16apr lost luggage liability limited hero
6 April 2016

Airlines' lost luggage liability limited

$15,000 luggage claim fails against Air New Zealand.

The case of a couple who failed in a $15,000 claim against Air New Zealand provides a useful reminder of airlines’ obligations when luggage is lost in international travel.

Mr and Mrs Green (not their real names) travelled to England on an Air New Zealand flight to attend an event at one of “England’s oldest and most respected institutions”.

However, when the Greens arrived in the UK, they found the airline had left one of their suitcases in Los Angeles. It took nine days to get the bag back.

In the meantime, Mrs Green says the airline gave her the green light to replace the luggage on a like-for-like basis, provided she kept receipts. The Greens spent $26,000 on new belongings.

But when the couple approached Air New Zealand for compensation, it told them its liability for the lost luggage was limited to about $2125 under the Montreal Convention. The convention sets out the maximum amount an airline has to pay if luggage is lost, damaged or delayed on an international flight.

Severely out of pocket, the Greens took Air New Zealand to the Disputes Tribunal to recover $15,000, the maximum amount the tribunal can typically award. The tribunal found in favour of the couple, stating the airline made a representation upon which the Greens relied to their detriment.

Air New Zealand disputed the decision. It referred the case to the High Court because it believed the matter involved important issues of principle and precedent.

Airline counsel, Nathan Gedye QC, argued domestic laws couldn’t be used to circumvent the Montreal Convention. He maintained the convention was “the sole remedy” when it came to claims against an airline for loss, injury or damage suffered on an international flight.

While Justice Gerald Nation sympathised with the Greens, he scrapped the Dispute Tribunal’s decision. Justice Nation stated the tribunal must recognise the limits on entitlements and liabilities provided for in the Montreal Convention.

As a result, Air New Zealand’s liability was restricted to the convention’s cap, although Justice Nation said it would be appropriate for the airline to pay the Greens interest on top of that amount.

For more information about your rights when it comes to travel problems, see our Travel traps report.

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