Ryanair Should Have Paid Compensation For Ash Cloud Delays, European Court of Justice Rules

A Ryanair customer's battle to receive compensation for her flight after it was delayed by 2010's ash cloud crisis could result in a rise in air fares, according to a court ruling.

The European Court of Justice was asked to consider whether the closure of airspace as a result of a volcanic eruption comes under the notion of 'extraordinary circumstances', which would oblige the air carrier to provide care to passengers - and whether any time or monetary limits could be put on those care costs.

Denise McDonagh had a seven-day wait for a Faro-Dublin flight on Ryanair and said she spent nearly 1,130 euros (£968) on a hotel, food and transport.

The ECJ ruled Ryanair should have paid for her expenses, saying: "All the obligations to provide care to passengers are imposed on the air carrier for the whole period during which the passengers concerned must await their rerouting."

Douglas McNeill, travel specialist and equity analyst at Charles Stanley, told the Huffington Post UK he didn't think price rises to pay for compensation were likely as most carriers already priced this into their ticket costs.

"The consequences of this judgment are pretty limited," he said. "It just confirms the status quo - airlines think it's unfair, but there it is nevertheless.

If the judgment was already a dead cert to rule against Ryanair, why did they bother taking it to court? Mintel's travel analyst John Worthington told the Huffington Post UK he might have the answer.

"Although this may appear to be adverse publicity for Ryanair, and many will question why they sought to extend such a battle, the airline has often thrived on a kind of 'in your face' truculence in its dealing with authorities – a kind of 'no publicity is bad publicity' approach," he said.

However, hidden towards the bottom of the judgment is a paragraph which could be taken by air carriers as a reason to put up their air fares, at a time when fuel costs and taxation have already seen prices skyrocket for British consumers.

The report reads: "While the obligation to provide care entails financial consequences for air carriers, they cannot be considered disproportionate to the aim of ensuring a high level of protection for passengers. The importance of that objective may justify even substantial negative economic consequences for certain economic operators."

Economic operators are low-cost carriers, such as Ryanair, Easy Jet and Jet2.

The report continues: "Air carriers should, as experienced operators, foresee costs linked to the fulfilment of their obligation to provide care. Furthermore, they may pass on the costs incurred as a result of that obligation to

airline ticket prices."

"Given the judgment, some airlines may feel they need extra insurance cover and may seek to pass on extra costs to the passenger, either upfront or, more likely, in the form of further 'stealth charges'," warned Mintel's Worthington.

"Such events are obviously rare, although we live in an increasingly unpredictable world with global uncertainties such as climate change opening up ever greater risks and vulnerabilities for international aviation."

But Charles Stanley's McNeill believed price rises may not be on the way: "In terms of raising prices to cover the compensation amounts; we're already there - the pricing already reflects that risk," he told HuffPost UK.

UPDATE: 11:58 31 January 2013

Minutes after HuffPost UK published this story, Ryanair issued a press statement admitting it would indeed increase its prices as a result of the ECJ judgment.

The statement read: "Ryanair regrets the decision of the European Court which now allows passengers to claim for flight cancellations which are clearly and unambiguously outside of an airline's control.

"When governments closed large swathes of European airspace unnecessarily in response to non-existent 'ash clouds' over Ireland the UK and continental Europe in 2010, the travel insurance companies escaped liability by claiming it was an 'act of God'.

"Today's ruling by the European Court now makes the airlines the insurer of last resort even when in the majority of cases (such as ATC delays or national strikes in Europe) these delays are entirely beyond an airline's control.

"Today's decision will materially increase the cost of flying across Europe and consumer airfares will increase as airlines will be obliged to recover the cost of these claims from their customers, because the defective European regulation does not allow us to recover such costs from the governments or unions who are responsible for over 95% of flight delays in Europe."

Ryanair has already said its prices will continue to rise - deputy chief executive Michael Cawley told the BBC prices would rise along with its profits for 2013.

The Dublin-based low-cost carrier released strong results earlier this week, with an 8% rise in seat prices helping to boost its profits to €18 million (£15.4m) for the third quarter