On May 14 of this year, a bill to amend the Civil Aviation Law (LAC) in Mexico was submitted to the chamber of deputies, with the aim of, among other issues, increasing the compensation amount for passengers affected by overbooked flights.
This bill has joined others that in recent times have sought to restrict or cancel flight overbooking or increase the compensation amount for consumers affected by this practice.
In the statement of reasons, the congressman proposing the bill indicated that its objective is the protection of mobility rights for all people, especially the vulnerable, as well as the rights of consumers.
The text of the bill makes reference to the constitutional lawsuit 401/2023 (the Amparo) in which the first chamber of the Supreme Court of Justice of Mexico (the Court) confirmed the obligation of airlines to compensate passengers who are denied boarding due to overbooking. This is regardless of the option the passenger chooses, as outlined in the law.
In the case of overbooking flights, which means selling more tickets than available seats, airlines request volunteers to forgo boarding in exchange for benefits negotiated between the passenger and the airline.
In the case of Mexico, if passengers refuse to give up their seats, the airline must, at the passenger’s choice: (i) refund the ticket price or the leg corresponding to the part of the flight not completed; (ii) offer substitute transportation on the first available flight and provide telephone communication, food, and accommodation in case of an overnight stay and transportation to and from the hotel if it is located outside the airport; and (iii) transport them at a later date to the originally indicated destination.
In the three previous cases, the Court decided that the airline must also pay the affected passenger compensation that will not be less than 25% of the ticket price or the uncompleted leg of the flight (article 52 of the LAC). This is so since the LAC only provides that such compensation will be applicable in the cases described in paragraphs (i) and (iii) mentioned above and omits the one indicated in paragraph (ii).
With this bill, it is proposed to amend article 52 of the LAC precisely so that the compensation explicitly includes the three mentioned cases in line with the Court’s decision but to increase the compensation from 25% to 35%. It also proposes a deadline for the payment of the compensation, which should not exceed 15 business days.
Additionally, the congressman emphasized that since the Amparo was resolved by a majority of three votes from the justices of the first chamber, and therefore “the decision is not binding but only advisory for other judges” it was necessary to amend article 52 in the referred terms.
Finally, he proposed adding a text to article 52 Bis of the LAC, which specifically addresses the request for volunteers by carriers in case of overbooking, so that they renounce boarding in exchange for benefits to be agreed upon with the airline. As long as such benefits are not fewer than those contemplated in paragraphs (i), (ii) and (iii).
The points that the congressman, author of the bill, seeks to add to that article are as follows:
- Once passengers complete the check-in within the established timeframe prior to boarding time, they will keep their right to the boarding pass.
- The possibility for people with disabilities, companions of infants, elderly adults, or pregnant women to check in at the airport at no additional cost. And that they keep their right to the boarding pass.
- That airline guarantees transparency in ticket purchases and the check-in process.
Comments on the bill
Bills aimed at improving the current legal framework for the defense and protection of air travelers are always necessary and welcome.
However, it is also advisable not to overlook the other side of the coin. That is to say, what would be the consequences of amending the law, especially regarding the increase in compensation percentages, as the bill seeks?
This will allow us to evaluate whether the bill, if approved, would indeed bring proven benefits to the passengers. Or even if it could be detrimental.
In my opinion, these would be some of the consequences:
- By increasing the percentage of compensation charged to airlines for overbooking flights, the cost of tickets would also rise immediately, directly harming the passenger. Since carriers would lose a tool to manage financial risks, travelers would have to bear the cost of that situation.
- For experts, overbooking flights is part of the business model of some airlines that, on one hand, allows them to maintain a profit margin. However, on the other hand, it allows ticket prices to remain accessible to passengers. In case its practice were canceled or restricted, or if an attempt were made to discourage it through increased compensation, not only would the airlines be affected, but also the consumers.
On the other hand, regarding the fact that the Court’s decision is not mandatory but merely advisory, as indicated in the statement of reasons of the bill, I believe that this fact does not diminish its significance. This is because, previously, the constitutionality of article 52 of the LAC had not been analyzed.
Even though, in effect, the first chamber’s decision in resolving the Amparo did not constitute a binding precedent because it did not reach the majority of votes from the required chamber justices for such purposes, it is undeniable that the chamber’s decision has significant influence for other judges when resolving identical or similar situations that may arise, even without having constituted a court precedent.
A decision issued by the country’s highest constitutional court has significant influence and authority for other federal or local judges to adhere to it. Since the decision is not a binding precedent, judges and courts could consider the chamber’s decision as a guide for interpreting future cases.
As always, I would like to know your opinion; feel free to send me a email at acervantes@ceglegal.com
