No-show clauses under fire: passenger rights versus contractual freedom

In recent years, however, these clauses have come under increasing legal and political scrutiny. For airlines, this development is noteworthy, as it directly affects the foundations of their commercial strategy.

Legal Background

No-show clauses are permitted in principle, provided that they are communicated transparently and clearly when the transport contract is concluded and provided that they include exceptions[1]. For airlines, these clauses are an essential tool to prevent passengers from deliberately booking cheaper tickets (for example, via a stopover) while only using part of the journey.

Nevertheless, in recent years, several national courts within the EU have ruled that no-show clauses can be considered unfair contract terms, particularly in cases where the passenger’s absence causes no actual damage to the airline. This issue is currently debated across several European jurisdictions, resulting in mixed case law.

European Pressure

The European Union is currently reviewing Regulation (EC) No 261/2004 on air passenger rights[2]. This revision is currently in its second reading before the European Parliament. In this context, European institutions have called for a ban on no-show clauses, or at least for stricter rules on transparency and permitted exceptions.

Although the European Commission initially supported a partial ban on no-show practices, it later stated, following the Council’s position on the revision of the Air Passenger Rights Regulation[3]:

“No-show: There is a full ban on no-show policies for return flights (without conditions attached) instead of the partial ban proposed by the Commission. Under the Commission’s proposal, airlines would be allowed to require passengers to pay a fee in order to take a return flight where they fail to show up for the outbound flight. The Commission opted against a full ban on "no show" policies because it would impair or weaken the ability of airlines to offer indirect flights at lower prices than direct flights and therefore hurt competition. Still, this provision is acceptable for the Commission as it strengthens passenger rights.”

For carriers, this means that an important tool for maintaining fare structures is under pressure. The issue affects not only contractual freedom but also the financial feasibility of differentiated pricing models in air transport.

Risks for Airlines

1. Loss of Price Differentiation
   Without no-show clauses, passengers can intentionally book cheaper, more complex routes without using all segments. This undermines airlines’ yield management systems.
    
2. Increase in Disputes
   Passengers facing cancelled return flights may file complaints with national enforcement bodies or take legal action, leading to negative publicity and legal costs.
    
3. Regulatory Pressure
   Some national consumer authorities (such as in Spain and Italy) already consider the (unconditional) application of no-show clauses to be an unfair commercial practice.

What Can Airlines Do?

• Enhance Transparency
  Ensure that the no-show clause is explicitly mentioned during the booking process, with a clear explanation of its implications. This reduces the risk of invalidation due to unfair terms.
   
• Introduce Flexibility
  Consider offering, for certain fare types, a free reactivation option in case of a no-show, or an additional fee for “decoupling” flight segments.

• Monitor Case Law Proactively
  Keep track of relevant judicial developments and adapt terms accordingly. In some jurisdictions, applying no-show policies without exceptions already entails legal risk. If the revision of Regulation 261/2004 is adopted, many airlines may have to significantly amend or even remove their no-show clauses from their general conditions.

Outlook

No-show clauses remain an essential instrument for airlines to manage capacity efficiently and mitigate commercial risks. At the same time, European legislators and national courts are increasingly scrutinizing this practice, prompting reconsideration. With the forthcoming revision of Regulation 261/2004, it is in the airlines’ best interest to closely monitor the debate and continue to clearly communicate their position to policymakers and passengers.