British Airways facing enforcement action by the Competition & Markets Authority over refunds

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• Ian C says:

  10 Jun10 June 08:56

  I think the big question, and probably the main reason the CMA are looking at it in the way they are, is which party in the contract is capable of choosing. E.g whether BA/Ryanair have an unequal position in the contract compared to the consumer.

  The main issue I see is that the airline has the power in this situation. They get to choose whether or not they operate the flight. If passengers cancel they can resell the hold space for extra cargo, decrease fuel costs, etc. They could cancel the flight, refund everyone’s money and end up most of the way back to square one.

  The consumer in this case doesn’t have any such option. The provision of FTVs certainly helps but these are not a viable option for everyone. The use of travel insurance is possible, but as we’ve learnt many insurers tried to worm their way out of payments, and in many such cases a refund sits behind an excess. Fundamentally a refund in this situation doesn’t seem unreasonable.

  The way I see it is the CMA is fulfilling its remit which is to stand up for consumers and attempt to more evenly balance the scales.

  The issues faced here by the airlines are far from unique. I work in the conference/live events industry. During this same time we’ve had to weather many of the same issues the airlines did, ticket refunds, cancellations, etc. We have plans within the business and insurances to help balance these costs but they are not 100% coverage which has left us out of pocket. Emergency planning like this is just part of running a business.

  • J says:

    10 Jun10 June 09:43

    Good point about balance of power, and about planning. I wonder whether airlines routinely have insurance for unforeseen events, that would cover their cost of refunding passengers in situations like this? They have insurance for crashes, presumably. Seems to me that if BA/Ryanair/et al are insured for this, then no question, they should refund and claim back from their insurance (I suppose there is a difference between, say, one or two passengers being unable to fly for some reason and being expected to claim on their personal insurance, versus an entire class of passengers being unable to fly and being covered by the airline / the airline’s insurance). If the airlines don’t have insurance for this, then I guess the question is should they have had? Was something like this sufficiently foreseeable that they should reasonably have insured against it? Can frustration of contract be insured against?

    In other words:
    – If they were insured but still refuse to refund = bad airline
    – If they were not insured but reasonably should have been = bad airline
    – If it was not reasonable to expect them to be insured… debatable?

    I get that the airline has the choice of operating or cancelling the flight – but what should happen if, say, 80% of the booked passengers can legally fly and only 20% cannot? No reason for the airline to cancel the flight. Is it right that the airline should shoulder all of the risk/cost of refunds/lost revenue etc, or should the risk be shared with the passengers (eg in the form of the excess on their travel insurance policies) who bought non-refundable tickets? Could it be argued that the passengers had the choice to buy a flexible ticket? (Genuine questions – I don’t know the answers – beyond the observation that it seems slightly unfair to put all of the onus on the airlines).

    Possibly raises the side question of whether travel insurance should be mandatory? Or should there be a ‘frustration of contract insurance’ levy added to non-refundable tickets? Yay, more surcharges 😉

    • Ian C says:

      10 Jun10 June 10:37

      I am not privy to the internal workings of the airline industry. But in our industry we have a fairly standard business interruption insurance policy which covers for some scenarios like this. I will admit that there has been issues over these policies also, with some insurers avoiding payouts. This is a problem for the insurance regulators and not the CMA to resolve.

      Similarly BA will be used to the concept the ATOL Protection Contribution which they pay per passenger to cover the ATOL protected schemes. Therefore it’s not like the idea to save now for potential future problems is an uncommon concept to them as a business.

      The issue with making things like travel insurance mandatory is that there are some people for whom travel insurance would be impractical. For example at the moment many insurers are not providing cover that would be applicable to this situation.

      It’s my view that the airlines should have foreseen the possibility for something such as this. We have seen a number of localised pandemics in the last few years with SARS, Plague, etc.

      The scope of non-refundable tickets I feel needs to be more clearly defined. On the previous page Rob set out some examples (rejected Visa, travel on bail, etc) where the airline wouldn’t be expected to “pick up the tab”. These examples all hinge on a persons actions/inactions. In cases where it is no fault there needs to be more clarity.

      For example: the contract basically has 2 parts:
      Part 1 – A traveller will board their aircraft and fly the entire flight – this is important in the example where consumers are sued for skipping legs of flights to save money
      Part 2 – The airline will operate a flight for me to travel on for my entire journey

      The issue here is that irrespective of the ticket type (refundable/non-refundable) if either party fails to meet their obligations there are legally allowable consequences (eg. cancellation compensation, etc) whether these be established in the contract itself or via applicable legislation.

      • Lady London says:

        10 Jun10 June 19:29

        Agreed. Frustration of contract is hard to argue even in business to business contracts. Parties are expected to make provision for business upsets. This may mean insuring or choosing to self-insure.

        I think the CMA has chosen a difficult argument here. I don’t fully support them. Both parties had insurance available to them prior to Covid that would have covered this. And since Covid is now a known risk frustration is still a bit hard to argue.

