DfT Aviation Consumer Policy Reform - Which? response

Summary

Which? welcomes the opportunity to respond to the Department for Transport’s proposals for reforming aviation consumer policy. Our views are summarised as follows:

• Reforms in the aviation and holiday sector are long overdue. Which? recognises the immense task facing the Government, regulators and industry in getting the travel industry back on its feet. However, if the sector is to build back for the long term then serious limitations and in consistencies of the regulatory and enforcement framework, exposed in earnest by the pandemic, need to be addressed in the Government’s long term plans in order to rebuild consumer confidence. Government departments’ approaches to reforms in this sector must complement each other for a cohesive, consistent and holistic agenda for reform.
• For this reason, Which? strongly supports the Department for Transport (DfT) proposals to reform the Civil Aviation Authority (CAA) enforcement powers. We believe the CAA’s current powers are too weak to secure action from businesses that are breaking consumer law. Administrative fining powers would give the CAA the ability to deter businesses from non compliance with consumer law, which has been flagrant by numerous airlines over many years, and enable it to intervene more swiftly and effectively when there are breaches.
• Which? believes that in the interim, and going forward, the CAA must act as a stronger regulator that acts in the interest of consumers by taking proactive steps to monitor businesses and ensuring compliance with the law. It is crucial the regulator responds quickly to new and emerging issues in the sector, championing passengers rights and protections, and ensuring a level playing field for all businesses by ensuring all of them comply with the law.
• Which? strongly supports the proposals to make Alternative Dispute Resolution (ADR) mandatory in the aviation sector given the scale of consumer detriment. Aviation is the only regulated sector where businesses are not required to be members of an ADR scheme, which leaves millions without access to ADR when things go wrong.
• We are concerned that having more than one ADR provider works against consumers’ interests and therefore we urge the Government to establish a single provider in the form of a statutory-backed ombudsman. It is crucial that a robust oversight system is set up so that the CAA can effectively monitor the ADR system performance and quality of outcomes.
• We would also reiterate in this context our call for an effective collective redress regime for passenger rights, as for other consumer protection matters, as already exists for competition cases. As set out in detail in our response to the recent BEIS competition and consumer policy consultation, there are many benefits to such a system, especially if it is implemented on an ‘opt-out’ basis. These include: addressing systemic and widespread consumer detriment; a more efficient use of the court system; and encouraging settlement of meritorious claims.
• Which? has serious concerns about the lack of evidence to support the proposals to change the Regulation EC261/2004 compensation rules, as retained in UK law, for domestic flights that are delayed. The same concerns would also apply if the same approach was applied to cancellations and denied boarding situations. We note that the consultation is only seeking views on cancellations and denied boarding situations and no changes are proposed at this stage.
• The primary purpose of EC261 is to ensure a high level of consumer protection, including by providing sanctions that are ‘effective, proportionate and dissuasive’, and this crucial point has not been taken into account in the consultation. Any new proposal to replace existing EC261 rules must still meet its original objective. Therefore, we believe that the proposals presented in this consultation do not offer a strong enough deterrent that would stop airlines from delaying, cancelling or over booking flights.
• Furthermore, we are concerned that the DfT’s proposals on compensation would not provide passengers with any compensation for the ‘consequential losses’ they would incur as a result of the delay. In such circumstances, the ticket price paid by the customer will not be proportionate to the harm caused by the long delay.
• We are also concerned that the impact assessment that accompanies this consultation fails to provide the evidence required to support the proposals that the Government is making. Our concerns include:
  • The lack of consideration of the distributional impact of the proposed changes, given that the likelihood of someone taking a domestic flight is strongly related to where they live and it is clear that changes will impact some parts of the UK more than others. The proposed new rules would disproportionately affect some groups of passengers, such as those flying to and from Northern Ireland and Scotland. Likewise, there is no consideration of the impact these new rules would have on disabled passengers despite the consultation covering separate proposals on accessibility.
  • The prominence given to claims made by low-cost airlines that compensation can be equivalent to 3% of their turnover without any substantiated evidence made publicly available to support these claims.
  • The lack of consideration of the impact these new rules would have on cancellations and connecting flights. The ambiguity and lack of clarity in the consultation text and the impact assessment on these topics is disappointing and highly problematic.
• For these reasons, we are disappointed that the DfT decided to proceed with a consultation on the highly complex topic of passenger compensation for disrupted flights without first attempting to collect the evidence via an official call for evidence or through a pre-consultation exercise.