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‘British Airways cannot be forced to refund flights you missed during lockdown’ – Government

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The Competition & Markets Authority (CMA) announced this morning that it is dropping its attempts to force British Airways and Ryanair to refund passengers who could not take their flights due to UK lockdowns.

It accepts that there are no legal grounds to justify this in cases where the flight did operate.

You can see the official press release on here.

Competition and Markets Authority British Airways Ryanair

In June, with much fanfare, the CMA announced that it was launching an investigation into airlines which had refused to refund customers who could not take flights due to legal restrictions.

(For clarity, this is NOT related to airlines who have failed to refund customers whose flights were cancelled. This investigation looked purely at people who did not travel but whose flights were operating.)

It was focussed on British Airways, who instead chose to offer vouchers to customers, and Ryanair, which only offered the opportunity to rebook.

In conclusion:

“After a thorough examination of relevant law, and the evidence it had gathered during its investigation, the CMA has concluded that the law does not provide passengers with a sufficiently clear right to a refund in these unusual circumstances to justify continuing with the case.”

British Airways Competition Markets Authority

Personally, the whole case seemed wrong from the beginning.

  • The original investigation appeared to be nothing more than a PR exercise by the CMA to be seen to be responding to consumer pressure
  • It would have taken no more than a couple of days to get a firm legal opinion on what British Airways and Ryanair had done. After all, the airlines had performed their contractual duty – ie operated the flight on which you bought a ticket.
  • British Airways, in particular, should arguably have been given credit – not threatended with legal action – for offering vouchers to customers. It was still operating flights and would have been perfectly within its rights to offer nothing. Instead, it offered vouchers which are virtually as good as cash to most people, given that they are valid until September 2023 and are transferable.
  • The CMA ignores the role of travel insurance, which should be the fallback position for anyone who could not travel due to lockdown

The CMA concludes:

“given the CMA can only enforce the law as it stands, it has decided to close the investigation.”

I can’t helping thinking that, given everything that has been going on in the business world over the last 18 months, the CMA could have used its limited resources more efficiently.

You can read more about the decision on here.

Comments (68)

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  • Ken says:

    Without seeing the opinion, I’d be fairly sure that as both Ryanair and BA are offering to fulfill the contract, just as a different time, that negates most frustration claims.

    Both companies behaved reasonably making the bar for frustration of contract higher – and it’s fairly high anyway.

    A customer would only be able to claim frustration if ;

    a) time of performance was of the essence. Are they really not ever going to travel on BA again ?

    b) did they not take out insurance? Courts have previously ruled that ‘unforeseen circumstances’ are negated by insurance.

    I suspect if airlines had simply refused any vouchers or rebooking then a test case of frustration would have a strong chance of winning.

    • Lady London says:

      I think time is of the essence on any airline booking. Particularly on a nonrefundable ticket. As customer loses their money if they fail to take that specific flight.

      So I think frustration of contract had to be considered. As insurance is available and flexibility was offered, en masse I think the decision ‘just’ fell on the righteous side.

      However if I’d bern the customer with a nonrefundable flight booked and the flight ran and the sole and only reason I couldn’t take the flight was newly introduced government restrictions and I’d booked before that was a thing, I’d give claiming frustration and therefore refund serious thought if I did not have a reason to fly that destination or airline in a reasonable amount of time (say 1-2 years).

      • Mikeact says:

        LL..but with BA you were offered your money back, albeit a voucher. I guess you’d certainly lose in the small claims court for anything else, regardless of whether or not you had insurance as well. All credit to BA.

        • Lady London says:

          I don’t think so Mikeact. There is no provision for me to demand a voucher for a nonrefundable flight I missed. If new unforeseen major prohibitive government action stops me taking a nonrefundable flight and no other reason I do consider that fulfils frustration of contract requirements. The contract has been rendered void by statute.

          • Mikeact says:

            An absolutely different scenario……we can all make up pretend situations.

  • ken says:

    And we can contrast this with the CMA guidance on how refunds should be provided for UK holiday cottages etc.

    • DR says:

      Yes indeed, to me the CMA appears to be very inconsistent with their guidance around covid related issues, mostly at the expense of small and medium sized businesses.

      • Ken says:

        I don’t think it’s inconsistent, just nothing is black and white.

        If it’s against the law to stay in a holiday let during lockdown then that contract is probably frustrated and it’s easy to do a blanket ruling.

        For flights , if there are reasons you can fly then it’s not quite the same. In addition airlines in this case behaved with some degree of reasonableness.
        Many cottage companies didn’t- so had to be strong armed into providing refunds. In hindsight a refund was probably better for the owner than an alternative date when prices went through the roof.

  • NFH says:

    The frustration of contract argument doesn’t apply, because the airline was still allowed to operate the flight and did so. The fact that most passengers were not allowed to take the flight does not mean that the contract was frustrated, any more than some passengers being turned down for a visa for the destination country, the destination country suddenly imposing a visa requirement, or the destination country suddenly imposing a travel ban on the passenger’s nationality (e.g. Trump’s action against seven Muslim countries). The passengers’ inability to fly is not the airline’s problem and does not lead to a frustration of contract.

