Low cost airline establishes contractual requirement on airport to accept aircraft outside normal hours

28 June 2011

The claimant airline (J) claimed that the defendant airport operator (B) was in breach of contract in refusing to accept departures or arrivals of J’s aircraft outside its normal hours. The parties agreement in relation to low cost services by J from and to Blackpool Airport was contained in a letter. Paragraph 1 of the letter agreement provided that J and B would co-operate together and use their best endeavours to promote J’s low cost services from the airport and that B would use all reasonable endeavours to provide a cost base that would facilitate J’s low cost pricing. The initial period of the agreement was 15 years. Further paragraphs dealt with airport charges, marketing expenditure, advertising and public relations and other operating details. The agreement did not mention the airport’s published operating hours, which were 0700 to 2100 and 0600 to 2000 in the summer. For a number of years J operated some flights, particularly at peak times in summer, outside the airport’s normal hours and did so with the support and co-operation of B. After a change of ownership, B told J that it would not accept departures or arrivals scheduled outside normal hours. J submitted that on the proper construction of the agreement B was obliged to accommodate its flight movements between 0600 and 0000 and, outside those times, to do its bit to accommodate such movements; the agreement expressly related to low cost services and “promote” in para.1 plainly meant advance rather than merely advertise or market, which were matters dealt with elsewhere in the agreement; the agreement contained no restriction on operating hours, unsurprisingly given the obligation to promote low cost services.

HELD: (1) Low cost was of defining importance. The word “promote” was used in para.1 of the agreement in the context of co-operation between the parties. Its position at the outset described the main activity which the parties would co-operate and use their best endeavours to carry on. Promotion in the limited marketing and advertising sense was covered by para.2. Therefore J’s interpretation was to be preferred. It was a fundamental assumption that J would be operating its aircraft and B providing airport services, in broad terms, at the hours of the day and night when low cost passenger services could generally be expected to run. The object to which the parties were obliged to direct their best endeavours included securing flexible working hours beyond those promulgated by B (see para.37 of judgment). (2) The obligation to use best endeavours to promote low cost services was a joint one, that to use all reasonable endeavours to provide a cost base was on B alone. There was no difference between best and all reasonable endeavours. The fact that J did not have to build its presence at the airport except in accordance with demand was relevant but it was no part of the exercise to relieve B from what might have proved a burdensome contract. The parties were assuming commercial and risk bearing obligations as part of the cooperative venture with each other; the words were not used in the context of leaving open for later negotiation an aspect of an otherwise explicit commitment or of obtaining consent from a third party, Phillips Petroleum Co (UK) Ltd v Enron (Europe) Ltd (1997) CLC 329 CA (Civ Div) and Yewbelle Ltd v London Green Developments Ltd (2007) EWCA Civ 475, (2008) 1 P & CR 17 considered. It could not have been intended that B should be able to pick and choose what to do in the light of what suited it or its parent company financially. The provision in the instant case was towards the objective end of the range although not necessarily so clear cut as to enable the court to proceed by ascertaining what an ordinarily competent airport might reasonably be expected to do in the same circumstances, Stephen v Scottish Boatowners Mutual Insurance Association (The Talisman) (1989) 1 Lloyd’s Rep 535 HL considered. Accepting however that the provision of a cost base required the wide and flexible hours contended for by J the words “all reasonable endeavours” imposed a lesser obligation than an absolute commitment to provide those specific hours regardless throughout a 15 year period (paras 39-48). (3) Opening outside normal hours was part of the service B provided and part of the deal. Its unilateral decision to refuse to accommodate J’s flights except subject to conditions was a breach of contract (paras 79-80).