The Court of Appeal held that a passenger’s entitlement to compensation under EC Regulation 261/2004 (“Regulation 261”) depends on the passenger’s delay in arriving at the final destination. Where the carrier provides more than one flight to the final destination, the flights are to be taken together. Thus, where a delay to one flight causes a passenger to miss a connecting flight and arrive at his or her final destination with a delay of more than three hours, the right to compensation under article 5 is engaged.
The Court of Appeal further held that Regulation 261 applies to flights out of the EU operated by non-Community carriers, provided only that the starting point was in the EU. The fact that a missed connecting flight is wholly outside the EU does not prevent compensation from being recoverable. Lady Justice Arden considered that this conclusion did not offend the principle of extraterritoriality. Jurisdiction is engaged by the original point of departure and the effect of subsequent flights is merely to quantify the loss suffered.
Prior to the Court of Appeal’s decision, airlines had achieved some success at County Court level in arguing that the decision in Sanghvi v Cathay Pacific Airways  EWHC 1684 precludes a right to compensation where a connecting flight is missed outside the EU. The Court of Appeal found that the decision does not have this effect, applying as it does to a denial of boarding which takes place outside the EU. Lady Justice Arden noted that the claimant in Sanghvi was not entitled to compensation based on the delay to her final destination, as it was of less than three hours.
Lady Justice Arden also distinguished Emirates Airlines Direktion fur Deutschland v Schenkel (C-173/07), in which the Court of Justice of the EU held that a flight for the purpose of Regulation 261 consists of a single unit of air transport and that successive carriages agreed in the form of a single contract do not constitute one single flight for this purpose. She considered the decision to apply to cases of an outbound and a return flight and the position to be different in cases of directly connecting flights.
The Court of Appeal rejected a submission by Emirates that the determination of the liability of non-Community carriers is a matter of domestic law, not EU law. Lady Justice Arden considered that the court was bound by its decision in Dawson v Thomson Airways Ltd  1 WLR 883 that the decisions of the Court of Justice of the European Union as to the meaning of Regulation 261 are binding on the courts of England and Wales.
The decision is consistent with the approach taken in other EU member states and is not a particularly surprising one. It is also not entirely satisfactory. Lady Justice Arden notes that her reasoning potentially deprives a passenger of compensation where the passenger’s journey starts outside the EU, even though subsequent flights would otherwise be within the scope of Regulation 261. Given the strained interpretation which has been given to Regulation 261 to give rise to a right to compensation for delay, some illogic may be inevitable.