Airlines’ failure to offer Covid cash refunds investigated by UK regulator

16 December 2020 | Finance

The UK competition regulator has launched an investigation into the failure of airlines to offer cash refunds to travellers who have been unable to take their flights because of the coronavirus pandemic.

The Competition and Markets Authority (CMA) said its move followed reports that airlines may have breached consumers’ rights by not offering cash refunds in cases where travel restrictions meant people could not legally take the flight.

The CMA cited the example of consumers being unable to travel for non-essential purposes in the UK or abroad during the second lockdown in England in November. The regulator said it was aware of cases where flights were not cancelled and customers were not offered refunds even though they could not lawfully travel. Instead, many were offered the option to rebook or receive a voucher.

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Why the UK competition regulator is investigating Covid flight refunds

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Why the competition regulator is investigating Covid flight refunds

What have the airlines being doing to prompt the CMA action
During the height of the pandemic when airlines were cancelling most flights the law was clear: consumers whose flight had been cancelled were entitled to a full refund – under the EU 261 regulations.

However, since the autumn, a great many travellers have found themselves in a strange position in that their flight has gone ahead, but they have been prohibited from boarding because of lockdown or other restrictions.

While some will have taken advantage of the offer to switch their flight booking to 2021, plenty of others have lost out – in some cases to tune of many hundreds of pounds.

What will the case rest on?
The CMA has already warned holiday cottage providers they must provide refunds to consumers who were prevented from honouring bookings by the various lockdowns and other travel restrictions imposed this year. At the start of the first lockdown lawyers argued that contracts to provide holiday accommodation had been “frustrated” by the fact that it was illegal for the consumer to travel to their destination – and therefore the consumer could ask for their money back. The CMA will examine whether the same applies to flights, and whether passengers should similarly be refunded.

How will this play out?
The best hope for frustrated travellers is an announcement in which the airlines agree to voluntarily offer affected passengers vouchers redeemable against future flights, and possibly refunds – but don’t bet a lot of money on it.

Miles Brignall

Photograph: Steve Parsons/PA

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Last month, Michael O’Leary, the chief executive of Ryanair, said customers would not be offered refunds if their flight was operating but they could not travel. “There won’t be refunds on flights that are operating and travelling,” he said. “But we’ve waived the change fees for bookings.”

The CMA said airlines may be under severe financial pressure but that did not mean consumers should be “left unfairly out of pocket”. The consumer group Which? estimates that the issue of refunds has affected “hundreds of thousands of people”.

Andrea Coscelli, the chief executive of the CMA, said: “We will be carefully analysing all the evidence to see whether any airlines breached consumers’ legal rights by refusing people cash refunds for flights they could not lawfully take. We recognise the continued pressure that businesses are currently facing but they have a responsibility to treat consumers fairly and abide by their legal obligations.”

The CMA intends to write to a number of airlines to “understand more about their approaches to refunds for consumers prevented from flying by lockdown”. The regulator, which did not state which airlines it would be contacting, said that after a “careful analysis of this evidence” it would then decide whether to launch enforcement action against individual airlines.

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“Airlines have often put customers in an impossible situation by operating flights during lockdown restrictions and refusing to offer cash refunds to people who cannot lawfully travel,” said Rory Boland, the travel editor at Which?. “It is right that the CMA has stepped in to investigate and it should take strong action, where appropriate. We expect hundreds of thousands of people who were simply following government rules by not taking flights to be issued refunds, or be given the option of a refund, as a result of this investigation.”

The CMA will work with the UK’s Civil Aviation Authority, which leads on consumer protection in the airline sector, on the investigation.

This post has originally been featured in Guardian.