By Rishiraj Baruah *
International Air Transport Association (IATA) is a private international organization; whose members are airlines, specifically composed of the scheduled airlines of the world. While, it is a private corporate body incorporated according to Canadian Law with its headquarters in Montreal, it performs functions which are ‘quasi- public’ in nature. It is termed as quasi-public because half of its members are either State-owned airlines or are de facto controlled by States which logically, means that mostly members are either controlled or supervised by their respective states and conduct operations according to the will of their governments.
Initial efforts at forming uniform conditions of carriage were developed in 1927 by the International Air Traffic Association, which is the predecessor of IATA. Initially, the International Air Traffic Association dealt with the field of standardization, especially with regard to standard airline tickets and consignment notes (known as Airway Bill). Standardization however was effectively pursued in the field of traffic, economics and technical safety. Following the aftermath of Chicago Conference in 1944, it was agreed at the international level by airlines that a kind of inter-airline machinery is required for international fares and rates. These ideas lead to the formation of the new International Air Transport Association (IATA) in April 1945, at Havana through a Special Act of the Canadian Parliament incorporating the organization.
1.2. IATA structure
The management and policy functions of IATA are exercised by the Executive Committee which is elected in the General Meeting of the Association. The Committee elects a Director General, who, along with the Secretariat moves the wheels of IATA. IATA is comprised of the five Standing committees (Financial, Legal, Technical, Medical, Traffic advisory committee and the Facilitation Advisory Group), the IATA clearing House and the IATA Traffic conferences.
1.3. IATA activities
The scope of discussing the broad range of activities that is carried out by the different fractions of IATA is beyond this article. Henceforth, the author would restrict the present scope of the research to conditions of contract and carriage (passenger and baggage). After many deliberations between the legal and the traffic committees of IATA, standardization of conditions of contract had been reached and agreed by the airlines. The Passenger Services Conference (PSC) and its specialized sub-committees have made efforts to create a high degree of standardization and simplification regarding passenger tickets and baggage handling. The objective of standardization of airline tickets is to promote customer convenience and smooth coordination between airlines and passengers. This standardization technique of the traffic as well as the legal committee of IATA led to the formation of uniform conditions of carriage, which determine the rights and obligations of the passengers and airlines.
A ticket and the airway bill are accepted form of documents of carriage. These documents represent the underlying contract between the passenger and the airlines, which appears as conditions of contract and carriage on a standard ticket. Standardization of airline tickets have facilitated interline commercial flight by removing language and currency barriers.
Most of IATA’s activities find expression through two ways, i.e. Resolutions and Recommended Practices. IATA Resolutions are agreements adopted by unanimous vote by traffic conference members and they become binding on the member once approved by the interested governments. A breach of the resolutions by a member is subject to fines by IATA Compliance Commissions. Whereas, recommended practices are non-binding but represent the views of majority of members of the traffic conference on subjects which are not yet fit to be included as hard laws.
- Resolution 724 on passenger ticket- notices and conditions of contract
Certain issues are not adequately covered by the Warsaw or Montreal Conventions, for example issues of overbooking, and hence this requires the development of uniform supplementary rules. National laws may fill those gaps but they are not necessarily uniform which may lead to confusion and ineffective justice delivery for consumers. In such cases, airlines and passengers have to define their relationships with regard to their rights and obligations through contract. A contract is an effective and simplified instrument which explains the passengers their rights and obligations. For this reason, IATA has developed the standard conditions of contract by Resolution 724, which are printed on a standard passenger ticket and checked baggage.
2.1. Passenger Ticket
The ticket itself is a contract of carriage, which may incorporate by reference other binding provisions so long as the ticket provides notice that it incorporates additional terms. The ticket which embodies the contract of carriage may incorporate the contract terms by reference, i.e. without stating the full text, but each air carrier must provide free of charge by mail or other delivery service to passengers, upon request, a full copy of the full text of the terms. The conditions of contract provide the link between the air carrier and the passenger or consigner. It serves two major functions i.e. it provides reference to airline’s conditions of carriage and incorporates by reference the liability rules governing the contract of carriage.
