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Iranian airspace restrictions: managing EU261 exposures

This briefing provides guidance to carriers on the Iranian airspace restrictions and considers the impact this will have on the management of passenger claims arising out of EU261.

The situation in and around Iranian airspace remains tense as a result of the killing of Qassem Soleimani in Iraq on 3 January, and the tragic downing of Ukraine International Airlines Flight 752 (PS752) in Iran on 8 January.

It is unclear how long the situation in the region will persist but an early-resolution seems unlikely. HFW’s experience from handling the fallout from other airspace closures/restrictions in the region (e.g. Pakistani airspace in 2019) is that there will be a significant increase in passenger claims arising out of European Union Regulation (EC) 261/2004 (EU261).

EU261: establishes common rules on compensation and assistance to passengers in the event of denied boarding, flight cancellations, or long delays. Carriers are required to pay compensation of €250 to €600 per passenger depending on the flight distance for delays of at least 3 hours, cancellations, or denied boarding from overbooking. It applies to: 1) EU carriers departing from the EU; 2) EU carriers departing from non-EU member states but travelling to an EU member state; and 3) non-EU carriers departing from an EU member state (and also possibly to non-EU connecting flights on the same ticketed itinerary where the first flight originates in the EU).

Iranian airspace

The issues around Iran's airspace puts a significant amount of pressure on air traffic in the region.

Iranian airspace handles around 1000 flights per day (80% being overflights). This equates to approximately 845 overflights per day, accounting for a total distance flown of 469,066 nautical miles 1.

Even if the overflights are pushed north or south, the airspaces around the region also have restrictions and are considered problematic areas to overfly.

Regulatory response

Notice to Airmen (NOTAM) have been issued by the Federal Aviation Administration (FAA) outlining flight restrictions that prohibit US-carriers from operating in airspace over Iraq, Iran and the waters of the Gulf and the Gulf of Oman.

The European Union Aviation Safety Agency (EASA) advised carriers to avoid overflying Iran, regardless of altitude, prompting many carriers to reroute or cancel operations through the region2.

For non-US carriers, Iran's airspace has technically remained opened since the crisis began, however most non-US carriers have reported following the FAA’s NOTAMs as a matter of best practice. The challenge for many carriers is that much of the airspace, including over the waters of the Gulf, is virtually unavoidable for Middle Eastern carriers or for carriers flying to/from Middle Eastern hubs. Asia Pacific carriers may also be significantly impacted.

The industry learnt significant lessons in the aftermath of the 2014 downing of Malaysian Airlines Flight 17 (MH17) when a number of carriers failed to reroute flights over the active conflict zone in the Ukraine. It is likely that most carriers will err on the side of caution on this occasion and avoid Iranian and Iraqi airspace completely given the FAA NOTAM and EASA guidance.

The likely consequence of this is that it will necessitate protracted rerouting, resulting in longer flights and higher fuel costs for long-haul carriers operating between Europe and the Asia-Pacific region.

  1. Cancellation claims: in the immediate aftermath of last week's events, several carriers were required to cancel flights that passed over the region and/or were operating to Iran.
  2. Delays: due to the airspace restrictions, carriers operating between Europe and Asia may be required to fly significantly longer routes which will in turn lead to unanticipated delays. As the political situation is constantly evolving, it may not always be possible to take measures to avoid such delays.

Reports in the media state that certain carriers have already started compensating passengers for EU261 claims arising from last week's events. Carriers should carefully consider whether this is the correct approach as there are defenses that may be available under EU261.

Extraordinary Circumstances

Article 5(3) of EU261 provides that a carrier is exempt from paying compensation in the event of cancellation or delay at arrival if it can prove that the cancellation or delay is caused by " extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken".

There is a raft of divergent case law across the various EU member states relating to this defense. Recent case law from England & Wales confirms that an Air Traffic Management Decisions (ATMD) is considered an " extraordinary circumstance"3.

The problem created by the current crisis is that the airspace restrictions are mandatory for US carriers only. However, if a delay or cancellation occurs as result of a security risk to passengers and the flight crew, this will likely be sound rationale for declaring such circumstances extraordinary and beyond the carrier's control 4.

Carriers are also required to take reasonable measures to avoid delays and cancelations (i.e. the second limb of the defense). In the immediate aftermath of last week's events, it is difficult to argue that anything could have been done to avoid the resulting delays or cancelations as many carriers were left in an impossible position.

It should be noted that the longer the crisis persists, the harder it will be for carriers to prove that the "reasonable measures" component of the defense has been satisfied. Courts are likely to decide that a carrier should find a way to fully mitigate any delays or cancellations through alternative routes, a change in take-off slots and/or higher fuel burn in order to operate the flight at a quicker speed than usual.

Guidance for carriers

In order to minimize EU261 claims activity, carriers should:

  • Notify passengers of anticipated delays as soon as possible prior to their flight if rerouting has been planned which leads to a longer flight time.
  • In the event of cancellation, liability to pay compensation can be avoided completely if passengers are notified well in advance and certain conditions are met (Carriers should refer to Article 5 (c) of EU261 for further guidance).
  • Carefully collate and store evidence relating to the ongoing political situation (this may include internal intelligence and external agency guidance) as well as steps which have been taken to ensure that reasonable measures have been implemented to avoid the delays (i.e. additional fuel burn or slot rotations). This may assist in the defense of claims.
  • In the event that flights are cancelled or delayed at short notice, carriers should ensure procedures are in place in order to provide care and assistance to passengers in line with Article 9 of EU261.
  • Seek legal advice on the approach of the Courts in a particular jurisdiction before relying on the "extraordinary circumstances" defense, as some jurisdictions are notoriously pro-consumer.

Additional considerations

Carriers should also note that there may be exposures under the Montreal Convention 1999, which provides that passengers can recover for losses occasioned by delay. There are situations where this may overlap with EU261 liability for compensation.

HFW assists a number of EU and non-EU carriers in relation to their EU261 exposures. If further information is required relating to EU261 or the issues raised in this briefing, please contact the author or your usual HFW contact:

James Jordan
Senior Associate
D +65 6411 5374
M +65 8123 355
E james.jordan@hfw.com

James has written about aviation issues relating to the political situation in Iran on previous occasions. To read his briefing on the impact of the Iranian sanctions snapback from May 2018, please click here.

Footnotes 

  1. https://www.icao.int/safety/iStars/Pages/Airspace-Contingency-Planning-Aid.aspx
  2. https://www.reuters.com/article/us-iran-crash-airspace/easa-urges-airlines-to-avoid-iranian-airspace-idUSKBN1ZA0RF
  3. Blanche v EasyJet [2019] EWCA Civ 69
  4. Recital 14 of EU261 confirms that cases of "political instability" and "security risks" are considered "extraordinary circumstances".

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