EU legislation and contractual relationship between the travel package organizer and the air carrier in case of charter flights. Liability for cancelled and delayed charter flights by Ilie Dumitru IJTTHL PRE-PRINT EU legislation and contractual relationship between the travel package organizer and the air carrier in case of charter flights. Liability for cancelled and delayed charter flights Ilie Dumitru Law Department of Bucharest University of Economic Studies International Journal of Tourism, Travel and Hospitality Law PRE-PRINT

EU legislation and contractual relationship between the travel package organizer and the air carrier in case of charter fights. Liability for cancelled and delayed charter fights ILIE DUMITRU, Phd. Associate Professor I. Global economic and legal contexts For more than half a century, international tourism has been in a continuous and signifcant development, becoming one of the most important sectors of the world economy before the Covid-19 pandemic. In 2019 the tourism industry contributed with more than 10% of the global GDP and was responsible for 333 million jobs. Meanwhile, international visitor spending amounted to US$ 1.8 trillion in 2019 (6.8% of total exports). If for all sectors of the national economies and the global economy, the Covid-19 pandemic meant a period of regression, for the tourism industry this regression was a dramatic one. In 2020, tourism's contribution to global GDP saw a decline of almost 50%, dropping to a contribution of only 5.5% of the previous year's global economy. This dramatic decrease, much more pronounced compared to other sectors of the economy, is explained by the specifcs of the tourism industry, which is directly dependent on travel. If other economic sectors were able to adapt to a lesser or greater extent to the new conditions (see work from home), for tourism, the blockades, conditions and travel bans of the period 2020-2021 had the efect of a real " guillotine". The solutions found worldwide to solve the problems caused by the Sars-Cov2 virus have made the start of the 2022 tourist season mark an exponential increase in demand for tourism travel. However, the previous two years of restrictions, reductions in activity, layofs, had the efect of a relative impossibility for the tourism industry to immediately/instantly return to the levels of activity prior to the pandemic period. We have in mind the layofs of personnel who served the tourism and passenger transport sectors: airlines, airports, service providers for passenger transport, etc. Even though the outbreak of the war in Ukraine risks delaying the recovery of the tourism industry by 12-24 months due to factors such as persistent infation, high energy prices and airport/airline labor shortages, according to preliminary data, the year 2022 meant a " renaissance' of the tourism sector: international travel increased by 182% in the frst three months of 2022 compared to the same period last year.

According to the same UNWTO data, the frst quarter of 2022 saw more than four times more foreign arrivals (+280%) in Europe than in the frst quarter of 2021. 1 The somewhat predictable consequences of this almost instantaneous tripling have been the emergence of many dysfunctions in the international tourism industry: many canceled fights, signifcant delays caused not only by air carriers, but also by airports, through insufcient stafng. Or, in general, any dysfunction in the relationship between various actors of society fnds its solution in LAW, in the APPLICATION of the "LAW". In a similar way, these dysfunctions that appeared in the tourism sector in the "post-Covid-19" period generated litigation, the settlement of which required the intervention of the law and the application of the law by the courts. If, however, when we consider the hypothesis of a direct legal relationship between an airline company registered in the European Union and the passenger, it is relatively easy to determine the applicable legislation and to know the legal solutions it ofers, in the case of charter fights we are in the hypothesis of a division of the aforementioned legal relationship. This legal relationship is multiplied by the interposition of the tour operator between the air carrier and the passenger/tourist. This results in two distinct legal relationships: air carrier – tour operator and tour operator – tourist. We therefore propose to see to what extent the legislation of the European Union, duplicated by the jurisprudence of the CJEU, regulates sufciently clearly and precisely both of the aforementioned legal relationships, especially in terms of the liability of the air carrier and/or the tour operator, in the event of the delay or cancellation of a charter fight. II. The scope of our study First, a terminological clarifcation is necessary in relation to the air charter contract and "air charter fight". In international aviation terminology, charter fight means a fight operated under the terms of a charter contract between a direct air carrier and its charterer or lessee. It See UNWTO Report titled “Rethinking Tourism: From Crisis to Transformation”, refecting the 1 relevance and importance of tourism as well as the unprecedented crisis that hit the sector in 2020. Web address: f r o m - c r i s i s - t o - t r a n s f o r m a t i o n - W T D 2 0 2 2 . p d f ? VersionId=E2562wREejLJYZbb5IkplKFufBA9URdC .

