UK government seeks views on legislating airline refunds to package organisers

Department for Transport aims to ‘reflect on experiences’ following the COVID pandemic

The UK government is seeking industry views for the potential reform of one of the most contentious areas of OTA airline relationships exposed during the pandemic.

The Department for Transport (DfT) has today launched a consultation on Aviation Consumer Policy Reform.

It says the consultation is an opportunity to “reflect on recent experiences, in particular, following the pandemic”, and builds on an Aviation 2050 consultation.

It is separate to a further consultation on reform of the Atol consumer protection scheme run by regulator the CAA, but does considers the association’s powers of enforcement.

In particular the consultation looks at whether package travel organisers, who are legally obliged to refund a cancelled holiday within 14 days should have a right under existing European EC26 legislation retained in UK law to claim that money from the airline.

COVID-19 saw many OTAs that were struggling to refund Atol-protected customers blame airlines for not giving them the money back.

The situation saw claim and counter-claim between OTAs and airlines and led to leading UK agent On The Beach starting legal proceedings against leading budget carrier Ryanair.

The OTA claims it has refunded millions of pounds of customer money for flight bookings which had been passed on to Ryanair but not received the money from the carrier.

The consultation states: “We have heard from the travel industry a call for package organisers to be able to make a claim through legislation…on behalf of the consumer for a full refund where a flight that is part of a package holiday is cancelled by the operator.

“This would not affect the rights of the individual consumer, who would continue to receive their refund through the package organiser, nor should it affect airlines who would ordinarily do this through the commercial arrangement with the package organiser, but it would make clear in legislation the right for the package organiser to recoup the refund from the airline.”

The consultation asks the following question: “What would be the advantages and disadvantages of enabling package organisers to seek a refund for cancelled flights that are part of a package holiday through legislation?”

Rhy Griffiths, partner at law firm Fox Williams, said: “These reforms will be of real interest to travel companies, particularly those which look at the interplay between airlines and package holiday organisers.

“The DfT will look specifically at the flow of refunds between airlines and package holiday organisers, an issue which was brought into sharp focus by the coronavirus pandemic.”

As well as the issue of refunds from airlines to package organisers, the consultation seeks views on improved enforcement powers for the CAA to speed up and make consumer claims more efficient.

It is also considering whether to make it mandatory for all airlines to be members of Alternative Dispute Resolution (ADR) schemes that resolve grievances without going to court.

Other proposals revolve around the amount of compensation and whether this should be linked to the ticket price and the rules related to length of delay and whether a sliding scaled scheme similar to that in the rail sector should be introduced.

Finally the consultation is looking at airline accessibility for passengers with disabilities and reduced mobility and for people who share certain protected characteristics like age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion or belief, sex and sexual orientation.