March/April 2011

Gratuitous Air Transportation Performed by Privately Owned Corporation Falls Outside the Scope of the Montreal Convention

Holland & Knight Newsletter
Judy R. Nemsick

A district court in Puerto Rico recently decided an issue of first impression under the Montreal Convention (MC) in Lavergne v. Atis Corp.1 The issue involved Article 1 of the MC, which defines the scope of the treaty as follows:

This convention applies to all international carriage of persons, baggage, or cargo performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking.

The court interpreted the meaning of the phrase "air transport undertaking" as used in Article 1 and concluded that it refers to a business dedicated to air transport.

The action involved claims for wrongful death arising out of the crash of a Cessna 206H model aircraft, owned and operated by a privately owned company known as Atis Corporation (Atis), during a flight from the Dominican Republic to Puerto Rico. The plaintiffs contended that subject matter jurisdiction existed under the MC because the flight constituted international carriage performed gratuitously by an "air transport undertaking." Although the MC does not define this term, Article 2(1) provides that the treaty applies to carriage performed by the state and by legally-constituted public bodies that fall within Article 1. The plaintiffs contended that this article may be construed to include private aircraft flights.

It was undisputed that the passengers on the aircraft were transported as a personal favor and at no charge. The costs and fees for the flight were paid for by the corporate owners. Atis operated the aircraft under Part 91 of the Federal Aviation Regulations (FARs), which governs flight operations conducted for personal use.2

The court first examined the language used in Article 1(1) of the Warsaw Convention (WC), which contains language similar to the MC, but uses the word "enterprise" rather than "undertaking." The parties attributed different significance to the change of wording from "enterprise" to "undertaking." Examining various French and English dictionaries, the court found that both "enterprise" and "undertaking" are terms that refer to a business. The district court concluded that "there is no substantial change in the meaning of the provisions after their translation to English insofar as both refer to gratuitous carriage performed by a company or legally constituted body in the air transport business."

The court then looked to the case law under the WC for guidance on this issue.3 Only the Fifth Circuit Court of Appeals in Block v. Compagnie Nationale Air France had discussed, in passing, the possible interpretation of the phrase "gratuitous transportation by aircraft performed by an air transport undertaking" as it pertains to private flights. The Block court found that the objective of the provision was to "exclude the application of the [WC] to casual, isolated flights when a free ride is afforded by an owner not engaged in the business (enterprise) of flying."4

Because the aircraft was operated under Part 91 of the FARs and was not used for commercial purposes, the court held that it was not an "air transport undertaking." Although the company intended to eventually obtain certification under Part 135, it never did. The plaintiffs notably failed to convince the court that the changes effected in the MC "extend[ed] its scope beyond the commercial realm and into private flights conducted by companies that are not in the air transport business." The district court consequently lacked subject matter jurisdiction and dismissed the action.

1 __F. Supp. 2d __, 2011 WL 723393 (D.P.R. Mar. 1, 2011).

2 The company was created to own aircraft that could be used to transport the owners on flights between Puerto Rico and the Dominican Republic, where they remodeled privately owned vacation properties, apartment buildings and other properties.

3 The few courts discussing "gratuitous transportation" frequently focus on whether an individual is covered by the treaty, such as whether an employee is on a flight as a passenger or to perform work-related duties. See, e.g., Sulewski v. Federal Express, 933 F.2d 180 (2d Cir. 1991).

4 386 F.2d 323, n.30 (5th Cir. 1967). The district court considered this consistent with the WC's "underlying purpose [] to regulate and unify rules of liability to international airlines." 2011 WL 723393 at *6 (citing 1-10 Aviation Accident Law § 10.04(3)(b)).

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