Legal: Lost bags and Brexit

This year, new regulations require airlines to track baggage, and Brexit clauses are being added to commercial agreements

Despite improvements in baggage tracking and new technology, lost, delayed or damaged baggage causes immense problems to travellers as well as airlines and airports. Recent statistics show that almost 22 million items of baggage went missing during 2016 at a cost to the airlines of US$2.1 billion.

Under the Montreal Convention 1999, passengers can claim regardless of fault. It’s not open to airlines to blame ground services support. The Convention contains many limitations for the unwary. There is an overall time limit of two years and the maximum claim is 1131 special drawing rights per passenger (about £1,200) unless a special declaration of higher value has been made at check-in. In the case of damaged baggage, passengers need to complete a property irregularity report and make a written claim within seven days. For items alleged to be lost or stolen from bags, passengers should expect to produce receipts and must make the claim within seven days. For delayed baggage, passengers must notify the value of their expenses within 21 days from receiving the delayed bag. For baggage not recovered after 21 days, this is deemed lost.

Passengers have found the process of chasing for bags frustrating, and the attitudes of some airlines rather miserly, and so the new regulations are welcomed. The tracing of baggage will become far easier and more user-friendly.

IATA Regulation 753 is mandatory for all IATA airlines and will be introduced from 1 June 2018, requiring airlines to track bags at four critical points during a journey. Baggage will be tracked when handed over to the airline, loaded on to the aircraft, delivered to the transfer area and returned to the passenger. The regulation requires airlines to maintain an accurate inventory of baggage by monitoring the process. It will also require airports to have correct systems in place to ensure compliance with the new regulations. Some airlines are already installing technology to ensure these regulations are complied with. Early indications show significant reductions in bag mishandling, which has produced huge savings for the airlines.

Leading technology companies, such as Sita, have developed products that show delivery and baggage inventories as part of this process. This should provide relief to passengers with lost bags and all involved should benefit.

For those who still have a problem with their baggage, Montreal will still provide legal remedies to recover losses, when this is not agreed. For those looking for a cheaper means of resolving baggage disputes, most airlines have joined the mediation services, promoted by the Civil Aviation Authority, which can deal with this type of claim through an independent mediator.

Brexit clauses
Commercial agreements entered into by airlines, travel management companies and corporates have got to the point where Brexit and the consequences of it, will occur mid-term in many of their commercial agreements with suppliers, customers and trade partners. This creates uncertainty, particularly where, as a consequence of Brexit, there may be fiscal or tax changes, regulatory changes and some transactions where costs may rise and become uneconomic. Lawyers are starting to promote possible ‘Brexit clauses’, or are at least making clients aware of these when negotiating commercial terms. Essentially, these clauses define a ‘Brexit trigger event’, which covers such matters as a change in the law or a trade tariff, the loss or change to a licence or consent, a substantial currency fluctuation or a change which has a significant commercial adverse impact affecting the transactions to be carried out. If applicable, the proposed clause requires the parties to renegotiate the terms affected, and if they fail to agree then this is a ground for termination of the agreement.

Brexit clauses will need to be negotiated and may not be acceptable to some parties involved. However, all traders need to be aware of potentially drastic changes to their marketplace where they may wish to walk away from a contract that takes on a new life post-Brexit.

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