carrier” and it seems to me that, if Ryanair’s business can be seen to have carried with it a risk of strikes, the fact that it might have escaped them hitherto cannot prevent the strikes held in 2018 from being “inherent in the normal exercise of [Ryanair’s] activity”.

To my mind, paragraphs 41 and 42 of the CJEU’s judgment in Krüsemann indicate that strikes over pay and employment conditions are not to be regarded as “extraordinary circumstances”. The CJEU observed in those paragraphs that air carriers “may, as a matter of course, when carrying out their activity, face disagreements or conflicts with all or part of their members of staff” and that “under the conditions referred to in paras 38 and 39 of this judgment, the risks arising from the social consequences that go with such measures must be regarded as inherent in the normal exercise of the activity of the air carrier concerned”. Mr Kennelly naturally stressed the reference to paragraphs 38 and 39 of the judgment, where the CJEU spoke of there having been a “wildcat strike” following a “surprise announcement of a corporate restructuring process”, but it appears to me that the CJEU recognised that it is inherent in the normal activity of an airline such as Ryanair that it may find itself at odds with some or all of its employees, and there is an obvious risk of such a dispute leading to strike action on occasion.

Mr Kennelly sought to draw an analogy with LE. Passengers, he argued, are just as integral to Ryanair’s business as staff, yet LE shows that a passenger’s behaviour can be so unreasonable as to constitute “extraordinary circumstances”. It must similarly be appropriate, Mr Kennelly argued, to ask whether a strike has stemmed from unreasonable demands by a trade union, the more so since recital (14) to the Regulation specifically identifies “strikes that affect the operation of an operating air carrier” among potential “extraordinary circumstances”.

However, it is well-established that the mere fact that an event is mentioned in recital (14) does not render it “extraordinary circumstances”: see Wallentin-Hermann, at paragraph 23 of the judgment, and Krüsemann, at paragraph 34. Inclusion in the list means only that events of that kind may produce “extraordinary circumstance”, and “strikes that affect the operation of an operating air carrier” are most obviously likely to represent “extraordinary circumstances” if they do not involve the carrier’s own staff. A strike by air traffic controllers or airport staff, for example, could amount to “extraordinary circumstances” (as the CJEU noted in Airhelp, at paragraph 42).

Further, I do not think the question whether any particular strike constituted “extraordinary circumstances” can depend on whether a demand made by staff of an air carrier, or by a trade union on their behalf, was unreasonable. In the first place, it would not be extraordinary for an employer to deem a demand unreasonable. As the Judge said, it is normal for negotiations to involve “ebb and flow, one or other or both sides starting with robust or extreme or unreasonable or impossible positions”. Secondly, an inquiry into whether a strike was the consequence of an unreasonable demand would not be consistent with the objectives of the Regulation. In Huzar, Elias LJ thought it significant that attaching importance to the foreseeability of a problem would “open up endless debate”. In Lipton, Coulson LJ observed that it would be “contrary to the scheme of the Regulation to allow the carrier to embark on a complex analysis of precisely when, why or how a staff member became ill so as to explain their absence and the subsequent cancellation of the flight”. Likewise, the Regulation would not afford passengers the high level of protection intended if an airline could escape paying compensation on the basis that a strike which had caused a cancellation had arisen from an unreasonable demand by or on behalf of its staff. An inquiry into such a question would be disproportionate in the context of a claim for, at most, €600 per passenger; it would be hard for a passenger to obtain evidence to gainsay anything the air carrier said on the subject and any union would not be a party to the proceedings; and the Court would be ill-placed to adjudicate on a point of that kind.

Plainly, strikes are capable of amounting to “extraordinary circumstances”. In Airhelp, the CJEU said that a strike which “originates from demands which only the public authorities can satisfy” could be an “extraordinary circumstance”. Despite CS, it may well be, as the Judge suggested, that a sympathy strike whose aims were wholly unrelated to the strikers’ employer’s activities would also constitute “extraordinary circumstances”. Perhaps it is the case, too, that, as Mr de Haan was disposed to accept, a strike in which an air carrier’s staff sought, say, to have flights re-routed in response to a terrorist threat would represent “extraordinary circumstances”. Absent, however, the involvement of an external factor such as terrorism, it seems to me that a strike concerning the pay or employment conditions of employees of an air carrier will not involve “extraordinary circumstances”. Negotiations with employees about such matters are clearly “inherent in the normal exercise of the air carrier concerned” and they carry with them the risk that one or both sides will make demands that the other sees as unreasonable, that they will break down and that the employees will resort to strike action. As the CJEU said in Krüsemann, “air carriers may, as a matter of course, when carrying out … their activity, face disagreements or conflicts with all or part of their members of staff”. The possibility of “disagreements”, “conflicts” and even strikes in relation to pay and employment conditions is inherent in running the business of an air carrier and so a strike about pay or employment conditions will not be “extraordinary circumstances” regardless of whether the employees’ demands are seen as reasonable or achievable. Moreover, the fact that employees are represented by a trade union will make no difference.

This conclusion, while not founded on Airhelp, accords with the CJEU’s decision in that case. In Airhelp, the CJEU described a strike as “one of the ways in which collective bargaining may manifest itself” and said that a strike by staff of an air carrier “cannot be categorised as an ‘extraordinary circumstance’ … where that strike is connected to demands relating to the employment relationship between the carrier and its staff that are capable of being dealt with through management-labour dialogue within the undertaking”. I agree.

Mr Kennelly suggested that, were this Court to interpret the Regulation in the way that the CJEU did in Airhelp, there would be unintended consequences and perverse incentives, not least because the position of trade unions in collective negotiations would be strengthened in an undesirable way. However, in the context of international travel there is virtue in a passenger’s rights to compensation being the same whether his flight is from, say, London Stansted or Dublin. In fact, an air carrier which had to make cancellations as a result of a strike would have an incentive to cancel flights from the United Kingdom rather than European Union airports were we to accept Mr Kennelly’s interpretation of article 5(3) of the Regulation.

The upshot is that, in my view, the Judge was right to reject Ryanair’s contention that the flight cancellations at issue were caused by “extraordinary circumstances” in his impressive judgment. The strikes from which the cancellations arose, relating as they did to employment conditions of employees of Ryanair, did not constitute “extraordinary circumstances” whether or not the aims of the strikers were reasonable or achievable and notwithstanding the involvement of trade unions.

I would dismiss the appeal.

I agree.

I also agree.