Implementing 1999 Montreal Convention
1.0 Title of Proposed Measure
The Carriage by Air Acts (Implementation of the Montreal Convention 1999) Order 2001
2.1 The 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. This Order sets out prospective amendments to the Carriage by Air Act 1961 that will enable the UK to ratify the Convention.
Objective: To provide a greater level of financial protection for air passengers and their baggage, and for consignors of cargo.
2.2 Risk Assessment
The proposal does not deal with risks to the environment, consumer or worker safety or health.
3.1 Options
The UK signed the Montreal Convention in 1999 with a view to ratification. The Community has also signed the Convention with a view to ratification, and the Member States have been encouraged also to ratify as soon as possible. There is therefore no other sensible option but for the UK to enact the legislation necessary to facilitate ratification.
3.2 Issues of Equality or Fairness
No issues arise. The provisions of the Montreal Convention, when in force, will apply to all airlines engaged in international carriage by air between the UK and other states party to the Convention. 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.
4.1 Benefits
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 the Convention will bring are as follows:
a. The possibility of an electronic document of carriage (Article 3.2);
b. A liability limit in relation to damage caused by delay to passengers of 4150 SDRs (Article 22.1);
c. A liability limit in relation to the destruction, loss, damage or delay of baggage of 1000 SDRs (Article 22.2);
d. A mechanism for the periodic review of liability limits (Article 24);
e. A new jurisdiction (Article 33);
f. A State Party may require carriers from other States Parties to furnish evidence of adequate insurance (Article 50).
4.2 Quantifying and Valuing the Benefits
a. The possibility of an electronic document of carriage (Article 3.2);
The Convention introduces the possibility for airlines to utilise modern communication techniques in relation to the provision of certain information which, under the Warsaw Convention, had to be given in written form. This will allow the full development of electronic ticketing which, for those passengers who wish to make use of it, will simplify international air travel. It will also allow airlines to reduce administration costs significantly, not just in relation to what documentation they must provide to passengers but principally in relation to the global system of inter-airline billing.
b. 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 £3500) 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.
c. 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.
d. A mechanism for the periodic review of liability limits (Article 24);
One of the reasons for adopting the Montreal Convention was the fact that the liability limits established by earlier instruments were out of date. To prevent this recurring, the Convention provides a mechanism for uplifting the limits in line with inflation.
e. A new jurisdiction (Article 33);
The Montreal Convention provides a new jurisdiction that will be of benefit to claimants. It will allow a claim to be made in the country of the passenger concerned provided the airline involved operates services to and conducts business in that country. In a small number of cases this will relieve the claimant of the need to bring a claim in another country.
f. 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.
5.0 Compliance Costs for Business, Charities and Voluntary Organisations
5.1 Business Sectors Affected
- Airlines engaged in international carriage by air.
- Ground handling agents.
- Insurance companies.
5.2 Compliance Costs for a Typical Business
There are no direct compliance costs since the proposal merely changes the liability limits applicable. 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.
5.3 Total Compliance Costs
As per response to Paragraph 5.2.
6.0 Impact on Small Businesses
The vast majority of international passengers 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.
7.0 Any Other Costs
None.
8.0 Results 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.
9.0 Summary and Recommendation
The impact of this proposal is considered cost neutral in that the benefits to international 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.
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.