2.2. Contents of Res. 724
IATA members have to mandatorily follow Resolution 724 which lay down standard conditions for contract of carriage that should be printed on every ticket of member airlines. The conditions on contract consist of general notices which deal with certain rights and obligations of the passenger and airline. The notices cover liability limitation, overbooking/denied boarding, information on taxes and user fee and other national requirements. The conditions of contract incorporate by reference, the general conditions of carriage.
IATA conditions of contract are broadly divided into three parts, namely:
2.2.1. Notice of liability limitations: This part states that the Warsaw Convention or the Montreal Convention and its related and applicable Protocols govern and limit the liability of the airline death or bodily injury or in respect of loss of or damage to baggage, and for delay. It also provides for the time limit for any action in court of claim.
2.2.2. Notice of Contract Terms incorporated by Reference: This part deals with six clauses which summaries the content of conditions of carriage, especially conditions and regulations or applicable tariffs which are made applicable to the passenger by way of incorporation by reference into the contract of carriage.
2.2.3. Notice regarding denied boarding, checked and unchecked baggage, check-in times and dangerous goods.
2.3. Issues related to uniformity of conditions of contract
The conditions of contract have been a difficult issue for the IATA legal committee as they should have been not only acceptable to airlines but also should be in consonance with national and international rules. Mostly, problems have arisen due to different legal codes of different countries, precisely wherein one clause may be considered as lawful in one country while the same clause might be considered as unlawful in another. For example the question whether the Conditions of Contract have to be printed was of particular interest as certain legal systems in Latin America may not recognize the terms of conditions of carriage unless they are expressed on the ticket or airway bill. Certain courts might consider the absence of these conditions on the ticket as inadequate notice to passenger and it may lead to ambiguity in the existence of the contract itself. While in cases where conditions of contract are not expressly mentioned on tickets, some common law courts may construe existence of an implied contract by way of conduct of the passengers.
Under common law, for example in the U.K., the contract of carriage is an agreement and is based on the principle that every agreement is an accepted offer. In case of agreements evidenced by a ticket, the ticket deliverer is the offeror (airline) and the passenger is the offeree who accepts the offer. Conditions of contract printed on the ticket are sufficiently considered as communication of terms of the contract of carriage. However, in case, if the conditions are not printed on the ticket, but the carrier has provided reasonable sufficient information to the passenger regarding the terms of contract, the passenger is estopped from denying knowledge of terms. Under civil law, for example in France, in a case, it was expressed that carriers cannot limit their liability if case limitation of liability terms were not expressly printed on the traffic document (tickets) or were mentioned in such a way as to become illegible.
The importance of the printing of the conditions of contract in any contract of carriage is clearly stated in Harris v. Great Western Railways by Justice Blackburn as:
‘And it is clear law that where there is a writing, into which the terms of any agreement are reduced, the terms are to be regulated by that writing. And though one of the parties may not have read the writing, yet, in general, he is bound to the other by those terms; and that, I apprehend, is on the ground that, by assenting to the contract thus reduced to writing, he represents to the other side that he has made himself acquainted with the contents of that writing and assents to them, and so induces the other side to act upon that representation by entering into the contract with him, and is consequently precluded from denying that he did make himself acquainted with those terms.’
The efforts of IATA PSC in harmonizing these conflicting legal positions by way of Resolution 724 are laudable. It has lead to standard conditions of contract which are compliant with different legal codes. This has reduced passenger confusion and brought uniformity among different airline-passenger contracts facilitating interline commercial operations, as a result.
- Recommended practice 1724 general conditions of carriage (passenger and baggage)
The rules of carriage applicable to international carriage by airlines are standardized by IATA though Recommended Practice 1724 (RP 1724), which are recommendatory tools of reference but not binding on member airlines. The reason for including it only as a recommended practice was to provide airlines with considerable leeway to comply with national laws. In the 35th Passenger Services Conferences of IATA (Dublin, October 2013), the shocking point of interest was the decision of the Conference to rescind RP 1724 General Conditions of Carriage (Passengers and Baggage). Hence, the new 34th edition of PSC resolutions manual does not include RP 1724. However, it is still widely used as general conditions of contract and most airlines have copied RP 1724 as is, on their general conditions of carriage or have amended their terms and conditions to reflect the terms included in IATA RP 1724. The conditions of carriage are not printed on the ticket; however they are also part of the contract as, generally, are incorporated into the airline –passenger contract by reference.
