A lack of clarity in the law makes it “insufficiently certain” that the competition watchdog would be able to secure refunds for British Airways and Ryanair customers who were prevented from flying by Covid travel restrictions.
The Competition and Markets Authority (CMA) launched a probe into the airlines in June over concerns they may have broken the law by failing to offer refunds for flights customers could not legally take during periods of lockdown.
Instead, BA offered vouchers or rebooking and Ryanair provided the option to rebook.
But after a thorough examination of relevant law, and evidence gathered during its investigation, the CMA concluded that the law does not provide passengers with a sufficiently clear right to a refund in these “unusual circumstances” to justify continuing with the case.
Consumer protection law sets out that passengers are entitled to refunds when an airline cancels a flight, because the firm cannot provide its contracted services.
However, it does not clearly cover whether people should be refunded when their flight goes ahead but they are legally prohibited from taking it.
Following its review of the law and evidence, alongside expert advice, the CMA concluded that prolonging this investigation could not be justified given the length of time it would take to reach an outcome in the courts and the uncertain outcome.
Considering this, and given the CMA can only enforce the law as it stands, it has decided to close the investigation.
CMA chief executive Andrea Coscelli said: “We strongly believe people who are legally prevented from taking flights due to lockdown laws should be offered a full refund and we launched this investigation in the hope that we would be able to secure a positive outcome for consumers.
“However, after considering the relevant law and gathering evidence in our investigation, we have concluded that the length of time that would be required to take this case through the courts, and the uncertain outcome, can no longer justify the further expense of public money.
“Given the importance of this to many passengers who have unfairly lost out, we hope that the law in this area will be clarified.”
A BA spokesperson said: “During this unprecedented crisis we have acted lawfully at all times, issuing nearly four million refunds and offering highly flexible booking policies enabling millions of our customers to change their travel dates or destinations.
“We’re grateful for their support at a time when we’ve been navigating dynamic and fast-changing travel restrictions to maintain a limited schedule that ensured vital air connections for travellers and cargo throughout the pandemic.”
A Ryanair spokesperson said: “Ryanair welcomes the CMA’s decision to close its investigation.
“We operated a limited schedule during UK lockdowns for customers who travelled for essential reasons.
“Passengers had the option to change their bookings without paying the flight change fee and many availed of this option.”
This case is different from other instances where the CMA has secured refunds for customers.
For example, in the package travel sector, customers are protected by a separate set of laws, the Package Travel Regulations, which give consumers refund rights that the CMA was able to enforce.
The CMA was also able to take effective action to get consumers refunds in several other sectors, such as weddings and holiday lets.
In these cases, the legal position was different, in particular because lockdown legislation made it unlawful for businesses to operate – unlike airlines, who were permitted to continue flights.
CMA action has already led to commitments to refund hundreds of millions of pounds for people whose holidays were cancelled due to the pandemic, including from LoveHolidays, lastminute.com, Virgin Holidays, Tui UK, Sykes Cottages and Vacation Rentals.
Which? Travel editor Rory Boland said: “It’s disappointing that the CMA has closed this investigation into airline refunds.
“It‘s hugely unfair that passengers have been left to shoulder the bill for following the law and protecting public health by staying home, while British Airways and Ryanair have been allowed to hold onto their cash for flights people couldn’t legally take.
“Time and time again regulators have not taken action against airlines because the powers they have are too weak and the time taken to conclude a court case is too long. It’s clear that current regulation is not working and consumers are being let down by gaps and inconsistencies in flight and holiday rules.
“The government must urgently set out how it plans to review travel regulations and strengthen consumer protections.
“Plans to give the CAA greater powers to tackle the consistent lawbreaking we saw on refunds from some airlines can’t come soon enough. These must be sufficiently tough, and give the ability to fine airlines directly for past behaviour to ensure they won’t step out of line again.”
More: Analysis: CMA warns industry to comply with refunds law