KL803

After an industrial court ruled against KLM already in May, the court of appeals of Austria ruled against KLM, too. According to different Austrian sources miles can no longer expire after just 20 months. There was no clear rule about for how long miles should remain valid, though.

Link to source: Europakonsument
Link to court rule: https://verbraucherrecht.at/cms/uplo...Ob_139_16h.PDF
(sources are in German only).

I wonder, what kind of repercussions this rule might have to the Flying Blue program.

Thanks to Air Rarotonga for giving me the heads-up!

Hannibal Lecter

Bonus miles: Valid for 30 years


VKI wins lawsuit against KLM

19.10.2016 |


Air Travel


If you collected bonus miles from the Dutch airline KLM in the past, you had to be busy. Why? After a period of 20 months without "extending activities", the miles would just be cancelled.

The Austrian Verein für Konsumenteninformation (VKI) took legal action against this practice. The supreme court (OGH) now decided in favour of the VKI on all questions. It stated that the jurisdiction for vouchers applies to bonus miles as well. This means that they have to be valid for 30 years and the airline is not allowed to reduce this time frame.


The decision is legally binding. You can read the full text of the verdict here (in German language).


If you collected bonus miles from KLM and they were unlawfully cancelled, you can protest by referring to the verdict of the HG Vienna from 13.10.2015 (case 39 Cg 43/14p).

irishguy28

What is a "bonus" mile?

Is it a bad translation of Prämienmeilen (award miles)?

They surely don't mean just the Elite bonus miles (Silver: 25% Gold: 75% Platinum: 100%)

KL803

They mean award miles.

NickB

After a quick read (and based on my limited German), my understanding is that the 20 months limitation is unlawful under Austrian law because of gross disparity between the obligations of the respective parties in breach of Article 879 of the Austrian Civil code. In other words, the 20 months limitation would be disproportionate. An ancillary issue is that the lack of transparency of the clause, in that it does not identify what are "qualifying activities" that stop the clock running.

Not all European legal systems have a similar prohibition on unbalanced transactions as Austrian law. However, the Directive on unfair terms in consumer contracts (applicable in the whole EU) defines an unfair term as one which, contrary to good faith, causes significant imbalance between the parties. You could therefore probably follow a broadly similar line of reasoning to that of the Austrian courts in most European jurisdictions based on national legislation implementing the Directive. Whether courts in other EU Member States would similarly conclude that this constitutes a breach of good faith principle and that therefore it is an unfair term is not guaranteed, however,

KLouis

Since the time I had fights with my mom when I was a child, I found it hard to understand the logic behing many things that lawyers considered to be very logical. This is one such case:

Nobody is forced to become an FB member. As a matter of fact, there is a big choice of FF programs and the T&C of each one is clearly accessible for reading before one decides to join such a programmme. I also hated it when I had to take a no-real-purpose flight a month ago in order keep my miles, but I joined FB (or, to be precise, FD) knowing that they had certain rules. Heck, I earned more than one million miles in the years before I switched alliances and I was glad to see that my "new" *A miles did not expire. But going to court and sueing FB because I don't like their rules, well, I find it strange and I find the court's decision even stranger.

At any rate, I no longer collect FB miles, I'm not Austrian and neither do I live in Austria, so this thing is irrelevant for me.

NickB

Reasoning goes something like this. Contract law is in principle based on a logic of equality between the parties. In certain situations, however, there is substantial and structural inequality between the parties that would allow one party to exploit its position of power over the other one. We could say: well, we don't care. Such is life and if the weaker party loses out, then so be it. In certain contexts, however, we consider that we must give the weaker party some ammunition to redress the balance to some extent. Two areas where we normally have such protective legislation, at least in Europe, are labour law and consumer law. In consumer law, in particular, one device used to protect the consumer, as the weaker party who typically must accept the terms of contract dictated by the supplier of goods and services, is to prohibit "unfair" clauses, understood as clauses that the trader is able to impose on the consumer solely because of its position of greater power and that you would not find in the contract if there was equality of power between trader and consumer. That is broadly speaking the gist of the legislation on unfair terms.