does not include scheduled air transportation or nonscheduled air transportation, sold on an individually ticketed or individually waybilled basis. 2 So, our working hypothesis is that a tour operator, in order to transport its tourists to the holiday destination, concludes an air charter contract with an airline company in the European Union whereby the air carrier undertakes to carry out one or several air fights, according to a certain fight schedule, between a departure airport and a destination airport and return. We aim to analyze the applicable legislation and determine to whom and within what limits a sanctioning or legal liability system is applicable in the event of the delay or cancellation of a charter fight contracted by a tour operator. Who should have the obligation to repair the damages sufered by tourists in such situations? The tour operator or the airline? Are there any limitations on this liability? III. Relevant EU law in the analyzed feld The EU legislation aimed at this issue has in the foreground the Regulation (EC) no. 261/2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of fights. 3 This regulation applies to: - passengers departing from an airport located in the territory of a Member State to which the Treaty applies; - passengers departing from an airport located in a third country to an airport situated in the territory of a Member State to which the Treaty applies, unless they received benefts or compensation and were given assistance in that third country, if the operating air carrier of the fight concerned is a Community carrier, provided that passengers have a confrmed reservation for that fight and, except in cases of cancellation, present themselves at check-in at the time indicated in advance, no later than 45 minutes before the published departure time. US Code of Federal Regulations / Title 14 - Aeronautics and Space / Chapter II - Ofce of the 2 Secretary, Department of Transportation (Aviation Proceedings) / Subchapter A - Economic Regulations / Part 212 - Charter Rules for U.S. and foreign direct air carriers / § 212.2 Defnitions. Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 3 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of fights, and repealing Regulation (EEC) No 295/91.

In case of fight cancellation, the afected passengers have: ❖ the right to reimbursement of the cost of the ticket within seven days, to a return fight to the original point of departure or to rerouting to their fnal destination; ❖ the right to service (meals and refreshments, hotel accommodation, transport between the airport and the place of accommodation, the possibility to make free telephone calls or send two free messages by telex, fax or e-mail); ❖ the right to compensation in the amount of: ➢ EUR 250 for all fights of 1,500 km or less; ➢ EUR 400 for all intra-EU fights over 1,500 km and for all other fights between 1,500 and 3,500 km; ➢ EUR 600 for all fights not covered by the previous points. In the case of a fight delay, the regulation provides for a system with three levels of penalties: ❖ in the event of prolonged delays (two hours or more, depending on the fight distance), passengers are always ofered meals and refreshments and the right to two free phone calls or two messages; ❖ if the departure time is scheduled for the next day, passengers are also ofered hotel accommodation and transport to the place of accommodation and from it to the airport; ❖ if the delay is at least fve hours, passengers have the option of a refund of the full cost of the ticket and, if applicable, a return fight to the original point of departure. The Court of Justice of the European Union has stated that when passengers arrive at 4 their fnal destination three hours or more after their scheduled arrival time (such as passengers whose fights are cancelled), they can claim lump sum compensation from the airline, unless the delay is caused by extraordinary circumstances. But are these provisions of Regulation no 261/2004 also applicable to charter fights? Can the tourists of a tour operator formulate such requests for compensation and indemnifcation? If so, from the airline or from the tour operator? It should be emphasized here that tourists are not in a contractual relationship with the air carrier, but with the tour operator. And this contractual relationship is governed by See the judgment delivered in a preliminary questions procedure in related cases C-402/07 4 and C-432/07.