3.1. RP 1724: Overview
RP 1724 consists of eighteen articles, whose detailed analysis is beyond the scope of this article. However, briefly, it includes the following articles:
- Definitions of particular expressions
- Applicability to all carriage by air, performed by the carrier for reward, and to reduced fare and gratuitous carriage.
- Tickets providing prima facie evidence of contract, and including conditions.
- Fares, taxes, fees and charges
- Reservations with requirements in respect of time limits, personal data, seating, imposition of a service charge and need of reconfirmation
- Check-in and boarding: documentations
- Refusal and limitation of carriage in various circumstances
- Baggage requirements related to safety
- Schedules, delays, cancellation of flights
- Refunds in case of failure by carrier to provide carriage or in case of flight coupons or entire tickets voluntarily not used by passenger
- Conduct aboard aircraft by passengers and prohibition on use of certain equipments
- Arrangements for additional services ,with no liability for such services
- Administrative formalities regarding compliance with government regulations, etc
- Successive carriers performing a single operation
- Liability for damage
- The limitation on claims and actions
- Unilateral modifications to conditions of carriage and waiver of responsibility of the carrier for changes made by agents and other representatives of the carrier in the above conditions
- Aids to interpretations for conditions of carriage
3.2. Conditions of carriage: Unfair or fair?
The conditions of carriage are always under tight scrutiny by courts of different jurisdictions. Some controversial issues related to IATA conditions of carriage would be analyzed in the following paragraphs. While some clauses are blatantly unfair as ruled by different courts, the author would also differ on certain issues where courts have termed a clause as unfair but the same clause is necessary in light of industry practice.
3.2.1. Code-share agreements: Article 2.3 of the RP 1724 states that incase code share agreements exist with other airlines, the airlines shall advise the passenger of airline operating that aircraft. This provision was inserted after EU Directive 93/13 and requests by many national authorities. However, it is yet to come into effect. On March 10, 2010, the Namur Commercial court in Belgium issued judgment against Brussels Airlines and Ryanair by stating that code-sharing agreements without the consent of the passenger amounts to unfair contractual terms as it is ‘transfer of the contract of carriage’ leading to ‘a reduction in consumer protection without… consent’ which violates the Fair Trading Act..
The author concurs with the view of the above judgment that code sharing agreements without prior consent of passenger which leads to reduction of quality of services offered should be considered unfair and airlines should bring their conditions of contract in line with amended IATA general conditions of carriage.
3.2.2. Sequential use of coupons: Article 3.3.1 of RP 1724 mandates that the passenger shall strictly adhere to the order of the flight itinerary. Failure to do so, for example, if the passenger fails to travel one leg of a return journey, the airlines reserves the right to unilaterally cancel the whole contract or airline may deny boarding to such passengers. Many jurisdictions have termed this behavior of airlines’ as unfair. This definitely raises questions on the fairness of article 3.3.1 of RP 1724 as it significantly imbalances the rights and obligations between the parties. In 2009, Frankfurt district court held that British Airways cannot enforce the provision of mandatory sequential use of flight coupons. In 2010, the German Federal Court of Justice stated that passengers are not obliged to exercise the sequential use of flight coupons as long as they are acting in good faith.
However, the question, whether so called ‘smart ticketing’ is legal and the denied boarding by airlines in such cases is illegal, remains unanswered due to use of ambiguous terms like ‘good faith’. And the confusion will remain until IATA comes out with an amendment or clarification to article 3.3.1 of RP 1724.
