Friday, 10 March 2017

German court finds airline price-adjustment clause unfair

In a recent judgment, the Court of first instance of Berlin (LG Berlin) fined Air Berlin for using an unfair price-adjustment clause in its contracts, in legal proceedings initiated by the Federal German Consumer Protection Association (VZBV). The judgment is appealable.

The text of the clause is the following:
“4.1.2 Changes to the air fare after the time of contracting are permissible in the event of changes in fuel costs, changes to or the imposition of aviation-specific levies (taxes, charges, contributions, special levies or other aviation-specific levies for certain services), aviation-specific charges, emission certificate costs or exchange-rate fluctuations of at least 10% of the individual fare if a period in excess of four months has elapsed since the time of contracting and the agreed travel date, and if the Airline notified the booking party accordingly without delay on receipt of such information and the Airline had no influence on such change at the time of contracting. In the event of a seat-related increase in costs of carriage (e.g. fuel costs), the Airline may demand payment of the increased amount; otherwise the additional costs of carriage shall be divided by the number of the seats on the aircraft and the resultant increase applied as a charge to each individual seat. If charges payable by the Airline, such as airport charges, are increased, the price of the flight may in turn be increased by the appropriate proportionate amount. In the event of a change in exchange rates after the Contract of Carriage has been concluded, the price of the flight may be increased in line with the amount by which carriage has become more expensive for the Airline. A price increase may only be demanded up to 21 days before the agreed departure date. If the price increases applied after conclusion of the contract amount to more than 5 % of the total flight price, the booking party is entitled to withdraw from the contract without incurring any expense. In the event of a reduction or cancellation of taxes, charges, or costs, the surplus amount is refunded or deducted, as applicable. With respect to travel to or from the U.S., increases in the airfare after contract conclusion may be imposed only for increases in government-imposed taxes or fees provided that written consent for such potential increases was obtained from the booking party at the time of contract conclusion by checking the opt-in box on the booking site.”

The Court found that the clause leads to an unacceptable reduction of the consumers’ contractual rights, in violation of the principle pacta sunt servanda. The clause foresees a price increase in case that the airline costs increase, which favors the airline, without foreseeing a price decrease if the airline costs sink, which would favor consumers. In addition, the clause shifts to consumers the market risk of the airline, especially regarding changes in the exchange rate. The fact that consumers can withdraw from the contract if the price increase exceeds 5% plays no role, according to the Court, because passengers may encounter significant difficulties in finding an alternative flight for the same date against a comparable price. Furthermore, the Court found no legitimate reason for the different terms foreseen regarding flights to the US.

Besides, the Court found the clause to be intransparent, too complicated and very difficult for consumers to understand its meaning.    

As a result the Court fined Air Berlin with 250.000 €. Air Berlin has the right to appeal the judgment.

You can find the text of the judgment here, while here is the relative press communication of the VZBV (both in German).

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