national legislation, which transposes Directive no 2302/2015 (New Package Travel Directive / NPTD) . 5 We can give the answer by interpreting the provisions of paragraphs 5 and 6 of Article 3 of Regulation no 261/2004: "5. This Regulation shall apply to any operating air carrier providing transport to passengers covered by paragraphs 1 and 2. Where an operating air carrier which has no contract with the passenger performs obligations under this Regulation, it shall be regarded as doing so on behalf of the person having a contract with that passenger. 6. This Regulation shall not afect the rights of passengers under Directive 90/314/EEC (Currently replaced by NPTD – A/N ). This Regulation shall not apply in cases where a 6 package tour is cancelled for reasons other than cancellation of the fight.”. Per a contrario, Regulation 2004/261 also applies to tourists who have boarded or should have boarded a charter fight, and they are entitled to compensation and/or compensation from the air carrier in the event of fight delay or cancellation, with unless their tourist trip is canceled for reasons other than fight cancellation . 7 In the context of this conclusion, we also fnd the Commission Notice (2016/C 214/04) - "Interpretative Guidelines on Regulation (EC) No 261/2004 (…) and on Council Regulation (EC) No 2027/97 on air carrier liability in the event of accidents as amended by Regulation (EC) No 889/2002 of the European Parliament and of the Council". This Communication mentions that passengers/tourists have rights in relation to both the package organiser under the NPTD and the operating air carrier (air carrier) under Regulation No. 261/2004. Therefore, seeing the frst sentence of paragraph 6 of art.3 of Regulation no 261/2003, we understand that tourists who have contracted a package of travel services (within the meaning of NPTD), which also includes air transport with a charter fight contracted by the tour organiser, they can choose to act in two ways: - either based on the provisions of Regulation 261/2004, requesting compensation and/or indemnifcation from the air carrier; Directive (EU) 2015/2302 of 25 November 2015 on package travel and linked travel 5 arrangements, amending Regulation (EC) No 2006/2004 and Directive 2011/83/EU of the European Parliament and of the Council and repealing Council Directive 90/314/EEC NPTD Article 29 – Repeal: 6 ”Directive 90/314/EEC is repealed with efect from 1 July 2018. References to the repealed Directive shall be construed as references to this Directive and shall be read in accordance with the correlation table set out in Annex III.” In addition, see recital 16 of Regulation 261/2004: 7 " In cases where a package tour is cancelled for reasons other than the fight being cancelled, this Regulation should not apply."

- either based on the provisions of Directive 2302/2015, requesting compensation from the tour organiser. This double course of action for tourists is confrmed by Article 14(5) of NPTD, which also states that the rights to compensation or reduction of the price under that directive do not afect passengers' rights under Regulation 261/2003. The European legislator anticipated that in this way it will be possible for some tourists to request damages/compensations both from the air carrier and from the tour organiser and specifed in NPTD (art. 14 paragraph 5) that price reductions or compensations granted under the passenger rights regulations and under that directive are mutually exclusive to avoid overcompensation . 8 However, neither Regulation 261/2004 nor Directive 2302/2015 establish the entity that must bear the cost of the overlapping obligations: the tour operator (the organiser of the travel service package) or the operating air carrier? The settlement of such a matter is to be done by reference to the clauses of the air charter contract concluded between the organizer and the carrier and, possibly, to the applicable national legislation. It is certain that any such contractual clause must not adversely afect the ability of the tourist/passenger to address a request to either the package organizer or the air carrier and to beneft from the corresponding rights. IV. Diferences between the liability of the air carrier and the organizer of the travel package, in case of delay or cancellation of an air fight In addition to the above, it should also be noted that the European legislator was not concerned, especially at the time of the adoption of NPTD, to ensure a balance between the status and legal obligations of the tour operator (the organizer of a travel service package) and those of the air carrier, from the perspective of the recognized rights of tourists/passengers. The diferences are major especially in the case of a charter fight cancellation: Point 36 of the preamble of Directive 2015/2302: 8 ”This Directive should not afect the rights of travellers to present claims both under this Directive and under other relevant Union legislation or international conventions, so that travellers continue to have the possibility to address claims to the organiser, the carrier or any other liable party, or, as the case may be, to more than one party. It should be clarifed that, in order to avoid overcompensation, compensation or price reduction granted under this Directive and the compensation or price reduction granted under other relevant Union legislation or international conventions should be deducted from each other. The organiser's liability should be without prejudice to the right to seek redress from third parties, including service providers”.

