Downgraded flights - new rules on reimbursement.
On 22 June 2016, the Court of Justice of the European Union released this judgement. I quote the two names it is known by, to assist searching. Steef Mennens v Emirates Direktion für Deutschland, Meenens versus Emirates.
http://eur-lex.europa.eu/legal-conte...CJ0255&from=EN
This judgement sets new rules in this area: any advice in this thread, and indeed anywhere else on the internet, needs to be checked to this ruling to ensure accuracy. BA have immediately started to use this judgement (which, given it was very favourable to the airlines is not terribly surprising).
Downgrading is covered by article 10 of EC261/2004, and allows for reimbursement for downgrading, within 7 days, of 30%, 50% or 75% of the "ticket price" in the event of a downgrade, depending on the distance. Exceptional circumstances do not apply to downgrading. Also note that this is reimbursement, not compensation.
In essence this new ruling decided two issues:
1) "Ticket price" is pro-rata to the distance affected by the downgrade, not the whole ticket price as paid. There are some complexities, see below. Point 32 in the judgement.
2) In assessing ticket price, the airlines are entitled to still charge "taxes and charges" relevant to the downgraded cabin. Again complexities are below. Point 43.
If you bought a single ticket and were downgraded for the whole distance, then this makes for a reasonably easy calculation. Look at the fees and taxes for the downgraded cabin and apply/vary accordingly. If you bought a return, it depends a bit on whether the ticket was through priced, or two tickets in one PNR - the calculation could be different and it may not be obvious to the passenger which method is being used. In reality, it's probably a reasonable approach to use the mileage of the affected flight over the mileage of the total flights.
Carrier surcharges
The other complexity relates to carrier surcharges. The judgement made no specific reference, other than this phrase (point 36): "Those taxes and charges are unavoidable components of the final price to be paid by the passenger in order to avail of the service proposed by the air carrier". Clearly government taxes such as APD (which can be cabin specific) and airport fees fall into this definition. But what about carrier surcharges? I would argue they are avoidable in that the airline has a full choice whether to charge them or not. Indeed BA does not have carrier surcharges on its shorthaul services. Furthermore the final sentence in the judgement, 44.2, says "as long as neither the requirement to pay those taxes and charges nor their amount depends on the class for which that ticket has been purchased", when BA does vary both that requirement and the amount. However, that is my opinion, it would need court judgement to be 100% clear on this.
How much can you claim?
Let me take two examples. LHR-BRU and LHR-JFK.
LHR-BRU: 350 km = 30% band (under 1500 km)
Currently the cheapest Club Europe from LHR to BRU is £200 return. On BA.com you can see the fees to be a relative high proportion: £78, consisting of APD: £26, Heathrow charges (PSC): £30; Brussels charges: £22. No carrier surchage.
So if downgraded from LHR-BRU to EuroTraveller, you can look to get the following:
Fare for LHR-BRU section: £100
Minus APD for EuroTraveller-Club Europe difference: £13
Heathrow charges: £30
£100-£43 = £57 times 0.3 =
reimbursement of £17.
Note that if downgraded from BRU to LHR, the reimbursement would be higher, £23 or so.
===
LGW-JFK: 5530 km = 75% band for trips over 3500 KM.
Cheapest Club World fare return £1310
Downgraded to WTP from CW between LGW and JFK.
Fare calculated for LGW-JFK: £655.
APD: £146 (WTP is the same, WT is £73)
Gatwick airport fee: £13
JFK airport arrival fee: £26
Other fees and taxes (for the return flight): £33
Total fees and taxes both ways £205
Carrier surcharge: £125 each way. WTP is £72.
So my calculation is based on carrier surcharges are excluded from taxes and charges (open to debate). In which case:
£655-(£146+£13+£26)=£470 x 0.75 =
reimbursement of £352
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Now in both cases I've used low fares where taxes are a high percentage. Since it would be usual to pay something like twice these quoted fares, the reimbursement for BRU would perhaps be typically £50, and for JFK £800 or so. If carrier surcharges are judged to be in the same category as taxes then for the New York examples the reimbursement could be £72 lower.
How does this work in real life?
BA tends to work out its own reimbursement based on fare differences. In some cases this could be more generous than the amounts quoted above, however they often use the fare paid by you minus a Y basis fare, which is often unfavourable. I think that's wrong, they should use the fares in operation on the day of purchase (so there is a case for making screen shots when booking travel).
In conclusion, the recent judgement has had the effect of clarifying what is meant by ticket price (though injected a new point of confusion over carrier surcharges) but has also scaled back the reimbursement for downgrades, making it a lot more complex in the process.
[Disclaimer: I am not a lawyer. Corrections / reinterpretations are welcome from those who are.]