U.K. Probes Airlines for Refusing Refunds During Pandemic

(Bloomberg) -- The U.K.’s Competition and Markets Authority is investigating whether airlines violated consumer rights by failing to offer passengers their money back for flights they couldn’t lawfully take during Covid-19 lockdowns.

The probe is part of an ongoing review of how holiday refunds have been handled during the pandemic, the CMA said in a statement Wednesday. Some carriers kept operating even when lockdown rules in the U.K. or abroad made it impossible for people to fly legally, it said.

The refund issue has been a contentious one since the outbreak began disrupting global air travel early this year, prompting cash-starved airlines to steer passengers toward rebooking or accepting credits for future flights. The failure to offer prompt reimbursement spurred a public backlash.

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“We recognize the continued pressure that businesses are currently facing, but they have a responsibility to treat consumers fairly and abide by their legal obligations,” CMA Chief Executive Officer Andrea Coscelli said in the release.

Those pressures have led to a minefield of terms and conditions that vary by carrier. Passengers found themselves having to stay on hold with customer-service representatives to get refunds while vouchers were offered automatically, making it easier to choose that option.

BAR UK, which represents 70 domestic and foreign airlines in Britain, said carriers had upheld their obligations under the EU261 regulation, which governs refunds, while also applying their own commercial policies which sometimes exceeded those requirements.

“The industry has been doing its absolute best,” CEO Dale Keller said.

The U.K.’s Civil Aviation Authority previously criticized airlines but said in July that rules were being heeded, with refunds paid, call-center waiting times reduced, and customers getting more clarity over their rights. The aviation regulator said Wednesday that it welcomed the new investigation.

The CMA will examine the response of the industry during the second U.K. lockdown in November, which came after many carriers had bolstered their finances and seen a modest revival in revenue flows in the late summer.

Michael O’Leary, CEO of discount giant Ryanair Holdings Plc, has been vocal in defending airlines over the issue, telling the BBC last month that claims passengers were still waiting for cash were “completely false” and that his company had spent more than 1 billion pounds ($1.2 billion) on refunds and vouchers. Ryanair declined to comment on the CMA probe.

(An earlier version of this story was corrected to fix the date in the second paragraph.)

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