/ Travel & Leisure

Why it’s not right to make it cheaper for airlines to disrupt your flight

The government is proposing making it cheaper for airlines to disrupt UK flights. Here’s why the regulator needs greater powers, and why we need an aviation ombudsman.

Today I’m putting the finishing touches to Which?’s submission into the aviation consumer policy reform consultation, hoping that some of the government’s proposals are taken forward and implemented –and others are quickly abandoned.

The regulator needs greater powers and we need an aviation ombudsman.

I was very pleased to see that measures to strengthen Civil Aviation Authority (CAA) powers and mandating Alternative Dispute Resolution (ADR) in aviation were being considered within this consultation when it was announced seven weeks ago.

A good ADR provider should help customers to get a quick resolution of complaints, including payment of compensation, without having to take expensive, time-consuming court action.

For years, Which? has been calling for the CAA to have powers to fine airlines when they break the rules, in order to better protect consumers and their money, just as some other regulators in the UK and abroad do. We expect that with greater powers the regulator will be more proactive in informing all of us of our rights when things go wrong and act more decisively in holding the airlines to account.

Those rights should include access to redress. For years, membership of ADR has been voluntary for airlines, which means airlines can leave any time when they disagree with a decision leaving consumers unable to enforce their rights, just as Ryanair did in 2018. ADR must be mandatory for all airlines and be the responsibility of a single statutory aviation ombudsman so that, if something goes wrong, we can quickly and cheaply enforce our rights without resorting to the courts.

Inadequate plans

However, I was surprised to see within these proposals plans to change the levels of compensation we can claim for delays to domestic flights. Especially given the disruption and illegal behaviour passengers have experienced before and during the pandemic.  

The government proposals appear to mirror compensation in rail, despite aviation being very different to the rail system, applying the following model:

✈️ For a delay of more than 1 hour but less than 2 hours, passengers are entitled to compensation of 25% of their ticket price.

✈️ For a delay of more than 2 hours, but less than 3 hours, passengers are entitled to compensation of 50% of their ticket price.

✈️ For delays of over 3 hours, passengers are entitled to compensation of 100% of their ticket price.

This would change a long-standing law introduced in 2004 called Regulation EU261/2004. Without getting too technical, the law dictates that airlines need to pay out a minimum of £220 to a passenger whose flight is delayed by over three hours.

What is very concerning is the lack of evidence behind these proposals. They seem to have been rushed through without first attempting to collect the evidence, let alone involving passenger and consumer groups in the discussions. In fact, only some airlines were involved in the discussions. 

Digging through the consultation documents, it appears that low-cost airlines have communicated verbally that compensation can be equivalent to 3% of their turnover, but that commercial sensitivities have prohibited the airlines from providing evidence of this to the government.

Weaker consumer rights

We cannot have weaker consumer rights in a sector where acting illegally is the norm. Paying £220 in compensation may seem high, especially when compared to the price of a low-cost ticket. However, the figure is set at a level designed to stop airlines from delaying, cancelling or overbooking flights, while also giving the consumer cover for their losses incurred as a result of the disruption.

The reduction of the penalties will make it far easier for carriers in the UK to cancel flights or overbook seats for commercial reasons. That’s something that happens fairly regularly in many other countries, such as the United States.

These changes will undo that financial penalty. Which? looked at figures provided by Skyscanner to calculate how much airlines would have to pay out for long delays on some of the most popular UK routes under the possible new system, assuming planes have a full capacity of 180 passengers and everyone eligible was to be compensated.

✈️ Edinburgh to London, average economy ticket price £44: If it were full, an airline would potentially have to pay out up to £39,600 for delays of three hours or more. Under the government’s proposed scheme the maximum payout is reduced to just £7,920.

✈️ Gatwick to Belfast, average price £55: If it were full, an airline could have to pay out up to £39,600 for delays of three hours or more. Under the proposed scheme the maximum payout falls to just £9,900.

This will fundamentally shift the balance of power away from the consumer and further towards the airlines.

Proportional impacts of disruption

What you pay for your flight is not proportional to the impact of disruption. Airlines, of course, would rather pay little or no compensation, and by running as punctual a service as possible they have the power to make it happen. 

