Failure to Keep Conditions of Carriage at Airport Deprives Airline of Contractual Defenses

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March 20, 2013
Michael McGrory
SmithAmundsen Aerospace Alert

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In a case that epitomizes “form over substance,” a Texas Court of Appeals allowed a passenger breach of contract case to proceed against an airline because the airline failed to keep a copy of all terms incorporated by reference at an airport office.

In Ron v. AirTran Airways, Inc., the plaintiff’s flight from the Bahamas to Orlando was canceled. Pursuant to terms incorporated by reference into AirTran’s contract of carriage, when a passenger is involuntarily denied boarding, his sole remedy is a refund of the unused portion of his ticket.

AirTran made that refund, and sought dismissal of the plaintiff’s lawsuit. However, the plaintiff asserted that AirTran had not complied with 14 C.F.R. § 253.4(b), which requires airlines that incorporate terms by reference in their contract of carriage to make the full text of the terms available for public inspection at its ticket offices. The plaintiff testified that prior to his trip he received a confirmation email mentioning the terms incorporated by reference, but that the text of the terms was not included. The plaintiff also testified that when he asked to see the additional contract terms at the Nassau airport, AirTran told him they were not available there. The Court found that AirTran’s failure to comply with § 253.4(b) deprived the airline of defenses that relied on terms incorporated into the contract of carriage by reference, and reversed the lower court’s dismissal.

One justice offered a particularly strong dissent, noting that the case posed a “potentially devastating consequence” for the airline industry because airlines would lose all contractual protections whenever incorporated by reference terms are unavailable in a single ticket office, regardless of the location of the ticket office or where the tickets were purchased. The dissenting justice also noted that the terms were available at any time on the internet, a point that helps illustrate the impracticality of the majority’s holding.

It is now very easy for any member of the public to access an airline’s full conditions of carriage, and the requirement that they be kept in hard form at all of an airline’s ticket offices is anachronistic. In fact, the airline may have been able to argue that the terms were available digitally at its Nassau airport office. Moreover, the fact that AirTran may not have had a copy of the terms at the Nassau airport had no effect whatsoever on the plaintiff’s decision to enter into the contract, any alleged breach, or any damages that may have flowed from a breach; indeed, AirTran’s alleged failure was little more than an irrelevant technicality. Nevertheless, until DOT regulations are brought in line with the “Information Age,” the Court’s harsh punishment of AirTran in this case should stand as a warning to all airlines to comply fully with the letter of the law.