Two of Britain’s biggest airlines may have breached consumer law by failing to offer timely refunds for flights cancelled because of the pandemic, the competition watchdog said today.
The Competition and Markets Authority (CMA) said that British Airways and Ryanair were under investigation because they “refused to give refunds to people that were lawfully unable to fly”.
Both airlines may have left passengers “unfairly out of pocket”, it said, with some travellers forced to accept vouchers for future flights instead of getting their money back.
The regulator could take the carriers to court under the Enterprise Act 2002 to seek refunds or compensation for affected customers.
The move is made after repeated criticism of airlines for failing to provide money back for flights cancelled as a result of travel restrictions imposed during the pandemic over the past 16 months.
Under existing rules, airlines are supposed to provide a cash refund if requested within seven days.
In some cases, airlines and tour operators have asked customers to accept vouchers or credit notes for future bookings, even though there is no indication of when flights and holidays outside the UK will fully resume. Passengers who did get their money back often told of lengthy delays or being forced to spend hours on the telephone attempting to chase refunds via a call centre.
Today’s move comes after the watchdog launched enforcement action against several package holiday companies, forcing them to agree to offer cash refunds to customers.
Last month, Teletext Holidays and Alpharooms agreed to hand back £7 million to customers whose holidays were cancelled as a result of the Covid-19 pandemic.
It follows similar agreements made by LoveHolidays, Lastminute.com, Virgin Holidays and TUI UK after thousands of customers complained that the companies had failed to refund them for cancelled trips.
The travel sector has been one of the hardest hit during the pandemic and has faced the most scrutiny from the watchdog, which wrote to more than 100 companies reminding them of their responsibility to process all refunds within the legal timeframe.
Today, BA hit out at the action, accusing the government of attempting to “punish further an industry that is on its knees”. It said it had issued more than three million refunds.
However, Grant Shapps, the transport secretary, insisted that airlines had a duty to ensure passengers could book tickets with “confidence”.
He told Sky News: “There is an absolute requirement and duty to make sure that people either rebook or get their money back; that is the way to build confidence . . . I do urge all operators to adhere to that and welcome the Competition and Market Authority work into this because that’s how we are going to rebuild confidence.”
The watchdog said it would be writing to both airlines as part of the investigation.
It said that during the lockdown “British Airways and Ryanair refused to give refunds to people that were lawfully unable to fly, with British Airways offering vouchers or rebooking and Ryanair providing the option to rebook”. Irish-based Ryanair operates an extensive short-haul European network out of UK airports while BA operates short and long-haul routes.
It added: “The CMA is concerned that, by failing to offer people their money back, both companies may have breached consumer law and left people unfairly out of pocket.
“It is now seeking to resolve these concerns with the companies, which may include seeking refunds, or other redress, for affected customers.”
Andrea Coscelli, the regulator’s chief executive, said: “While we understand that airlines have had a tough time during the pandemic, people should not be left unfairly out of pocket for following the law.
“Customers booked these flights in good faith and were legally unable to take them due to circumstances entirely outside of their control. We believe these people should have been offered their money back.”
The agency said that it should not be assumed either airline has broken the law.
A spokeswoman for BA said: “We continue to offer highly flexible booking policies at the same time as operating a vastly reduced schedule due to government-imposed travel restrictions, and we have acted lawfully at all times.
“It is incredible that the government is seeking to punish further an industry that is on its knees, after prohibiting airlines from meaningful flying for well over a year now.
“Any action taken against our industry will only serve to destabilise it, with potential consequences for jobs, business, connectivity and the UK economy.”
Ryanair said it had looked at refunds on a case-by-case basis and had paid money back “in justified cases”.
“Since June 2020, all our customers have also had the ability to rebook their flights without paying a change fee and millions of our UK customers have availed of this option,” it said in a statement.