The government appears to have found some of its Aviation Consumer Policy Reform proposals too difficult, says Ian Taylor
The government has confirmed plans to grant the CAA tougher enforcement powers, including the right to impose fines on airlines for failing to comply with air passenger rights.
But the Department for Transport (DfT) has yet to make clear whether these powers will extend to the CAA enforcing airline refunds to package-holiday organisers when a flight is cancelled, as proposed in a consultation last year.
The DfT published its plans on air passengers’ rights on June 27, promising “stronger enforcement powers, access to faster and cheaper dispute resolution, and increased compensation for damaged wheelchairs”.
But it gave few details beyond noting legislation would be required to grant “new administrative powers for the CAA to hold airlines and airports to account for breaches of aviation consumer rights”.
Legislation will also be needed to require “mandatory membership” of Alternative Dispute Resolution (ADR) bodies for airlines and to remove the current cap on compensation for passengers whose mobility equipment is damaged on domestic flights.
The DfT promised a further consultation on changes to compensation for flight delays and cancellations proposed in its Aviation Consumer Policy Reform consultation of January 2022.
It made no reference to the note in that reform consultation that: “We have heard a call for package organisers to be able to make a claim . . . on behalf of the consumer for a full refund where a flight that is part of a package holiday is cancelled.
“[This] would make clear in legislation the right for the package organiser to recoup the refund from the airline.”
The DfT said legislation on the CAA’s new powers, compulsory membership of ADR bodies and compensation for wheelchair damage “will be brought forward as soon as parliamentary time allows”. However, it gave no timetable for this.
Confirmation of enhanced powers for the CAA is in line with similar plans for the Competition and Markets Authority (CMA) which enforces consumer rights legislation including the Package Travel Regulations.
The CAA’s current enforcement powers are limited. The regulator must issue warning letters and pursue undertakings on compliance before going to court to seek enforcement action.
The changes would mean the CAA could rule on breaches of the law and impose fines on airlines without going to court.
The Chartered Trading Standards Institute called for similar powers earlier in June.
Compensation for delays and cancellations
The DfT consultation on Aviation Consumer Policy Reform, published in January 2022, proposed legislation to require airlines to refund Atol holders when the flight portion of a package holiday is cancelled.
Industry demands for such a measure stemmed from the difficulties Atol holders and agents had in securing refunds for cancelled flights from airlines during the Covid-19 pandemic, especially during the first months.
The consultation proposed allowing the CAA to fine carriers for failing to pay refunds for cancellations within seven days as required under existing rules set out in EU Regulation 261 on air passenger rights.
It also proposed revising compensation rules for domestic flight delays and cancellations, suggesting that a sliding scale of payments based on the cost of travel could replace the current standard payment for delays of three hours or more.
The changes would be limited to domestic travel since the government has no power to enforce them on international flights.
It proposed consumers be entitled to 25% of fare for a domestic flight delay over an hour, 50% for a delay over two hours and 100% for three hours – based on compensation already applied to rail and ferry travel.
The latest DfT statement notes only that: “The government will undertake further work on compensation for passengers facing disruption.”
Airlines have long demanded the adjustment of compensation payments to reflect the price of fares, with the DfT noting aviation calls “to rebalance the rates for compensation to be more representative of the cost of travel”.
No mention of ‘Brexit dividend’
The government hailed the proposed reforms on aviation consumer policy in the 2022 consultation as “made possible thanks to the UK’s departure from the EU”.
Grant Shapps, who was transport secretary at the time, insisted: “We’re making the most of our Brexit dividend.”
But there was no mention of a “Brexit dividend” in this week’s announcement. Instead, transport secretary Mark Harper highlighted the measures to enhance compensation for damaged wheelchairs.
There is currently a cap on the amount airlines must pay for damage to passengers’ mobility equipment.
CAA joint interim chief executive Paul Smith urged carriers “to adopt the proposals immediately for all flights, not just domestic flights, in advance of legislation”.
He welcomed the promise of stronger enforcement powers and introduction of mandatory Alternative Dispute Resolution (ADR) for airlines and passengers, saying: “We encourage all airlines to introduce this immediately.”
ADR is currently voluntary and not all airlines engage in it. There are only two ADR bodies in the UK.
The DfT argued ADR gave consumers “a way to escalate complaints that cannot be settled between them and the airline without the need to go to court”.
That move has been welcomed by the specialist tour operators’ association Aito, with Aito director Noel Josephides noting: “A compulsory ARD system has been far too long in coming.
“We hope the necessary legislation to facilitate the new powers will be pushed through Parliament as soon as possible.”
Whether the government will find time for the legislation is open to question. We may have to wait for the end of the current Parliament and the King’s speech opening the next Parliament, expected in November, to find out.