Some fliers have had to take airlines to court to receive flight delay compensation, even after using new, government-promoted dispute resolution schemes.
One severely delayed passenger told Which? Travel that EasyJet failed to pay the £450 that he was owed, despite a ruling in his favour from arbitration scheme CEDR. He ultimately had to send in the bailiffs. By the time all of his costs had been added, from a ruling in the small claims court to the obtaining of a warrant, plus interest, he ended up with a cheque for £1,388. And a BBC report suggests that he’s not alone in having to go to such lengths.
‘EasyJet always adheres to the decisions made,’ the airline told us. ‘We aim to pay in a timely manner and are sorry that, due to administrative errors, this did not happen on this occasion.’
Until January 2016, the Civil Aviation Authority (CAA) handled all airline complaints – but it had no power to force the airlines to pay flight delay compensation. As a result, airlines frequently ignored it. According to CAA data, EasyJet refused to pay 24% of the time after being told to by the CAA, a figure that was around average for the major airlines. The worst offender, Emirates, refused to pay almost three quarters of the time in the year up to August 2016.
Competing justice for compensation
When the CAA authorised new private arbitration schemes, which do have the power to enforce their rulings, it was hoped that passengers would no longer be forced to go to court to obtain compensation, which can be up to €600 per person. Carriers are obliged to accept their rulings on issues, such as flight delay compensation and lost or damaged luggage. If they do not pay, the arbitrator could throw them out of the scheme. However, as the airlines themselves fund the arbitration schemes, the arbitrator would then lose the revenue that their complaints provide.
There are currently six different schemes authorised by the CAA, not including its own arbitration service. Although membership of a scheme is not obligatory, most of the airlines flying from the UK have now signed up. British Airways, EasyJet, Thomas Cook and Tui are all members of CEDR. Ryanair, Virgin Atlantic, Flybe and Norwegian, as well as many smaller airlines, are members of Aviation ADR (previously known as The Retail Ombudsman). Other airlines have joined national schemes abroad while some, such as Jet2 and Emirates, are not members of any scheme, leaving passengers to continue complaining to the CAA.
The airlines fund the schemes themselves and can switch to another scheme, or leave altogether, if they feel they aren’t getting value for money.
Breaking the law
The CAA first announced in 2015 that it was going to give new powers to Alternative Dispute Resolution (ADR) providers, which could compel the airlines to pay the compensation due for severely delayed flights. Ombudsman Services (which performs a similar role for Ofgem in the energy sector and Ofcom in telecoms sector) was one of the first to express an interest. Not long afterwards, though, it pulled out, releasing a statement complaining that ‘price rather than quality’ was the dominant factor in the CAA’s search for an organisation to perform the role.
Instead CEDR, a long-standing commercial dispute resolution firm, stepped up but by June 2016 it had only managed to convince one airline to join – Tui. The CAA then approved another provider, The Retail Ombudsman.
The Retail Ombudsman had launched in January 2015 with a promise to help consumers deal with complaints about major high street retailers.
Initially, however, it was committing an offence by even calling itself an ombudsman. It is illegal to use the term ‘ombudsman’ without authorisation from the relevant authorities. It could have been liable for a £1,000 fine and an additional £100 for every day for which it misused the name. Instead, it was allowed to join the Ombudsman Association and was ultimately approved by the Chartered Trading Standards Institute (CTSI).
This is despite the fact that it had wrongly implied in its 2015 annual report that Sainsbury’s and Tesco, as well as many other retailers, were members. The Ombudsman Association allowed it to call itself an ombudsman for more than a year before investigating. It later issued a statement that The Retail Ombudsman ‘did not meet the OA’s membership criteria for independence, fairness, effectiveness, openness and transparency, and accountability’.
By this time the Retail Ombudsman had resigned from The Ombudsman Association, changed its name to Retail ADR and launched Aviation ADR. Which? Travel asked the CAA whether it knew of the allegations against The Retail Ombudsman when it approved it to handle airline complaints but it declined to comment.
Flight delay payouts delayed?
Despite these issues, the CAA has described the new model for airline complaints as a success. According to its December 2017 report, the two largest schemes, CEDR and Aviation ADR, ‘helped resolve more than 10,000 passenger complaints in their first 12 months.’ It also claimed that ‘more than 75% of complaints have been resolved in consumers’ favour’.
However Which? Travel has seen figures from the CAA itself that show that, in fact, fewer than 3,000 people had a complaint resolved in their favour between January 2016, when the scheme launched, and March 2017. While only a few hundred passengers were turned down, many thousands more were still waiting for resolution.
The CAA told us that complaints can take up to four months to be resolved. The arbitration schemes have 90 days to issue a ruling, but this is from the moment that they receive the full case file from both the airline and the consumer. Delays can occur if the airline fails to provide the file promptly.
Which? Travel made a freedom of information request for data for the most recent 12-month period, but the CAA failed to provide statistics on how many complaints had been received by the two arbitration schemes. As a result it is difficult to assess how well the system is now functioning.
Although over 80% of flights from the UK are now with airlines that are members of an arbitration scheme, the CAA itself still handles more complaints than either Aviation ADR or CEDR. However, it still has no power to enforce its judgements. Emirates ignored its rulings 83% of the time in the most recent 12-month period for which we have data. This is despite the CAA having launched ‘enforcement action’ against it and four other airlines in February 2017.
The CAA has confirmed to us that its enforcement action against Emirates remains open. Emirates recently lost the right to appeal against a court ruling that it has to pay compensation for delays caused by missed connections outside the EU.
Aviation ADR responds
Aviation ADR told us that when it launched as The Retail Ombudsman in January 2015, it believed that it had permission to use the word ‘ombudsman’. It admits that this was not the case, but claims that it was told by the relevant government department that this was an ‘innocent and understandable mistake’.
It also denies that it did anything wrong in including the logos of retailers who were not members on its annual report. It says some of them had ‘engaged’ with it but it did remove their names when requested. Finally, it says that it was ‘greatly prejudiced by the Ombudsman Association, whose board consisted of personnel from competing ADR schemes’. It does not accept that The Retail Ombudsman scheme did not meet the criteria to be an ombudsman.
The CAA responds
The CAA gave us a new set of figures on complaints that it says are more up to date than those it had given us previously. It says: ‘Since its introduction two years ago, the two CAA-approved ADR providers have received over 23,000 cases for decision. Of the cases decided up to the end of last year, over 11,000 (or over 76% of cases where a decision has been made) have been upheld (in full or in part) in favour of the consumer.’
These statistics suggest that around 3,500 complaints were not upheld and over 8,500 people are still waiting for a ruling.