Coronavirus: Airline refund woes lead to calls for a new ombudsman scheme

Consumer group Which? has urged the Civil Aviation Authority (CAA) to introduce a new aviation ombudsman scheme to improve the “broken” passenger complaints system, as part of its upcoming recovery plan.

The review of the broken complaints system comes as consumer trust in the aviation industry continues to dwindle as a result of the COVID-19 pandemic’s impact on the sector.

Responding to CAA’s consultation on potential changes to its current Alternative Dispute Resolution (ADR) policy, Which? said that the current measures are not working for consumers in the already troubled travel industry.

Currently, CAA oversees the two private companies, which operate the ADR process that arbitrates between customers seeking compensation and airlines. But Which? said that passengers are repeatedly let down by the “convoluted dispute resolution process.”

It said some had to endure over a year-long battle to receive compensation they were due, despite promises that cases would be resolved within 90 days. While others have had to rely on claims management firms, to challenge the airlines after the ADR system failed them.

One woman, the consumer group spoke to was forced to hand over nearly half of the compensation she was entitled to as payment to her solicitors.

Watch: Which? - Travel companies breaking law over refunds

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Which? fears that the CAA’s proposed changes to the dispute schemes that would include a new process for “complex and novel” cases, may give airlines undue influence over how future cases are handled. It said that the plan will do little to address the “weaknesses of the existing system.”

Which? is worried that ADR’s process, which involves unreasonably long waits for passengers as they go through a long and convoluted dispute process, to put many people off complaining at all.

The consumer group warned that the proposals also appear to prioritise airlines’ perspectives over consumers’, and risked the “already weak consumer protections being further diluted.”

In 2018, CAA was unable to penalise Ryanair (RYA.L) due to limited enforcement powers. It argues that the current system makes it easy for airlines to shirk their responsibilities to promptly refund or compensate consumers – even allowing them to quit dispute resolution schemes without penalty — leaving thousands of passengers out of pocket.

Editor of Which? Travel, Rory Boland, said: “Throughout the coronavirus crisis, passengers have seen their consumer rights ripped up by some airlines that have consistently flouted the law – but they have found there is nowhere to turn for support.”

Boland said that the situation has only “served to highlight that the current complaints system is broken, and tinkering around the edges will not be enough to reform it and make it work for passengers.”

“The government must ensure that passengers’ needs are front and centre in its aviation recovery plan, starting with the introduction of a mandatory, single ombudsman scheme for airlines, as a first step to restoring trust in the sector,” he added.

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CAA communications director, Richard Stephenson, said: “The Civil Aviation Authority was a leading force in the creation of the alternative dispute resolution scheme in the UK which has enabled thousands of consumers to receive compensation from airlines.

“We have received Which?’s response to our consultation and we will review its proposals for how improvements can be made to the existing arrangements for the benefit of consumers.”

The effects of the coronavirus pandemic continue to be felt by the aviation industry, with British Airways (BA) owner IAG (IAG.L) announcing 87,000 more jobs could be lost if the government keeps travel quarantines in place till Christmas. The restrictions could cause a £4.6bn ($6bn) hit to the UK economy, airline leaders have warned.

Earlier this month, easyJet (EZJ.L) warned it would fly fewer than expected passengers in the coming months as a direct result of the UK’s latest quarantine measures in Greece. Announcing it would not give investors any guidance on its financial performance for the rest of this year and next, blaming “the lack of visibility and the continued level of uncertainty.”