Ask any consumer who has suffered a last minute cancellation or delay of three hours or more if they’d swap their compensation payout to fly on time. I’d bet the vast majority would. Missing out on a holiday, a business meeting or a family reunion because of a severe flight delay can be far more costly than missing a train, particularly given the geography of this country. Booking alternative travel at the last minute can be unaffordable for many.

Also, what could you do if your flight from Belfast to London was delayed by more than 3 hours, or worse, cancelled?

The likelihood of someone taking a domestic flight is strongly related to where they live and it is clear that changes will impact some parts of the UK more than others. To this end, we are concerned how these plans will disproportionately affect those travelling to and from some parts of the UK more than others. 

More delays, cancellations and overbooking

The current rules are an understanding of these two facts: giving the airlines a strong  financial incentive to limit severe delays. The length of time gives airlines an adequate opportunity to recover a schedule that has been knocked off course, while keeping the consumer harm caused by a delay as minimal as possible. 

I am deeply concerned that if these proposals go through as they are, that incentive will be lost and we could see more delays, cancellations and overbooking as consumers get minimal compensation. I hope that the Department for Transport thinks very carefully when reading through Which?’s submission and abandons these plans.

Do you take regular domestic flights? Have you ever suffered a severe delay or late cancellation and struggled to get compensation? Please let me know your story in the comments.

Comments

There seems to be a flaw here in conflating delays with cancellations. I think the % refunds if a flight is simply delayed seems reasonable; if the flight eventually travels with the original number of passengers, what doe the airline gain from a delay, whether unavoidable or contrived? On the contrary, it costs them money.

Brian H says:
25 March 2022

It may seem reasonable but the consequences of a delay will vary between passengers. What you pay for your flight is not proportional to the impact of disruption. Delays which result in missed connections and subsequent higher costs is one example. It has been pointed out that passengers have not had an opportunity to voice their concerns about any proposed changes, which may result in unfairness to passengers if the law is changed as outlined in the Which article. These proposals require wider consultation.

Presumably if your first part of a journey is a UK internal flight that is part of a booking to a destination outside the UK then any delay in reaching your final destination would be covered by existing compensation.

This revised compensation only seems to apply to domestic flights.

It is a nonsense to link compensation for delay to a percentage of the ticket price. On the same flight, there are passengers who may have paid as little as £10 and some sitting in business class who paid £400. This variation in ticket price is a function of when they booked, projected or actual seat availability at the time of booking, ticket flexibility and whether they want to pay a lot extra for the very limited perks of use of the airport lounge, a larger baggage allowance, sitting up front and getting an in-flight meal.

On what basis is a passenger who paid more for their ticket any more inconvenienced by a delay or cancellation? If anything, they have the relative peace and quiet of the excutive club lounge to wait in, where drinks and food are free. The passengers who bought cheap seats may spend their time sitting on the hard floor of an overcrowded airport terminal if the flight delays are widespread, and buying their food and water from overpriced outlets.

There is also the scenario where passengers have already boarded or landed and are being held on the aircraft – most likely due to a technical fault.

I would argue that those who paid least for their tickets are probably in the most discomfort and also the most out of pocket.

Kevin says:
26 March 2022

Since airlines use dynamic pricing to optimise their revenue from any particular flight, ticket prices are highly variable. If compensation is based on ticket price, it should reflect the notional cost to the airline if they had to buy the seat BACK from the passenger, maybe based on something around the peak ticket price?

@Kevin,

That seems like a more sensible idea. What we don’t want is an airline incentivised not to fly because 100 passengers paying £20 on average say, doesn’t pay for the cost of operating a half full flight and all they have to do is refund the passengers.

As I often say, being in business doesn’t entitle you to make a profit on every deal. Sometimes you have to take a loss to make your money elsewhere.

I don’t take domestic UK flights, so this is unlikely to impact me, but I do think that linking compensation to the ticket price is an absurd proposal. In the event of a plane crash, should compensation for injury or death be likwise linked to the ticket price? Of course not; the principle has no merit in any circumstances.