3.2.3. Exclusion of liability in case of death or disease: Article 15.1.2i of RP 1724 states that airlines are ‘not responsible for any illness, injury or disability, including death, attributable to your physical condition or for the aggravation of such condition’. This clause has been termed unfair and as being contrary to the Montreal Convention 1999 by Belgian Courts. However, the author humbly differs with regards to the view of the court. The Warsaw/ Montreal Convention preclude the liability of air carriers in case the passenger embarks with a pre-existing medical condition and the illness develops during the flight. Article 17 of Warsaw/Montreal mandates that there should be an ‘accident’, which is an unusual or unexpected event external to the passenger. In Air France v Saks, the court has expressed the view that, ‘…Article 17 refers to an accident which caused the passenger’s injury, and not to an accident which is the passenger’s injury. The text thus implies that, however ‘accident’ is defined, it is the cause of the injury that must satisfy the definition rather than the occurrence of the injury alone.’
This clearly suggests that the Belgian court failed to correctly appreciate the legal position of the Montreal Convention, especially regarding the term ‘accident’. It had failed to properly analyze the standard practice of the air industry that if a passenger embarks the flight with a pre-existing condition and it subsequently leads to death or aggravation of the disease, the airline should not be made liable as it is not an ‘accident’. The basic premise for the principle of liability is that if there is imposition of liability under a convention, it also considers exclusions to such liability. This basic premise was not appreciated by the court.
However, if a disease is caused in-flight due to inaction or negligence of the air carrier, then it is an ‘accident’ and compensation can be claimed.
3.2.4. Non-transferability of tickets: Article 3.1.2 of RP 1724 states, ‘A ticket is non transferable’. In a letter by Bureau Européen des Unions de Consommateurs AISBL (BEUC) to IATA in February 2013, the BEUC contended that Article 3.1.2 of RP 1724 which prohibits the transferability of passenger tickets is unfair on the basis that if airlines could enter into code-share agreements, the passengers should also be allowed to transfer their tickets. However, this argument is flawed at its conception as shown by the following case.
The Belgian Constitutional Court in its judgment over an action brought by Test-Achats stated that consumers booking air travel through a travel agent have a different object from a consumer directly booking tickets with an airline. The former deals with a contractual obligation to organize travel on consumer’s behalf while the latter deals with a contract of transportation. Hence, the differential treatment of consumers regarding transferability of tickets is valid wherein tickets booked through travel agents are transferable while tickets directly booked with the airlines are non-transferable in accordance with the general conditions of carriage of the airline. In the author’s view, article 3.1.2 of RP 1724 is fair and reflects industry standards.
Henceforth, the author has tried to briefly analyze some controversial elements of RP 1724, amongst other issues that still are unanswered. With rapid development of international air transport and the broad strides in the field of consumer protection, changes are required in the airline –passenger contracts. It is important for airlines to mull their conditions of carriage in line with the consumer protection laws of their respective states. IATA conditions of carriage provide considerable discretion to airlines to comply with their national laws. However at the same time, it is necessary that industry practice is kept in mind by the courts while deciding upon issues related to conditions of carriage by air. Albeit the fact that some conditions recommended by IATA are potentially unfair, its conditions of carriage are, nevertheless, a model guiding framework for validating or invalidating the conditions of carriage of various airlines.
- India: a case-study
The Director General of Civil Aviation of India has issued Civil Aviation Requirements (CARs) under the provisions of Rule 133A of the Aircraft Rules, 1937 for facilities to be provided to passengers by airlines due to denied boarding, cancellation of flights and delays in flights. This CAR is applicable for both scheduled and non-scheduled airlines. CAR section 3 Series M Part III imposes rules on compensation and assistance to passengers in case of denied boarding, cancellation or delays in flights. Airlines operating in India have to now amend their contracts of carriage to comply with the said CAR. It was issued under the consideration to raise the standards of protection both to strengthen the rights of the passengers and to ensure that airlines operate under harmonized conditions.
