[Invest&Law] "Compensation of 600,000 Won Each"... Conclusion of Japan Peach Aviation Flight Cancellation Case After 5 Years

Domestic Court Rules Compensation Against Japan's Peach Aviation
Peach Aviation Claims Limited Liability Under Low-Cost Carrier Terms
Court Rejects Peach Aviation's Appeal

A domestic court has ruled that Japanese low-cost carrier (LCC) Peach Aviation must provide proper compensation to passengers despite flight cancellations.

According to the legal and industry circles on the 23rd, the Supreme Court made this decision regarding a damages lawsuit filed by more than 80 plaintiffs, including Mr. Kim, against Peach Aviation at the end of last month. The court upheld the rulings of the first and second trials ordering Peach Aviation to compensate the passengers between 400,000 and 600,000 KRW each, dismissing Peach Aviation’s appeal.

Previously, on September 21, 2018, Peach Aviation canceled flight MM002 on the Incheon-Osaka route, scheduled to depart at 10:10 a.m., after a two-hour delay due to maintenance issues, and sent passengers back. The airline refunded tickets to some passengers and provided all passengers with points worth approximately 80,000 KRW that could be used for purchasing tickets. Mr. Kim and other passengers filed a lawsuit claiming that Peach Aviation’s compensation was inadequate.

The departure hall of Incheon International Airport Terminal 1 is bustling with crowds heading overseas. The photo is unrelated to the article content.
Photo by Jo Yongjun

Airlines are required to compensate passengers for delays under the Montreal Convention, an international regulation applicable to international air transport. The compensation limit for delays is up to 5,346 SDR (approximately 9.8 million KRW). There is no separate compensation limit for cancellations. In the second trial, the Seoul Central District Court ruled that Peach Aviation was liable based on domestic law without needing to apply the Montreal Convention. This was because the cause of the aircraft defect raised by Peach Aviation had not yet been identified, and there was no evidence to recognize it as a manufacturing defect.

Peach Aviation argued that passengers had agreed to its terms and conditions, which limit liability in exchange for lower fares, and therefore there was no reason to pay damages. However, the court did not accept the terms cited by Peach Aviation. Attorney Ji-hye Kim from the Legal Office Support stated, "There is no reason for an LCC not to provide proper compensation to customers in the event of cancellations," and pointed out, "Avoiding responsibility through the terms and conditions may also constitute an unfair contract term."