To ask His Majesty’s Government what assessment they have made of the case for making National Air Traffic Services liable to pay compensation to customers for operational failure.
My Lords, the Government deeply regret the recent NATS operational failure and its impact on airlines and their customers. The incident is being investigated and lessons will be learned. NATS has an outstanding aviation safety record and is regulated against service targets set by the Civil Aviation Authority. There are incentives for NATS linked to its performance; failure to reach target levels may incur penalties and reduce the charges paid by airlines.
My Lords, last week 2,000 flights were cancelled because of NATS’s inability to process flight plans, and a quarter of a million passengers were grounded. When airlines are responsible for delays, they must pay compensation to the passenger and pay for alternative flights, accommodation and food. When NATS is responsible for delays, no compensation is payable at all—and, worse, the airlines have to pick up the bill for alternative flights, food and accommodation, which, in this case, was £100 million. Both NATS and the airlines are commercial companies—NATS had a profit of £150 million last year—so is not the differential compensation between NATS, on the one hand, and airlines, on the other, wholly indefensible?
I am grateful to my noble friend for highlighting this issue, but I am afraid that I do not accept the premise that the two are comparable. There are elements in NATS’s current licence that allow financial penalties to be placed on it in the instances of poor performance. Indeed, as I stated in my first Answer, there is also a mechanism to reduce charges in subsequent years to the airlines because of poor performance. However, I would say that the event that happened was, thankfully, very rare; nothing similar had been seen for over 10 years. Therefore, we are very grateful for the work that the airlines did, and we worked closely with them to repatriate people as necessary.
My Lords, if a passenger is delayed on a train, they can claim compensation from the train operator, which in turn can claim from Network Rail, the infrastructure manager, if it caused the delay. It seems to me that NATS and Network Rail are very similar—they are infrastructure managers—so what is the difference between compensation if you are on a train or on a plane?
I do not think that those two comparisons are quite correct. We have to deal with the situation we are in now, where there are already arrangements for NATS to be penalised financially and for future charges to the airlines to be reduced, should NATS’s performance fall below set levels. I am delighted to say that NATS’s overall performance is incredibly high and it tends to outperform other European air navigation service providers.
There was not, because the miliary planners would not have been able to take over the system as quickly as NATS was able to. There are well-established contingency plans in NATS on what to do in these sorts of very rare events, and those plans were followed. There was a restriction on flow; however, as many flights as possible were kept flying.
My Lords, whatever the cause of the problem, from the passengers’ point of view there was disruption to their flights and many passengers reported being very poorly treated by their airlines. As has been pointed out, it is the airlines’ responsibility to deal with the problem, however they might be reimbursed in the end. Can the Minister explain to us what the Government intend to do to increase the powers and resources of the CAA to ensure that, when passengers have disruption to their flights, they are properly and promptly compensated?
As the noble Baroness will be well aware, we retained EU 261, which became UK 261, which puts certain obligations on the airlines to provide information on rights, refunds or rerouting, and care and assistance. Broadly, that is working very well. The CAA already takes action on the airlines not complying with that. The noble Baroness may have seen, a few weeks ago, that the CAA reached an agreement with Wizz Air to go back over many years to rectify some of the times when it had not treated passengers in line with those obligations. However, the Government will legislate, when parliamentary time allows, to give the CAA additional administrative powers to enforce consumer laws.
My Lords, I was heavily involved in the original regulation 261 on passenger rights 20 years ago and I understand fully the criteria for exceptional circumstances, which was the case with NATS recently. However, can my noble friend tell us what mechanism is in place for the airlines to recover financial losses caused not only by the recent air traffic failure but by other third-party providers involved, such as ground handling companies, so that passengers can be compensated in a fair and proper way by the airlines?
As I think I have already outlined, there is no mechanism by which airlines can seek financial compensation directly from NATS in this circumstance. However, there is a mechanism whereby charges can be reduced in the future if NATS does not meet its service targets.
My Lords, when the investigation into what the Minister refers to as “these events” is completed, if it concludes that there was negligence on the part of NATS or people who work for it, surely NATS should be responsible for compensating those to whom it owed a duty of care—namely, the airline companies and the passengers. Is that not how it works in this country?
The noble Lord raises a hypothetical—the outcome of this investigation —which I will probably not engage with at this moment. However, what I am very clear about, as is the Secretary of State, is that the investigation that NATS is carrying out, overseen by the CAA, will get to the root cause of whatever caused these events and that that will be published in due course with next steps.