UK watchdog the Competition and Markets Authority (CMA) has launched an investigation into whether airlines broke the law by denying refunds to customers for flights they couldn’t legally take.

The move is part of ongoing work by the CMA in relation to holiday refunds during the Covid-19 pandemic.

In a statement, the authority said the investigation “will consider situations where airlines continued to operate flights despite people being unable lawfully to travel for non-essential purposes in the UK or abroad, for example during the second lockdown in England in November”.

The CMA added it is aware that, in some cases where flights were not cancelled, customers were not offered refunds and, instead, many were offered the option to rebook or to receive a voucher.

“The CMA recognises that the airlines sector, like many others, is under strain due to the pandemic.

“However, it is concerned that certain airlines may have breached consumers’ legal rights by failing to offer cash refunds, leaving people unfairly out of pocket, and has therefore opened an investigation to examine the matter further,” the authority said.

Andrea Coscelli, chief executive of the CMA, said: “We will be carefully analysing all the evidence to see whether any airlines breached consumers’ legal rights by refusing people cash refunds for flights they could not lawfully take.

“We recognise the continued pressure that businesses are currently facing, but they have a responsibility to treat consumers fairly and abide by their legal obligations.”

The CMA will work closely with the CAA on the investigation. The two bodies share the same enforcement powers to tackle breaches of consumer protection law.

The watchdog will write to airlines requiring information about their approaches to refunds for consumers prevented from flying by lockdown.

It will then decide whether to launch enforcement action against individual airlines.

Consumer group Which? welcomed the investigation. Travel Editor Rory Boland said: “Airlines have often put customers in an impossible situation by operating flights during lockdown restrictions and refusing to offer cash refunds to people who cannot lawfully travel – so it is right that the CMA has stepped in to investigate and it should take strong action, where appropriate.

“We expect the hundreds of thousands of people who were simply following government rules by not taking flights to be issued refunds or given the option of a refund, as a result of this investigation.”