Publication | July 2017

Welcome to the July edition of Legalflyer.

Pešková v Travel Service AS:  Welcome clarity in the application of denied boarding regulation, EC261

Regulation (EC) 261/2004, EU regulation covering passenger compensation for flight delays and cancellations, is described by general counsel of many major airlines as their biggest challenge. The administrative and financial burden of dealing with claims handling can be huge. The recent Pešková v Travel Service AS case has provided clarity for both passenger and airline as to when a flight delay can be categorised as being caused by an ‘extraordinary circumstance’ - an event which does not entitle passengers to compensation. This article reviews the case and explains why it is a helpful judgment for both passengers and airlines.

Brexit, the Repeal Bill and Aviation

The UK Government has been formulating a Brexit strategy and, as part of that, it proposed, in the Queen’s Speech of 20 June, 2017, a “Repeal Bill” which has three primary aims

  • To repeal the European Communities Act 1972, which currently establishes the supremacy of EU law in the UK
  • To preserve EU law where it stands at the moment before the UK leaves the EU. Parliament will then be able to decide which elements of that law to keep, amend or repeal; and
  • To enable changes to those laws to be made by secondary legislation to rectify problems occurring as a consequence of Brexit.

This article looks at a number of principals running through EU law which the Repeal Bill will need to consider and focuses throughout on the laws that are important to UK and European aviation businesses.

Dubai’s Al Maktoum International Airport en route to becoming the world’s largest

By 2020 the aviation sector in Dubai is projected to account for 37.5% of GDP, worth US$53.1 billion and rise further to US$88.1 billion in 2030 representing 44.7% of GDP. To meet projected air traffic growth Dubai Airports has commenced a project to develop the airport infrastructure. This article highlights key features of the project which centres on a major expansion of a smaller airport in the Emirate, Al Maktoum International Airport.

Developments in air passenger protection in the Peoples’ Republic of China

As of 1 January 2017, the Peoples’ Republic of China enacted the “Provisions on the Management of Flight Regularity" regulation with the intention of addressing passenger protection in the domestic aviation market. It is the first piece of Chinese regulation in this area. The article covers the scope of the regulation, what it means for airlines and highlights some guides and rules that have been published to aid its implementation.

International tax avoidance – the new Multilateral Instrument and implications for aircraft finance transactions

The final article covers an important development coming out of the OECD’s base erosion and profit shifting project (BEPS). The Multilateral Instrument contains a series of provisions that are regarded as good practice or minimum standards by the OECD in order to prevent cross-border tax avoidance. The article looks at the impact of this development for aircraft lessors and lessees. For example, it could result in more scrutiny of aircraft transactions involving intermediate lessors that rely on treaty protection to receive rentals without withholding tax.

Pešková v Travel Service AS:  Welcome clarity in the application of denied boarding regulation, EC261  Brexit, the Repeal Bill and Aviation  Dubai’s Al Maktoon International Airport   The tip of the iceberg for aviation passenger protection in the Peoples’ Republic of China  International tax avoidance – the new Multilateral Instrument  and implications for aircraft finance transactions