        However if the CMA is doing this to expose BA who deliberately removed refund request functionality from their website so as to block customers from requesting cash refunds they were entitled to, and deceptively forced customers into a path on their website that would only provide a non-encashable voucher instead, and what is more amended the website a second time so as to also block customers requesting a refund who had discovered a workround ( such as covered by HfP ) then I support the CMA’s action because that was indeed ‘dirty tricks’ to deny customer rights.

  • Memesweeper says:

    10 Jun10 June 10:04

    “The provision of FTVs certainly helps but these are not a viable option for everyone.”

    Then the consumers should not have booked a non-refundable ticket. I can’t imagine anyone who booked for travel in that period didn’t understand there was some measure of risk, balanced by the offer of FTVs. Seems fair to me. Conversely forcing airlines to refund passengers who are legally unable to fly would set a bad precedent.

    As others have commented, the CMA is barking up the wrong tree here. There are far more material breaches of law and good faith that need clamping down on at BA and other airlines,

    • Ian C says:

      10 Jun10 June 10:46

      My understanding from the article was that this was from the general investigation which commenced in December which covered basically refund handling over the entire pandemic.

      I agree people who book knowing the risks during the pandemic should be treated as having known and understood the risks. Those who booked prior to the pandemic (after all BA releases flights some 11 months early) would not have known.

      I am not sure I sit on the full 100% refund, especially for non-refundable tickets, however the airline keeping the full amount is also not fair. After all if the passenger cancels then the airline also saves money (less fuel burn, less baggage to process, potential to collapse 2 flights in to 1, etc).

      The refund criteria could reflect cause and consequence. If neither party causes the issue the consequence should be shared. If the airline cancels they take the consequence, likewise the same with passengers.

      • Memesweeper says:

        10 Jun10 June 11:43

        For those who booked prior to the pandemic, I’d agree. Something should be done for them.

    • Chris H says:

      11 Jun11 June 20:48

      Please do not be unrealistic on this forum. Buying a refundable ticket, or fully flex is the domain of the very rich, or high end businessmen. For most of us it is an untenable option.
      Getting a visa is something we have control over and can get well in advance and will have a good expectation that we will be able to get in well in advance. Knowing if a country will let any holiday maker into their country used to be well known in advance, but now is not something we have any control over, and will not know for sure about until the day of departure.
      I do doubt if insurance policies will pay out on this.
      If BA have availability on their site for a flight there is an expectation that the flight will fly, and that the country will let them in when they arrive if they have the (as known on the day of booking) right paperwork.
      When the situation changes, the original contract is often null and void due to “Frustration” or situation beyond the control of one of the parties to the contract which prevents them from fulfilling their part.
      BA know this and said they will pay refunds if the UK Gov say we cannot go. So why not pay refunds if the destination country says we cannot go? Is there any real difference to the flyer on who decides they cannot enter? I think not. Is there any moral difference. No, definitely not.
      My situation was I booked a flight 2 years ago for last March 2020. It was cancelled and I was able to rebook it free of charge for later that year. It was cancelled and I rebooked it for March this year. It was cancelled so I rebooked it for the beginning of June. It was cancelled and I rebooked it for next week. In between all these flights have been changed so I had to re route from BWI to IAD. The morning flight to IAD was cancelled so I had to rebook the afternoon flight. Every time I changed there was a realistic expectation that by the time the flight took place the entry restrictions would be lifted. I was not charged a rebooking fee, and did not have to pay any fare difference, just the constant change in car hire costs.
      Now I am cancelling the flight because BA want an extra £2000 for the difference in original cost and the new costs for the flight if I rebook in July. There would not have been a cost if I had chosen not to rebook on the afternoon flight, but rebook straight away for the July flight, but I DID NOT THINK that by June 14th we would still not be allowed into the USA.

  • Track says:

    10 Jun10 June 13:17

    There is more. If you purchase a ticket, an airline might choose to see it as an obligation to fly and go after you if you don’t fly (this happens if you drop a return leg or come to airport/use facilities and decide not to fly).

    The public thinks they are buying an option, but they are entering a contract with an obligation.

• Neil Spellings says:

  10 Jun10 June 09:03

  I wonder if they will include the likes of EasyJet who continue to refuse requests for refunds and only give vouchers you still can’t use

  • Anthony says:

    10 Jun10 June 12:27

    I’ve had multiple refunds from Easyjet?

    • Anna says:

      10 Jun10 June 12:57

      +1, they have been infinitely more co-operative than BA.

    • Neil Spellings says:

      10 Jun10 June 13:22

      They declined to refund the cost of an original booking because I part-used it for a voucher for another flight (that also got cancelled)

• Chris Heyes says:

  10 Jun10 June 09:11

  If a Airline (any Airline) as a facility on-line to issue legally due refunds than takes that faculty off-line. on purpose.
  That Airline should be forced to issue fixed compensation on top of the refund “say treble the refund” “plus” a very large fine
  Any business that cannot survive, is just in the same position of any other business.
  After all does it really matter, another Airline will “pop up!