1. If the tourist chooses to act under Regulation 261/2004, the air carrier can be exonerated from liability whenever it proves that the delay or cancellation of the fight occurred due to "exceptional circumstances". Point 12-13 of the preamble of Regulation 261/2004 states that transport operators should compensate passengers, except in cases where the cancellation occurs in exceptional circumstances, which cannot be avoided despite all reasonable measures taken. In such situations, passengers whose fights are canceled can only request and obtain reimbursement of the cost of tickets or rerouting under satisfactory conditions and beneft from appropriate services while waiting for a subsequent fight. Even the Montreal Convention shows that the obligations of actual air transport operators should be limited or their liability exempted in cases where the event is caused by exceptional circumstances, which cannot be avoided despite all reasonable measures taken. Such circumstances may arise in particular in the event of political instability, weather conditions incompatible with the carrying out of the fight in question, safety risks, unforeseen defciencies that may afect the safety of the fight and strikes afecting the operations of the actual air carrier. In addition, the operating air carrier will not owe passengers any compensation in the event of a fight cancellation if the passengers have been informed of this cancellation at least two weeks before the scheduled time of departure. 2. By reference to this situation of the air carrier, that of the organizer of a travel service package is even more burdensome: Art. 13 paragraph 1 of Directive 2302/2015 establishes that the organizer is responsible for the performance of the travel services included in the contract regarding the travel service package, regardless of whether these services are to be provided by the organizer or by another travel service provider. In order for the organizer to be able to terminate the contract regarding the package of travel services without payment of compensation, it is necessary (art. 12 paragraph 3) that, in addition to the full reimbursement to the traveler of all payments made for the package, the non-execution of the contract to be caused by unavoidable and extraordinary circumstances AND the organizer to have notifed the traveler about the termination of the contract, without delay and before the start of the performance of the package. This last condition means that the tour operator cannot be exempted from paying compensation to the tourist when the cancellation of an air fight included in a tourist package occurs or is known after the start of the package execution.

Or, in the context of the post-pandemic Covid19, from which we started at the beginning of our presentation, most of the problems that led to the cancellation of some fights were ones that appeared at the last moment, unknown a priori and unanticipated (airline staf and airport staf strikes, aircraft malfunctions, etc.). For example, an organizer of a travel package that includes coach transport from Porto to Lisbon and charter transport from Lisbon to Paris will owe compensation to tourists if the Lisbon-Paris fight is canceled after departure of tourists from Porto, even if the cancellation is caused by extraordinary circumstances, known to the organizer after the start of the tourist trip. 9 V. Conclusion Such a regime for the protection of tourists in their relationship with the organiser, such as that in Directive no 2302/2015, is excessive in our opinion and, by law, should be put in line with the protection regime for passengers of an air carrier. Ubi eadem est ratio, eadem lex esse debet! Where there is the same reason, there must be the same law! In other words, if the air carrier does not have the obligation to pay compensation if it can prove, in accordance with Article 5(3) of Regulation 261/2004, that the cancellation is caused by extraordinary circumstances which could not have been avoided despite the adoption of all possible measures, similarly the organiser of a package of travel services that includes air transport should not owe tourists compensation in case of cancellation of the trip, respectively of the fight, without such exception being conditional on notifying the traveler before starting the performance of the tourist package. We hope that a future revision of Directive 2302/2015 will take into account all the problems manifested both during the Covid19 pandemic and afterwards. In Romania, the problem is very current, because a month ago an airline company in fnancial 9 difculties also as a result of the restrictions during the Covid19 pandemic, announced in the evening that starting 0:00h the next day none of its planes would take of . And to date, none of its planes have made any fights, except for those necessary to return the aircraft to their operating bases in Romania. At the time of the announcement, several travel package organizers had tourists in various tourist destinations around the globe, who would then return to Romania on charter or regular fights of that airline. In addition to the signifcant eforts made by these tour operators to complete the execution of the tour package and bring the tourists back to Romania, they are currently also facing compensation claims from some of the tourists.