Applying 1999 Montreal Convention
1.0 Title of Proposed Measure
The Carriage by Air Acts (Application of Provisions) Order 2001
2.1The Issue and Objective
Issue: The 1999 Montreal Convention establishes a comprehensive and up-to-date set of rules defining and governing the liability of air carriers in relation to passengers, baggage and cargo. It will eventually replace the 1929 Warsaw Convention, as amended by various supplementary conventions and protocols. National legislation amending the 1961 Carriage by Air Act is needed to enable the UK to ratify the Convention internationally. The Carriage by Air Acts (Application of Provisions) Order 2001 applies certain of the provisions of the Montreal Convention in relation to non-international carriage by air. It also consolidates all previous application of provisions orders made under the 1961 Act.
Objective: To provide a greater level of financial protection for air passengers and their baggage, and for consignors of cargo.
2.2Risk Assessment
The proposal does not deal with risks to the environment, consumer or worker safety or health.
3.1Options
It would be possible for the UK not to apply the relevant provisions of the Montreal Convention for the purposes on non-international carriage by air, relying instead on the existing provisions based on earlier liability conventions. However this would, in relation to matters not covered by EC rules, introduce an unwelcome imbalance between domestic and international provisions.
3.2Issues of Equality or Fairness
No issues arise. The relevant provisions of the Montreal Convention, when in force, will apply to all airlines engaged non-in international carriage by air. Like the Warsaw Convention it will eventually supersede, the Montreal Convention seeks to establish uniform rules governing airline liability and as such is a means to achieve equality and fairness in relation to compensation arrangements.
4.1Benefits
The Montreal Convention introduces a comprehensive and up-to-date set of rules defining and governing the liability of air carriers in relation to passengers, baggage and cargo. Provisions equivalent to some of the provisions of the Convention are already in force by virtue of Council Regulation 2027/97 and earlier amendments to the 1961 Carriage by Air Act.
The main additional benefits implementation of certain provisions of the Convention will bring are as follows:
The provision disapplying the carriage of postal items from the scope of the Convention is retained (Article 2.2);
The provision requiring carriers to deliver to the passenger a baggage identification tag is retained (Article 3.3);
A liability limit in relation to damage caused by delay to passengers of 4150 SDRs (Article 22.1);
A liability limit in relation to the destruction, loss, damage or delay of baggage of 1000 SDRs (Article 22.2);
A State Party may require carriers from other States Parties to furnish evidence of adequate insurance (Article 50).
4.2Quantifying and Valuing the Benefits
The provision disapplying the carriage of postal items from the scope of the Convention is retained (Articles 2.2 & 2.3);
The 1967 Application of Provisions Order excluded the equivalent provision of the Warsaw Convention, thereby bringing the carriage of postal items within the scope of the Order. In the absence of any representation in favour of perpetuating this practice, the Government proposes not to exclude Articles 2.2 & 2.3 from the Order. This will have the effect and benefit of excluding postal items from the scope of aviation-specific legislation, thereby avoiding overlap with legislation relating to postal administration.
The provision requiring carriers to deliver to the passenger a baggage identification tag is retained (Article 3.3);
The 1967 Application of Provisions Order excluded the equivalent provision of the Warsaw Convention, thereby permitting carriers not to deliver a baggage identification tag to passengers on non-international flights. The Government thinks that air passengers should receive a baggage tag whether the flight is domestic or international, enabling them to establish ownership in the event of delay, damage or loss.
A liability limit in relation to damage caused by delay to passengers of 4150 SDRs (Article 22.1);
Although the 1971 Guatemala City Protocol provides for a liability limit in relation to delay of 4150 SDRs, the instrument has yet to enter into force and liability for delay continues to be governed by the provisions of the 1955 Hague Protocol. However, the Hague Protocol does not provide a separate liability limit for delay: damage occasioned by delay forms part of the general provision for damage to passengers and actually carries a limit of 16 600 SDRs.
This somewhat surprising situation is unlikely to prove problematic in practice. Although many passengers suffer delay when flying, it is unusual for compensable damage to occur and the number of claims made under the existing legislation are thought to be few. Normal airline practice is to make provision for delayed passengers by way of subsistence and, if necessary, overnight accommodation. The proposed limit of 4150 SDRs (approximately £350) is probably sufficient to cover situations where the airline does not make the above provisions for its passengers in the event of delay. The limit will however be insufficient to cover the payment of significant consequential damages, such as a missed holiday, but such exigencies would probably be covered by the passenger's own insurance.
The new liability limit for delay, although somewhat controversial, is expected to have little consequence in practice.
A liability limit in relation to the destruction, loss, damage or delay of baggage of 1000 SDRs (Article 22.2);
The present baggage limit is 17 SDRs per kg of checked-in baggage. For a typical 20kg case, this is equivalent to just under £300. The new limit is not weight related but a single, maximum amount, equivalent to approximately £850. Whereas the current limit is rather low, resulting in a significant limitation in compensation (unless the passenger has separate insurance), the new limit will allow most passengers whose luggage is lost or damaged to receive full compensation.
What will be a benefit to passengers will of course be a cost to airlines. Unlike compensation for damage caused by delay, baggage claims represents a significant cost to airlines and the result of implementing this provision will mean higher costs to airlines unless improvements are made to the handling of baggage. These costs may well be transferred to handling agents and ultimately to insurance companies.
A State Party may require carriers from other States Parties to furnish evidence of adequate insurance (Article 50).
This provision is self-explanatory. The Government has already taken steps to require all foreign aircraft operating under permit to or from the UK to comply with an ECAC (European Civil Aviation Conference) resolution setting out minimum insurance levels. This will provide financial protection to UK citizens travelling on such aircraft.
5.0Compliance Costs for Business, Charities and Voluntary Organisations
5.1Business Sectors Affected
Airlines engaged in non-international carriage by air.
Ground handling agents.
Insurance companies.
5.2Compliance Costs for a Typical Business
Apart from the requirement to provide a baggage identification tag, there are no direct compliance costs since the proposal merely changes the liability limits applicable. Since most airlines already provide baggage tags on non-international flights, the effect of this provision is expected to be minimal. Paying higher levels of compensation to passengers may result in greater operating costs (either directly or through higher insurance premiums) which may be passed on by way of higher fares.
5.3Total Compliance Costs
As per response to Paragraph 5.2.
6.0Impact on Small Businesses
The vast majority of passengers on non-international flights are carried by airlines, few if any of which could reasonably be described as small or even medium sized businesses. A very small number of air taxi operators will be affected but the number of passengers carried in relation to the overall total is insignificant and, in any event, the proposed legislation will be non-discriminatory in its application.
7.0Any Other Costs
None.
8.0Results of Consultation
The Government informed the airline industry and aviation lawyers of this proposal and other than matters of detail drafting, no adverse comments were received.
9.0Summary and Recommendation
The impact of this proposal is considered cost neutral in that the benefits to air passengers in terms of the availability of higher levels of compensation will result in a corresponding cost increase to the airlines. Even though this may result in slightly higher ticket prices, the Government is of the view that the more realistic liability limits established by the Montreal Convention should be made available to UK citizens on non-international flights.
10.0 Enforcement, Sanctions, Monitoring and Review
No enforcement measures are included since the proposal merely alters the terms under which claims for compensation are made in the courts.
