The UK’s competition regulator has launched a probe to see if British Airways (IAG.L) and Ryainair (RYA.L) have broken consumer law by not offering refunds for flights that customers were unable to take due to legal reasons.
It comes as the coronavirus pandemic has taken a major toll on the travel industry and as consumers have seen their mobility restricted due to strict travel regulations around the world that aim to curb the spread of the virus.
During periods of lockdown across the UK, British Airways and Ryanair refused to give refunds to people who were lawfully unable to fly, with British Airways offering vouchers or rebooking and Ryanair providing the option to rebook, the Competition and Markets Authority (CMA) said.
It has written to the airlines, detailing these concerns and hopes that as a result of the probes affected customers will be able to get refunds or other redress.
“While we understand that airlines have had a tough time during the pandemic, people should not be left unfairly out of pocket for following the law,” said CMA chief Andrea Coscelli.
“Customers booked these flights in good faith and were legally unable to take them due to circumstances entirely outside of their control. We believe these people should have been offered their money back.”
“It should come as a surprise to no-one that Ryanair and British Airways are still being dragged over the coals by the CMA over the way they tried to squirm out of refunding customers who couldn’t fly during the pandemic," said Russ Mould, investment director at AJ Bell.
The move comes after the CMA opened an investigation into the airlines sector in December 2020 following reports that consumers were being denied refunds for flights that they could not legally take.
British Airways and Ryanair now have a chance to respond to the watchdog's concerns.
Mould said the airlines are still "operating under severe restrictions, so the natural response from the airlines would be to criticise the CMA probe, implying it is kicking an industry which is already on its knees".
Travel refunds have been a major headache for consumers during the pandemic, with many complaining of long delays and difficulties getting their money back. Consumer group Which? earlier estimated that Brits were still waiting for around £1bn in holiday refunds.
The CMA recently asked package travel firms to ensure refund options are clear and accessible following a deluge of complaints from customers who have struggled to claim refunds over the last year.
It also earlier took action against five top package travel companies, securing more than £200m ($281m) in refunds for customers. These included Teletext, LoveHolidays, Lastminute.com and Virgin Holidays.