Complaints and enquiries - Air Transport Users Council

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16 Financial protection Last year the failures of Oasis Hong Kong Airlines, Zoom and XL, amongst other airlines, left thousands of British passengers stranded abroad or, for those who were yet to travel, out of pocket. This is because there is no financial protection against the failure of schedule airlines in the UK as there is for tour operators (under the ATOL scheme). When an airline fails, passengers can get their airfare refunded from their credit card company under the Consumer Credit Act if they made their booking by credit card. But purchases made on credit cards must be above £100 and be made directly with the supplier. And many passengers do not pay for flight tickets with a credit card; they may not own one or they may wish to avoid credit card charges. Alternatively passengers can get their money back through their travel insurance. But few travel insurance policies offer cover against the failure of scheduled airlines and, of those that do, some have exclusions that appear to potentially dilute the cover. For a number of years, we have called for government to introduce a financial protection scheme for the failure of scheduled airlines similar to the ATOL scheme for tour operators. In 2005, we supported the CAA’s detailed proposal for a financial protection scheme for scheduled airlines. But the Government declined to take forward the CAA’s proposals. In October, our chairman wrote to Geoff Hoon, the then Secretary of State for Transport, about this issue. In her letter she suggested that the current economic climate and the increasingly competitive nature of the industry raised the spectre of a greater likelihood of airline failure. This, together with a background of consumers’ general lack of understanding of financial protection, had made air passengers increasingly vulnerable to the impact of an airline’s failure. Further, we suggested that this was clearly demonstrated by the numbers of passengers seemingly left out of pocket or stranded abroad following recent failures. The AUC’s previous position in respect of scheduled airline failure has been that protection should be via a flat fee levy on all passengers to be paid into a common fund. This levy should cover passengers for reimbursement of monies and for those already abroad, completion of holiday and return home. We continue to hold this view and urge that detailed consideration be given to extending financial protection for air passengers, to include the failure of scheduled airlines. Despite the current economic climate and pressure from us and other industry stakeholders, the Government shows no sign of introducing a scheme. Perhaps our best hope may be to look to Europe. Last year, the European Commission commissioned a study to consider the impact on EU consumers of airline bankruptcies based on an analysis of the causes and situations surrounding aviation bankruptcies in the EU since 2000.
17 Supplementary charges One of the most noticeable trends to have emerged in the airline industry in the last few years has been the increase in the number of supplementary charges for services that would previously have been paid for as part of the ticket. In the last year, many airlines have introduced an array of new charges and increased existing ones. We said in our annual report last year that we did not automatically consider such charges as bad news for passengers provided the charges were optional and for specific services. For passengers who did not need these services, it might mean the price they pay for their flight was lower as a result. We accepted it was an evolution of the market in response to the advent of no-frills air travel. And we concluded that as long as the charges remained optional then passengers should not be concerned at this development. We still hold this view. But complaints to the AUC show that not all passengers share it. Written complaints about taxes, fees and charges increased by nearly three times last year, mainly due to an increase in complaints about supplementary charges. Most complaints tended to be about the level of the charge rather than the principle; for example, many passengers considered that the credit and debit card charges were disproportionate to the cost to the airline of processing their booking. And they were concerned by how much card charges had increased in recent years (we compared the card charges of five airlines in October to four years previously - see table below). Complainants also felt other charges were often not good value, particularly reservation change fees and baggage fees. Airline February 2004 October 2008 Credit debit Credit Debit British None None £4 per ticket None Airways BMI £4 per person None £4 per person None EasyJet £4 per booking None 2.5% of booking (minimum £4.95) £1.95 per booking Flybe Ryanair £1.75 per person per sector £1.75 per person per sector £0.40 per person per sector £0.40 per person per sector £3.50 per person per sector £4 per person per sector £1.50 per person per sector £4 per person per sector Taken from AUC research, October2008 We understood these concerns. But we pointed out to these passengers that the charges were optional. Some airlines did not charge for using credit or debit cards and even those that did allowed passengers to use a prepaid card for free. In addition, many airlines continued to include services, such as for baggage handling and seat allocation, as part of the fare. And being allowed
Page 1: AIR TRANSPORT USERS COUNCIL ANNUAL
Page 4 and 5: 2 CHAIRMAN’S INTRODUCTION There h
Page 6 and 7: 4 REVIEW OF THE YEAR Complaints and
Page 8 and 9: 6 Telephone enquiries in 2008/09 Ty
Page 10 and 11: 8 compensate a number of passengers
Page 12 and 13: 10 Schedule changes Last year we re
Page 14 and 15: 12 Representing passengers Consumer
Page 16 and 17: 14 Besides, we suggested that it wa
Page 20 and 21: 18 to change the date or the name o
Page 22 and 23: 20 two-thirds of the standards and
Page 24 and 25: 22 Consultations and Inquiries Civi
Page 26 and 27: 24 Guest speakers at AUC Council me
Page 28 and 29: 26 She has written several text boo
Page 30 and 31: 28 Secretariat (as of March 31 st 2
Page 32 and 33: 30 • The AUC shall consist of a C
Page 34: 32 GLOSSARY APD Air Passenger Duty

Complaints and enquiries - Air Transport Users Council

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