The Department for Transport (DfT) has published its response to the aviation consumer policy reform consultation which it launched back in January 2022, addressing four key issues:
Whether the Civil Aviation Authority (CAA) should be provided with additional powers to enforce consumer protection laws;
Whether there should be mandatory alternative dispute resolution (ADR) for airlines;
Amending the compensation rules for delays and cancellations for UK domestic flights; and
Improving consumer accessibility for disabled passengers and those with reduced mobility.
Nearly 18 months later, the DfT has published a summary of the responses it received to the consultation, as well the next steps.
Additional powers for the CAA
The DfT has confirmed that it shall legislate to provide additional administrative powers to the CAA to help it ensure compliance by airlines with consumer protection laws.
There isn’t much detail yet on what those powers will look like, but it’s likely to include giving the CAA powers to issue fines against airlines for non-compliance with consumer protection laws.
This would be consistent with the powers being proposed for the Competition and Markets Authority (CMA) under the Digital Markets, Competition and Consumers (DMCC) Bill. It could also potentially include powers to force non-compliant companies to pay compensation to affected consumers as well as ordering companies to cease non-compliant behaviour.
The DfT has suggested that a further informal consultation could take place with stakeholders to ensure the powers are developed in a fair and proportionate way, as well as considering options to build in appropriate appeals processes.
It will be interesting to see how these new CAA powers sit alongside those proposed for the CMA under the DMCC and whether the fines will be of a similar scale (the DMCC is proposing eye-watering GDPR-style fines of up to 10% of a company’s global turnover for non-compliance with consumer protection regulations), and how regulation of the aviation sector will be divided between the CAA and CMA.
The DfT has given no timescales for when this legislation can be expected, instead leaving it to “when parliamentary time allows”. It also doesn’t specify what form this legislation will take – whether new legislation will be implemented, or whether existing legislation will be amended.
Mandatory ADR for airlines
Currently, ADR is only optional within the aviation sector with airlines able to voluntarily join a CAA-approved ADR scheme. This is all going to change with the DfT confirming that it will legislate to introduce mandatory ADR for all airlines operating to, from and within the UK.
In the meantime, the DfT will be encouraging more airlines to take up voluntary membership of ADR schemes. The DfT has also suggested it may work with industry, the CAA and complaint-handling bodies to prepare some best practice guidance on complaint handling in the hope this will minimise the number of complaints being escalated to ADR and beyond. Again, no timescale has been given for when these legislative changes (or guidance) can be expected.
Compensation for delays and cancellations of UK domestic flights
The DFT also consulted on whether the current rules around compensation for delayed UK domestic flights should be amended.
Currently, the rules for delayed UK domestic flights mirror those for EU flights with set compensation depending on the length of the delay (starting at three hours) and the distance of the flight. The DfT sought views on whether this should be reformed for domestic flights so that compensation was linked to the ticket price and was available for shorter delays, as follows:
For a delay of more than one hour but less two hours: 25% of ticket price
For a delay of more than two hours, but less than three hours: 50% of ticket price
For delays of over three hours: 100% of ticket price
From the responses, it’s clear to see that the industry is evenly split on whether such changes should be introduced. There are concerns that such a deviation from the EU flight delay rules may cause confusion amongst consumers; an increased administrative burden on airlines in calculating the compensation; as well as the risk that airlines will construct airfares to lower the cost of compensation owed.
Those in favour of the changes suggested that a system linked to ticket-price would be fairer on airlines (although it arguably favours low-cost airlines), as well as potentially reducing the cost of fares. There was discussion of what would constitute “ticket price” and whether it should include ancillaries or just the airfare – and again, there was no consensus on this amongst the respondents.
The consultation also discussed the possibility of additional legislation to assist package organisers in seeking a refund from airlines for cancelled flights sold as part of a package holiday. This was in response to the difficulties some tour operators faced during the pandemic in obtaining timely refunds from airlines for cancelled flights, with many tour operators having to refund consumers out of their own pocket in order to comply with their refund obligations to consumers.
There was no consensus on how to proceed, with some respondents (primarily airlines) arguing that Regulation 29 of the Package Travel Regulations already provides for a recovery mechanism for package organisers from their suppliers and so additional legislation isn’t needed.
Others argued that the current model isn’t sustainable nor fair on package organisers – as shown by the pandemic.
Due to the lack of a consensus and complexities involved in such changes, the DfT has committed to a further consultation on these issues, but no timescale was given as to when we can expect this.
Under the Montreal Convention 1999, damage to wheelchairs and other equipment used by disabled people and those with reduced mobility can be capped in an airline’s conditions of carriage.
The DfT has confirmed that it will introduce legislation to remove the cap for UK domestic flights in a move aimed at making aviation more accessible and ensuring everyone can travel with dignity and ease.
Some UK airlines already waive the Montreal Convention 1999 cap and the DfT has committed to working with UK airlines to increase the voluntary uptake of such waivers whilst it works to implement the proposed legislation.
There are three areas in which the DfT has confirmed new legislation impacting the aviation sector will be introduced but it has given no timescale as to when to expect this legislation – thus making it difficult for the sector to prepare.
Given it has taken the DfT nearly 18 months to publish its response, it may well take the DfT just as long to draft the new legislation. In the meantime, we would encourage airlines to:
Consider voluntarily joining an ADR body for certain types of complaints to help the company prepare for mandatory ADR when it comes into force;
Complete a “health-check” of its customer booking journey, terms and conditions, website, pricing and advertising methods to ensure it complies with applicable consumer protection regulations;
Consider whether it’s financially viable to voluntarily waive any cap it imposes for damaged wheelchairs/equipment used by disabled customers and those with reduced mobility, to prepare for such a cap to be removed in due course;
Consider how the business uses “special declarations” for customers who are disabled or have reduced mobility and see what changes it can make so that this doesn’t create an additional burden for these customers.
Meanwhile we await further consultation on changes to the compensation regime for delayed or cancelled UK domestic flights and the recovery rights of package organisers against airlines.
If you require further advice or assistance on any of the topics raised in this article, please contact the travel team at Fox Williams.
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