To ask Her Majesty’s Government what steps they plan to take to ensure airlines and tour companies refund people for costs incurred following the cancellation of flights and holidays.
The Question was considered in a Virtual Proceeding via video call.
My Lords, the Government’s position is clear. If a customer asks for a refund, that refund needs to be paid. The Government are in regular contact with the airlines and other travel providers, the regulators and consumer groups, to help businesses deliver on their commitments.
My Lords, I thank my noble friend for the clarity of that reply. Will she make it clear to all airlines and travel providers that sitting on £7 billion of customers’ money and inventing scams such as telling people to claim online or by telephone and then not answering those calls is a breach of the 2018 regulations, which require a full refund within 14 days? They must do that. Will they also stop their pyramid selling of phantom flights which will never happen, taking customers’ money and not refunding it? Is this not simply fraudulent?
My Lords, the Government appreciate the frustration that consumers are feeling. We have made it absolutely clear that the customer should get a refund if they ask for one. However, we also recognise the enormous challenges that businesses face. They have very large volumes of such requests, and staff may not be available—they may have been furloughed. There may be capacity constraints because of social distancing, or an increase in staff absence due to illness. The regulators are working very closely with the industry to find out what the problems are and to ensure that customers get their money back.
Lord Rosser (Lab)
Which? magazine has reported that a quarter of those with a cancelled flight in April were not offered a refund, and 19% were waiting to hear back, with figures much the same for those who had a holiday cancelled. Indeed, I was given an example this morning of British Airways still not having delivered on a promised refund, a month later. The Government decide what financial support to give our key travel and tourism industry to keep firms afloat, but the Government and the Civil Aviation Authority should not be allowing consumers’ clear statutory rights to be ignored by some parts of the industry. I return to the point made by the noble Lord, Lord Blencathra: when will the Government and the CAA act to protect the rights of consumers whose financial position may now be critical, as opposed to simply talking about doing so?
I do not accept that we are just talking about it. The CAA is in close contact with the industry; it recognises the current issues, and that there may be some delays. A consumer should not be told that they cannot have a refund. If they have been, they must contact the CAA with the details to find out exactly what is going on. We are working very hard to minimise the delays and to ensure that consumers get their money back.
Viscount Waverley (CB)
Compounding the distress, the tourism industry at destinations is also moribund. I fell foul of this myself, but recognised force majeure. Does the Minister recognise that certain carriers are avoiding legal compliance by not paying out on cancellations, yet are benefiting from bailouts or implementing internal redundancies and renegotiating contracts for those who remain? Notwithstanding this, will the Government consider supporting those who are uninsured by underwriting voucher claims in the event of future airline failure?
I thank the noble Lord for that suggestion and for bringing up the important issue of vouchers. Customers may be offered a voucher as opposed to a refund, but they are under no obligation to accept it. We are looking at all sensible proposals so that we can balance the protection of consumer rights, which is absolutely essential, with recognising the enormous impact this is having on an industry that employs hundreds of thousands of people and is a huge contributor to our economy.
Does the Minister agree that one of the greatest problems facing the airline industry at the moment is cashflow? What support are the Government minded to lend to the airlines at this crucial time? What discussions are she and the department having with our international partners to enable flights to take off at some point this year, particularly regarding social distancing, which is important and very difficult to deliver on planes and at airports? What kit will passengers have to use and what will be done to enable our rules to be recognised by our international partners?
My noble friend raises an important series of questions. On voucher support, the Chancellor has already announced wide-ranging support for all sizes of businesses. I encourage all those in trouble in the travel sector to avail themselves of the opportunities that there are. On restart and recovery, which is very much on our minds as well, an aviation restart and recovery team has been set up specifically at the DfT to work with the aviation industry to understand all the challenges it will have to get our planes back in the skies and to make sure that people can once again travel.
My Lords, the problem is not just with airlines, but with cruise operators and other providers. There appears to be a particular problem with those operators that are foreign owned. Many European countries have already changed their regulations to tighten this up. Are the Government planning to do likewise? Are they aware of the crucial issue that there is no point in having refund vouchers if a company no longer exists? Many of these companies are in danger of ceasing to exist in the near future.
The noble Baroness, Lady Randerson, is absolutely right that many of the cruise companies are indeed foreign owned. Provided that a cruise has been sold, or indeed offered for sale, in the UK, it will be covered by the package travel regulations. Therefore, the consumer will be entitled to a refund within 14 days. If a cruise holiday has been sold outside the UK or the EU, different terms and conditions may well apply. I will take back to the department her suggestion that other EU countries have changed their regulations. We will look into it.
On hotel and travel cancellations, what action can a consumer take where the provider’s insurance is claiming force majeure due to circumstances created by Her Majesty’s Government?
The issue around force majeure and contracts is complicated. I am sure my noble friend will appreciate that I cannot give firm advice, because in these cases, each contract is likely to be slightly different. In the case that this is happening to a consumer, I suggest that that consumer gets their own independent legal advice to fully understand the terms of the contract. It is also the case that some consumers who use a credit card will be able to make a claim with their provider. They might want to check with them as well.
If the Government are considering the bailout of transport operators, will they make it conditional upon the fair legal treatment of customers, particularly regarding refunds, as well as on the payment of tax, decent treatment of workers and environmental impact, perhaps along the lines of the New Economics Foundation’s fair bailout decision tree?