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25 Mar 2022

Government plan to slash compensation for severely delayed or cancelled flights

Airlines set to save thousands while passengers lose out under new government proposals

The penalty paid by airlines for severe delays or cancellations on UK flights would be reduced by tens of thousands of pounds per flight, under new Department for Transport proposals on passenger compensation.

Currently if your flight is cancelled at short notice, or delayed by more than three hours, you'll get at least £220 compensation, as well as the right to be rerouted or refunded. Except for under so-called 'extraordinary circumstances', such as bad weather.

However, the government has launched a consultation on plans that it describes as 'bolstering airline passenger protections and rights, made possible thanks to the UK's departure from the EU ', which could scrap this compensation on domestic routes.

It's suggested that pay-outs for severely delayed flights in the UK should, instead, be capped at the amount you've paid for your ticket. The government is considering whether the same rules should also apply after cancellations.

Much less for passengers on UK's most popular route

For the UK's most popular route, Edinburgh to Heathrow, the average one-way economy ticket costs £44, according to Skyscanner, so passengers would be paid £176 less.

The penalty on airlines is also significantly reduced. Some airlines use the A320 plane with a capacity of 180 passengers on the Edinburgh to Heathrow route. When full the airline would potentially have to pay a penalty of up to £39,600 if it wanted to cancel at short notice. Under the government's proposed scheme the maximum penalty is reduced to just £7,920.

Of course planes aren't always full, but even with the average number of passengers the airlines still face far lower penalties.

We looked at another popular route - Gatwick to Belfast. It's also flown by airlines that use A320 planes with around 180 seats. This route is typically 79% full according to aviation analysts OAG. The average ticket for this route is £55, according to data from Skyscanner.

That means the current, potential penalty for the airline is £31,240 if it cancelled at short notice. Under the proposed new scheme it would pay £7,810.

What can you currently claim if your flight's cancelled or delayed?

After Brexit, the government brought the European Union's EU261 scheme into British law. It sets out the compensation passengers are entitled to if a flight is delayed by more than three hours or cancelled. This ranges from £220 to £520 - depending on how far you're flying.

The law was designed to deter airlines from cancelling and overbooking flights for commercial reasons, and encourage an on-time service. It also helps passengers cover out of pocket expenses caused by delays and cancellations.

Prior to the pandemic there were numerous examples of wholesale disruption to flights. British Airways' IT meltdown in 2017 grounded hundreds of aircraft and disrupted the journeys of tens of thousands of people.

Ryanair passengers suffered similar disruption in 2018 after pilot and cabin crew strikes. In both cases the airlines were legally obliged to compensate customers, although Ryanair has fought a long court battle to avoid it.

The risk from the government's proposed cuts is that, not only will passengers be left out of pocket, but that airlines will be far more likely to cancel flights. The expense of running the flight may outweigh the penalty for cancelling.

Overbooking may also become a problem. The practice of booking more passengers on flights than there are seats, to account for no shows, was significantly curtailed in Europe as a result of EU261. But it remains common practice in other countries with weaker consumer protections, such as the United States.

In the US there is compensation in most circumstances if the airline overbooks and 'bumps' you from your flight. You can get up to 400% of your ticket back for this 'denied boarding'. But if your flight is simply cancelled you're not entitled to anything at all.

What is the government proposing?

Under the Department of Transport's proposed scheme, passengers could claim 25% of their ticket back after an hour delay on domestic routes, 50% after two hours and a full refund after a three hour delay. The government is also consulting on whether the same rules should apply in the event of cancellations or denied boarding.

These changes mean that more passengers will be entitled to claim compensation, but the overall payouts will be significantly reduced.

The DfT says its proposals are based on the compensation scheme used for rail and ferries, however, there are differences. Crucially, some train companies automatically refund passengers for delays but the government has said that airlines will not be required to do this.

Train companies also usually pay even when delays are caused by bad weather. Under the Consumer Rights Act, passengers can also potentially claim for 'consequential losses' - this is when there are additional expenses, such as a missed connection, caused by the delay or cancellation. Airline passengers can not claim for consequential losses.

Will these proposals also apply for overseas flights?

The government is currently only proposing to cap compensation for severely delayed or cancelled flights within the UK. It would be even more complicated and controversial to introduce it on flights abroad, where different rules apply depending on your destination.

Many flights would still come under EU law. Somebody flying from the UK to Spain, for example, on a Ryanair or any EU-registered flight would still be able to claim European compensation of £220 for severe delays or cancellations, as well as rerouting or a refund.

Somebody flying on a British Airways, easyJet or other UK-registered flight would only be able to claim a refund.

A similar issue currently affects passengers from the US. If you fly with British Airways from America to the UK and your flight is cancelled at the last minute you can claim £520 compensation. If you fly with American Airlines you are entitled to nothing but a refund or rebooking. This is the case even if you book your ticket through British Airways website.

Will passengers claim compensation - and will they get it if they do?

Even for long flights where compensation can be over £500, government figures and Which? research suggests that fewer than half of passengers currently claim the compensation they're owed.

Passengers who are delayed for an hour on the Edinburgh to Heathrow flight will only be owed £11 on average and many are unlikely to claim.

Under the current system airlines have often been accused of making it difficult for passengers to claim compensation, by not advising them of their rights or by failing to pay out promptly.

Before the pandemic there were thousands of people waiting to take airlines to court after not receiving compensation.

If compensation isn't paid, passengers can appeal to Alternative Dispute Resolution (ADR), but the ADR scheme used by most airlines, AviationADR, ruled in favour of the airlines over 80% of the time in 2021.

The government has also proposed making membership of an ADR scheme mandatory for airlines.