Airlines behaving like banks in their attitude to consumers
London, Friday February 21, 2014 – Despite previous efforts to force airlines to play fair, European airline passengers had over £3.4 billion of their own money retained by airlines in 2013. This is the estimate of taxes, fees and charges (TFCs) belonging to passengers that booked flights but for whatever reason didn’t travel, and were subsequently not returned to them by the airline.
These charges represent money collected by the airlines in advance for TFCs which are only incurred if passengers actually fly. If they don’t, the money paid over therefore belongs to the passenger by law. While most passengers will accept that the flight portion of their fare will be lost to them if they cancel, they are legally entitled to a refund for the costs which haven’t been incurred by the airline.
Airtaxback, set up to raise awareness of this issue and help passengers recover what is rightfully theirs, calls on airlines to reveal how much they actually retain and to change their policy of making repayment difficult. The company has set up a web page to enable passengers to spread the word in support for the campaign for change: http://www.airtaxback.com/TFC_Outrage_Campaign
Are the airlines behaving like the banks?
The TFC scandal follows fast on the heels of the fines for Ryanair and EasyJet by the Italian regulator for misinformation and overcharging for their insurance products.
It also comes at a time when some airline chiefs are paying themselves record bonuses – for profits generated in part by holding on to passenger TFC money. [1]
Airtaxback Calculations
Airtaxback has based its calculation on published industry figures, the Air Transport Users Council passenger survey, airline websites and feedback from passengers. It shows that approximately 61.5 million booked flights probably did not take place in 2013 – costing passengers about £3.4 billion in wrongfully retained taxes, fees and charges.
Estimates of retained TFCs by airline
Airlines’ Legal Obligations and Performance on TFCs – hiding behind weasel words
Consumer law in the EU and Commonwealth is clear that when a transaction is paid for and later is not executed, the original cost of the good or service may or may not be returned, depending on the specific terms of the contract, but the consumer is always entitled to a return of the taxes and related charges associated with the sale (see Roxborough Vs Rothmans of Pall Mall [2011] CLR 516).
Airlines broadly accept this principle, but apply their own terms and conditions limiting how they refund passengers’ unused taxes, fees and charges. At best, certain airlines return only some of the total non-ticket charges and apply a refund administration charge. EasyJet falls into this category. At worst, other airlines apply time limits for refund applications of as little as 30 days after the flight and also apply a prohibitive refund administration fee. Ryanair is the worst offender in this regard; it says they will refund government taxes only and only within a 30 day time limit, but they then apply a £15/£20 refund administration charge, which is invariably more than the government tax.
British Airways are also poor performers, applying up to £30 refund administrations charge, a time limit and making it difficult to apply for refunds, often leaving consumers on hold indefinitely.
Time for consumers to fight back
According to Airtaxback’s founder and CEO, Brian Whelan, airlines have been having it their own way for too long and legislators and state-sponsored consumer support groups have consistently turned a blind eye.
Basis of estimates
| Traffic* | “No-Shows”** | TFC Estimate*** | Total | |||
| AEAAssoc EU Airlines | 370m | 10% |
|
£2,235m | ||
| ELFAAEU Low Fare Airline Assoc | 207m | 10% | 100% Short – £46 | £952m | ||
| ERAAEU Regional Airline Assoc | 38m | 10% | 100% Short – £46 | £175m | ||
| Total | 615m | £3.4bn |
*Traffic taken from industry body websites and selected airlines websites, based on annualised monthly statistics
**No Show rate of 10% taken from mean point between 2010 Air Transport Users Council passenger survey which gave a figure of 20% average industry no show rate and Michael O’Leary of Ryanair’s statement on Irish state TV (The Consumer Show September 2010) of 5%.
*** Taxes Fees and Charges estimates from all non-ticket charges, including government taxes, or APD, airport landing fees and sundry additional service charges, taken from a sample of 1,000 Airtaxback customers from eight European airlines.
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[1] EasyJet’s CEO, Carolyn McCall received a whopping £6.4 million package for 2013 and her CFO, Chris Kennedy £3.7 million.