    • Stu N says:

      Agreed, and the distinction between (operating) flights and holiday cottages turns on this.

      For flights, the airline was able to operate the flight and did so, so it was clearly possible for them to perform their obligations. It is always the passenger’s obligation to ensure they are eligible to travel and if not the fallback should be insurance.

      For holiday cottages, the company was not permitted to let the cottages and the prospective renter was not permitted to rent it due to COVID restrictions so neither party could perform their obligations – this is about as clear an example of frustration as it is possible to see.

    • Andrew says:

      I’d be interested whether there’s any potential scenario under which frustration of contract would apply between a customer and airline in your opinion.

      Imagine a counter example. Due to green lobbying all UK air travel is banned from tomorrow. Any airline taking off from the UK would be breaking the law. Using your own wording the passenger says “your inability to fly is not my problem so even though you can’t I expect you to do what normally happens with cancellations and fulfill all my rights under EC261/2004. I’m entitled to rerouting so you must put me on a Eurostar and fly me from Paris or Brussels as soon as possible”. Honestly would the airline not claim frustration of contract and only offer a refund?

      • NFH says:

        I think frustration of contract would definitely apply where both parties, airline and passenger, are prevented from fulfilling their side of the contract. For example, you book a flight to Russia and subsequently the UK government decides that all travel to or from Russia, by airlines or individual passengers, is suddenly banned.

        • Stu N says:

          If the airline was banned from flying then that would, I think, be frustration as it couldn’t perform its obligations under the contract for reasons not foreseeable when the contract was entered into.

          In practice (i) the flights would then be cancelled invoking rights under conditions of carriage and (ii) passenger rights under EC261 would kick in so the frustration arguments wouldn’t need to be run.

          If passengers were banned but airlines could fly, you are in a very similar situation to COVID and I think the CMA’s view would be applicable here too.

    • Roy says:

      You can bet there will be a force majeure clause in the contract that protects the airline in the event that government action prevents it from operating the flight. Is there a similar clause protecting the consumer, in the event of government action preventing the consumer from flying? No. But is that fair? Or are those exactly the kind of asymmetrical terms that the various unfair contracts provisions in consumer law are designed to protect us against?

      • Andrew says:

        Very good point. Fairness of consumer contracts is likely to be a factor as well. If a determined passenger pushed for a refund I’d be amazed if they didn’t win. The airline would in fact be almost certain to settle, not wanting to lose, set a precedent and have the floodgates open.

  • Anna says:

    I recall that hotels and other accommodation providers were told that they were legally obliged to refund customers if either they or the customer would be breaking the law by using the accommodation, was that not correct?

    • Anna says:

      For example, holiday accommodation in Wales was allowed to open, but people weren’t allowed to travel from England to use it.

  • Anna says:

    Whatever the legal position, this is going to make people even more wary of non-refundable bookings!

  • Journeying John says:

    What about the many, many customers who had vouchers foisted on them when BA as the carrier cancelled?
    And those where the route to refund was effectively blocked by withdrawal of online functionality and uncontactable call centres?

    • Rob says:

      Different issue. You have the right to take BA to CEDR arbitration or Money Claim Online to swap your voucher for cash though, on the grounds you outlined. Doubt you’d lose. Only takes a few minutes to do the paperwork.

  • Harry says:

    The CMA would have spent its money better by bankrolling one of the clearest cases brought to its attention. That would clearly have been in the public’s interest. As it is we have the stupid statement from Andrea Coscelli, Chief Executive of the CMA, who said: “Given the importance of this to many passengers who have unfairly lost out, we hope that the law in this area will be clarified.” If the law needs clarifying why have you given up your investigation? Counsel told you the law does not need clarifying. If you think it does, test it in the Courts.

    • JDB says:

      It is for Parliament to legislate, not the courts (read or listen to Lord Sumption, retired Supreme Court judge, on this topic). It would be absurd for a regulator to spend huge sums of public money and take up court time on a flaky case that might equally reach the conclusion that the law lacked clarity. The CMA is better to work with the government to amend the law.

      • Lady London says:

        Practically speaking JDB, in English law courts do pretty much legislate at some times due to case law – lots of countries’ legal systems have no such concept.

        • Rob says:

          The UK is a ‘case law’ system – laws are loosely drafted and left to the courts to interpret via precedent. The way that the courts have interpreted EC261 (eg Jet2 vs Huzar) has shown how this works – Jet2 (and the rest of the industry) must rue the day they decided to challenge Mr Huzar over his view that delays due to aircraft maintenance problems should trigger compensation.

  • Aaron C says:

    Very interesting discussion. I’ve often thought of it as a bit like someone ordering or leasing a car then losing their driving licence (maybe they have a fit and it’s withdrawn medically). Would they be able to demand the car company takes the car back and stop paying for it? Probably not.

    Some people were able to fly during Covid. The airlines don’t ask why someone is flying when buying a ticket. All their contract is for is to operate the flight. Vouchers seemed like a very fair compromise.

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