Further, clause 3.8 of the CAR mandates that, ‘airlines shall display their policies in regard to compensation, refunds and the facilities that will be provided by the airline in the event of denied boardings, cancellations and delays on their respective websites as part of their passenger Charter of Rights. Passengers shall be fully informed by the airlines of their rights in the event of denied boarding, cancellations or delays of their flights so that they can effectively exercise their rights provided at the time of making bookings/ticketing, they have given adequate contact information to the airline or their agents. The obligation of airlines to fully inform the passenger(s) shall be included in ticketing documents and websites of the airlines and concerned third parties (GDS and travel agents) issuing such documents on airlines’ behalf.’
This regulation goes a long way for the promotion of passenger rights. However, it does impose additional guidelines on the airlines to comply with certain set of rules on compensation in case of denied boarding, cancellation or delays. The Indian Supreme Court in 2011, tried to balance the interests of the passengers as well as the airlines in such cases by stating, ‘What is relevant is whether there was any cause of action for claiming damages, that is, whether there was any deficiency in service or whether there was any negligence in providing facilitation. If the delay was due to reasons beyond the control of the airline and if the appellant and its crew have acted reasonably and in a bona fide manner, the appellant cannot be made liable to pay damages even if there has been some inconvenience or hardship to a passenger on account of the delay’
Consumer protection forums in India generally intend to lean towards the consumers in cases of non-negotiable contracts. However, in a recent landmark judgment by the National Consumer Dispute Redressal Forum (NCDRC), the apex consumer forum of India correctly interpreted the Article 7 of IATA General conditions of carriage which deal with refusal of carriage due to improper documentation and immigration requirements. The complainant was to take a flight from Amritsar to Pittsburg via Toronto. However, due to insufficient documentation (lack of transit visa), Air India refused to fly the complainant and also refused to put the complainant on an alternate flight without additional charges. The NCDRC held that Air India was not obligated do to the same by stating that, ‘The carriage of contract is subject to the provisions of Carriage by Air Act, 1972, Indian Contract Act, 1972 and Conditions of Contract Relating to Non-International Carriage (Passenger and Baggage) laid by the petitioner Airline and hence, binding on the parties to the contract. The said terms and conditions are incorporated on the electronic ticket by reference to the website of the petitioner airline.’ The court also referred to the article 7 of the IATA conditions of carriage while validating the conduct of the Airline.
The efforts made by DGCA India are appreciable as it promotes passenger rights and provides a clarified view on conditions on contracts of carriage for airlines and the passengers, as well. Now, the Indian courts have showed that passengers not only have right but they are also bound by certain obligations under contractual terms and breach of such obligations may result in refusal of entry by airlines. Henceforth, a balanced outlook is provided by the analysis of the Indian aviation scenario.
IATA conditions of contract and carriage have been under continuous inquiry by various governmental agencies. Specifically, the governmental agencies desire more protection of consumers while IATA has to cater to needs of the industry and the passengers as well. Some IATA conditions are viewed as unfair and illegal by government authorities. However, it would be wrong to say that IATA is only concerned with the airlines because it is not true. IATA has worked towards higher compensation of victims over the Warsaw convention in the past and has catered to the interests of the consumers. Existing gaps in the IATA conditions may be filled in by national legislations.
India (CAR Section 3 Series ‘M’ Part II & III), Europe (EU Directive 93/13 and Regulation (EC) 261/2004) and the U.S. have passenger protection legislations with which the airlines have to comply. Although, IATA considers these legislations as further fragmentation of an already fragmented industry, they are necessary in the interests of the consumers. Today, the market works on the principle, ‘der Kunde ist König’, hence it is even desirable for Airlines to comply with national consumer protection rules. The author views IATA’s general conditions of carriage as recommendatory guidelines for standard practices which have to be implemented in various legal codes according to the socio-legal infrastructure of the respective jurisdictions. Such implementation can only be done through national legislations. This combination of harmonized international standards coupled with national legislations shall lead to a synergic regime of passenger -airline contracts.
*(Rishiraj Baruah completed his bachelors of law from Gujarat National Law University, India and is currently pursuing an Advanced Master’s in Air and Space Law from Leiden University. He has published articles on air law and space law and has been recently selected as UNIDROIT research scholar for working on Third- Party GNSS liability. He can be be contacted at firstname.lastname@example.org)