• Andrew says:

  10 Jun10 June 09:17

  Love the comments about travel insurance – that’s generally not much good when you are visiting family on a domestic.

  I was one of the individuals who made a formal complaint to the CMA that BA weren’t recognising the Scottish Government’s position on travel. Although I had to then complain to the CMA that they were sending nonsense replies that had nothing to do with the subject raised.

  • J says:

    10 Jun10 June 09:52

    How so? A quick google shows plenty of options for domestic travel insurance?

    Totally agree with you re BA’s nonsense replies – their approach seems to be to completely ignore the issue/complaint and instead answer a whole bunch of unrelated questions that you didn’t ask, and basically try to fob you off with rubbish. It’s almost as though their system has a randomiser in it so that everyone gets the response to someone else’s complaint 😉

    • Andrew says:

      10 Jun10 June 10:12

      Here’s the wording of my usual Aviva Annual Policy:-

      “Yes, our policy covers holidays in the UK. Your holiday must involve at least 2 consecutive nights stay in pre-booked holiday accommodation.”

      So if I booked a BA flight to visit my parents or relatives in Scotland, it doesn’t qualify for travel insurance.

      It was the CMA that was sending nonsense replies.

      • Anna says:

        10 Jun10 June 12:59

        I don’t understand why you’d expect to be covered, it’s not travel in the sense of taking a holiday. If I booked a train ticket to visit my family, I wouldn’t expect my travel insurance to cover it if the train was cancelled.

        • @mkcol says:

          10 Jun10 June 21:52

          You should expect your travel insurance to cover you if your train was cancelled.

    • Ian C says:

      10 Jun10 June 10:58

      A lot of domestic travel insurance policies wouldn’t cover cancellations in this scenario. See the summary at https://www.moneysavingexpert.com/news/2020/02/coronavirus-travel-help-and-your-rights/#alreadybooked

      My Nationwide (admittedly inclusive bank account policy, so not the best option available) specifically says:

      “From 1 January 2021, you’re no longer covered for cancelling your trip due to the coronavirus or a pandemic, before you travel, unless it’s for medical reasons. This applies to all trips booked, or new accounts opened, on or after 1 January 2021.”

      • Anna says:

        10 Jun10 June 13:00

        Interesting – isn’t this the policy that still covers you for travelling against FCDO advice though?!

        • JDB says:

          10 Jun10 June 17:55

          Yes, it does cover you for travel to ‘all but essential travel countries’ and it does cover you for cancellation if you have covid (or indeed if you get covid abroad), but what it doesn’t cover is (for instance) not travelling because you have been told to isolate after being in contact with a covid case or if the govt changes the rules relating to you being allowed to travel.

• Andy S says:

  10 Jun10 June 17:16

  You can see BA’s & Ryanair’s view here, if they operated the flight, its not their responsibility that the passenger was not allowed to travel. and passengers should have appropriate travel insurance.

  If making bookings as present, you should carefully check the terms and conditions of your travel insurance policy and contract your insurer to find out if you would be covered for travel bans.

• Nick says:

  10 Jun10 June 20:26

  For those complaining about turning off online refunds last year, BA had a very good argument for it – a lot of customers whose flights hadn’t been cancelled were doing it, then complaining because they only received a refund in line with fare rules, which created additional work for everyone. So they asked people to call in order to explain the T&C – they couldn’t design a ‘halfway house’ quickly enough. It wasn’t entirely for customer-unfriendly reasons, whatever you believe.

  In this case, I actually hope it’s taken to court, to settle it once and for all. I don’t think they should pay if the flight operated, particularly if the customer didn’t bother with insurance, but if the law does indeed allow for a ‘frustration’ clause then the CMA should prove it, and everyone can stop arguing.

  • Lady London says:

    10 Jun10 June 23:35

    Sorry Nick I just don’t buy that explanation as to why BA disabled the pre-existing longstanding perfectly functioning ability for passengers to request a refund on the website.

    If what you’ve said BA is now saying is the reason, that BA was so concerned that they needed to discuss refunds with passengers in case a few might not actually qualify for the refund they might expect, then BA should have provided sufficient resource on their phone lines to deal with these calls and we all know the situation on the phone lines was that practically it was impossible to get through to BA on them.

    I respect (genuinely) your loyalty to BA though.

    • Nick says:

      11 Jun11 June 08:54

      Oh don’t get me wrong, there’s lots that they did (and do) that’s unfair for customers, and I’m very happy to be critical when that’s the case. I’m just saying (as I did at the time) that this isn’t one of them, at least not to the extent that it could have been.

      And at the time, every single person able to take calls from customers with the right skills and knowledge was doing so. I don’t know where else they could have got additional heads from at such short notice.

• Chris H says:

  11 Jun11 June 20:55

  BREAKING NEWS! I have just phoned BA about cancelling my flight to IAD USA next Tuesday. The morning flight was cancelled, but the afternoon flight I am booked on is still operating, but the USA won’t let me in. I think the exact scenario we are talking about.
  They have just given a full refund which they say will be refunded to the credit cards making the payment within the next 7 days.

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