Now, you could say: nobody is ever forced to enter into a contract to buy goods or services and, therefore, it does not matter if the terms are unequal and traders should be theoretically free to rip-off consumers to their hearts' contents if they so wish. At least in competitive markets, the mere existence of competition will ensure that the consumer will never be ripped off. Many, however, will consider that it is expecting a lot of competition and that, in the real world, competition is often very far from perfect and will often fail to deliver that outcome. That is why you often find clauses which are manifestly and unfairly to the benefit of the trader and the detriment of the consumer in many consumer contracts.

Whether the 20 months expiry clause constitute an unfair term, well, I do not think that it is the most clearcut example of a clause that is reflective of the inequality between trader and consumer so I can see how it could be argued either way. But it is not an outlandish decision either. It seems to me that it is an area where reasonable people could reasonably disagree.

KLouis

I fully see your points but there are two items that make this contract different from a classical contract between a consumer/customer and a goods/services provider: 1) This is free! (forgetting the payment of so-called taxes like fuel surcharges, which no court anywhere in Europe, so far, has found to be illegal ) 2) this is a frequent flyer programme, so they ask you/expect you to fly frequently with them (although one flight every 20 months is not that frequent).

NickB

Is it? So this is a reflection of AF being generous by nature and they only do this out of kindness of their heart and their philanthropic nature? Or could it be that it is designed to entice customers to fly on AF and partner airlines?

If it were genuinely "free", it would not be a contract as there would be no consideration on the other side. The miles that you get are not free: you pay for them in the price of your flight ticket. They are no more "free" than the breakfast you get at a Holiday Inn Express would be "free."

That is another debate but as long as they are transparent and do not pretend to be something else than they are and as long as they are clearly included in the price upfront so as not to mislead the consumer, I am not sure why we should regard them as illegal.

That was an argument made in the case and the Court considered it to be irrelevant and I think that they have a point. Surely, you cannot avoid applicable legislation merely by choosing to describe your programme as a "frequent flyer" programme. Looked at another way, you have paid for those miles when flying and should be given a reasonable time to use those miles and it is debatable whether the 20-months expiry period is actually reasonable or not.

As I said, I can see how it could reasonably be argued the other way but it does not follow from this that the Court's interpretation makes no sense. It is also a reasonable interpretation, imo.

KL803

I agree with NickB, the explanations are absolutely reasonable. My question is though: What is the recognition of this legislation worldwide? I reckon, within the EU a consumer could now fight KLM based on this Austrian decision.

I wonder why there's no fixed place of jurisdiction with Flying Blue. In contrary, in the §1.2 of the T&C's they mention the possibility of country-specific alterations. To my understanding, this gives Flying Blue the possibility of changing the program for every country individually.

So it looks like, that an Austrian member may keep his/her miles for up to 30 years while a French member looses his/her miles after 20 months.

brunos

Of course, any contract can be country-specific. For example, FB already discriminates against French resident in terms of French flights earnings of status miles. I guess that someone could raise the issue with regards to discrimination within EU. NickB could enlighten us as to the validity of such case.

TographerE

This would be interesting to know. Why should residents of France be penalized in this way? Why should you have to rack up extra miles or segments just because of where you live?

It's the same as internal flight/ TGV Air. Wholly ridiculous if you buy your ticket through the AF website. You are paying for their services so why can't you be appropriately "rewarded" for them?

NickB

Sorry. I had missed that. The answer is a bit complicated, though.
There is no overarching general prohibition in EU law on discrimination on grounds of nationality or residence by private companies (as opposed to discrimination by Member States themselves and public authorities). There could be an argument that the Directive on services in the internal market is meant to prevent discrimination by a provider of services based on the nationality or place of residence of the recipient of the services. However, there might be difficulties with the argument for a variety of reasons which are probably far too imbued with legal nerdiness to go into here so let us leave it at a non-committal "maybe" .

Goldorak

Is there any English translation of this statement available ?

CyBeR

I believe it's because France is AF's home market and they have a somewhat sizeable domestic route network, so the barrier to entry is more easily reached. KL on the other hand has no domestic routes at all, and of course this also doesn't apply to people not from either the Netherlands or France.