Federal Court of Appeals Orders Airline to Compensate for Canceled Flight

On June 18, 2021, Division III of the Argentine Federal Court of Appeals in Civil and Commercial Matters partially revoked the trial court’s decision and ordered an airline to compensate passengers who had acquired tickets from Santiago de Chile to Sydney for deeming the air transportation agreement binding, despite an alleged mistake in the published fare.

The plaintiffs actioned against the airline to either compel it to issue the tickets in question (which the airline had cancelled under the pretext that there had been a mistake in the fare) or to receive sufficient compensation to purchase other tickets with the same itinerary and for the same time of the year.

Additionally, they sought pain and suffering and the application of the fine for punitive damages provided in section 52 bis of Consumer Protection (CPL) Law No. 24,240. The plaintiffs based their claim on CPL provisions, its regulatory decree No. 1798/94 and the Argentine Civil and Commercial Code.

For its part, the airline contended that a fare analyst had mistakenly published the fare, constituting a substantive factual error affecting its willingness to contract as understood in section 265 of the Argentine Civil and Commercial Code. Therefore, its behavior was consistent with Resolution 1532/98 of the Ministry of Economy, which regulates the general conditions of international air transport in Argentina, because, when cancelling the tickets, it had refunded the plaintiffs.

The trial court partially admitted the claim, ordering the payment of costs and sentencing the airline to compensate each plaintiff. The trial court grounded its decision on the company’s contractual breach and concluded that it was obligated under the CPL to maintain the offered and advertised price, adding that the airline was not obligated to issue new tickets because it had already reimbursed the plaintiffs. 

The trial court also held that the punitive fine did not apply, because the airline’s breach did not meet the necessary requirements for it.

Both parties appealed the trial court’s ruling. In addition to challenging the amount awarded for compensation and the court’s refusal to fine the airline, the plaintiffs contended that the trial court had not addressed their specific performance claim grounded under the CPL and the Argentine Civil and Commercial Code. They also contended that the court had ignored their subsidiary request for new tickets in case the ruling was handed down after the expected date of the trip. They further added that arbitrary cancellations of plane tickets are not regulated by the Aviation Code or the Warsaw and Montreal conventions, which is why the court should have applied the CPL.

For its part, the airline contended it had made no offer under the terms of the CPL and that Resolution No. 1532/98 authorizes airlines to deny transport when the “applicable fare” has not been paid—and the airline had never been paid the “applicable fare” because the fare paid by the plaintiffs was for the wrong amount.

The Court of Appeals found that reimbursing the plaintiffs for the tickets did not solve the problem, as they were requesting performance of the transportation agreement under section 10 bis of the CPL or, alternatively, sufficient compensation to purchase tickets of equivalent characteristics.

While the Court of Appeals acknowledged that the Montreal Convention of 1999, the rules of the Aviation Code, Resolution No. 1532/98, the Argentine Civil and Commercial Code, and (supplementarily) the CPL were relevant, specific performance as contained in the Argentine Civil and Commercial Code and the CPL applied.

First, the Court of Appeals found no evidence that the fare published by the company was not part of an offer or advertising campaign, as the tickets were acquired with the fare fixed by the airline, through an authorized travel agency and as part of a “Travel Sale Day,” in which large discounts were applied to airline tickets. Against that backdrop, the passengers had reason to believe that the company’s offered price was incorrect. Therefore, the offer was totally valid.

Second, under Resolution No. 1532/98, the airline can deny transport if the fare has not been paid and must issue reimbursements if the flight is canceled. However, in the case under consideration, the airline cancelled paid tickets—not the flight—on grounds of an alleged error. Thus, the Resolution does not apply. 

Consequently, the Court of Appeals concluded that the offer was valid and binding and the airline was thus obligated to provide the offered and accepted service. However, because the travel date had elapsed by the time the ruling was handed down, the plaintiff’s subsidiary claim for compensation in an amount sufficient to acquire essentially similar tickets was in order.

In addition, the Court of Appeals found that the company’s breach did not result in pain and suffering recoverable by the plaintiffs, as the disappointment and helplessness arising from the fact that their tickets were cancelled two days after purchasing them does not meet the necessary legal requirements to award such damages.

Lastly, the Court of Appeals concluded that the civil fine for punitive damages under section 29 of the Montreal convention of 1999, passed by Law 26,451, was not in order either, as indicated by the Attorney General in his report. On this specific matter, the Court found that the CPL does not apply.

Case: “Lago, Martín Ignacio y otros v. United Airlines INC, summary proceeding.”