CMA investigates and takes enforcement action
The Civil Aviation Authority (CAA) should be the regulator for air transport in the UK. However, it is increasingly clear that the Competition and Markets Authority (CMA) is doing the CAA’s job for them.
During the course of this year the CMA has taken action against a number of companies which were not giving full refunds where they were owed due to coronavirus cancellations.
This includes: Sykes Cottages and Vacation Rentals in June, Bijou Weddings Group in September and yesterday (15 December) the announcement that following CMA action, LoveHolidays. The company had committed to pay out over £18 million to customers waiting for money back after their holidays were cancelled due to coronavirus.
CAA: A regulator that fails to regulate
In July the CAA reported on its airline refunds review. A number of airlines were found to be hugely failing in their legal duties and they gave commitments to the CAA to resolve the matters. For example, on 3 July, Ryanair published a set of commitments on its website about timescales for processing cash refunds.
Ryanair confirmed that 90% of its backlog would be cleared by the end of July 2020 with all refund claims made in April to be processed by 15 July and most of the claims made in May to be refunded by the end of July. This statement has not been updated and just a quick glance on Twitter and in Facebook groups dedicated to Ryanair complaints shows that Ryanair customers are still waiting for refunds.
Commenting on the review, Richard Moriarty, CAA Chief Executive said: “The airlines we have reviewed have responded by significantly enhancing their performance, reducing their backlogs, and improving their processing speeds in the interests of consumers.
“There is still work to do. We have required commitments from airlines as they continue the job of paying customer refunds. Should any airline fall short of the commitments they have made, we will not hesitate to take any further action where required.”
However, the CAA has failed to take any further action, appearing to believe that no further action is required.
CAA defers but the CMA brings action
It would appear that the CMA disagrees. Today, 16 December, the CMA announced that it was investigating whether airlines have breached consumers’ legal rights by failing to offer cash refunds for flights they could not lawfully take.
The CMA says “The investigation will consider situations where airlines continued to operate flights despite people being unable lawfully to travel for non-essential purposes in the UK or abroad, for example during the second lockdown in England in November.”
The CMA is aware that, in some cases where flights were not cancelled, customers were not offered refunds, even though they could not lawfully travel. Instead, many were offered the option to rebook or to receive a voucher.
How the CMA will work with the CAA
The CMA says that it will be working closely with the UK Civil Aviation Authority as it progresses its investigation. Its press release continues:
“While the Civil Aviation Authority (CAA) leads on consumer protection in the airline sector, the CMA has undertaken extensive action in connection with cancellations and refunds during the pandemic and is well placed to support the CAA on these issues. The CMA and the CAA continue to work closely and share the same enforcement powers to tackle breaches of consumer protection law.
The CMA will now be writing to a number of airlines requiring information to understand more about their approaches to refunds for consumers prevented from flying by lockdown.
Following a careful analysis of this evidence, the CMA then will decide whether to launch enforcement action against individual airlines.”
CMA forced to act on airlines failures
It is quite clear that the CMA has had to step in and walk where the CAA fails to tread.
Paul Smith, Group Director of Consumers and Markets at the CAA, said :
“It is right that consumer rights are upheld throughout this period and we welcome this investigation from the CMA, which follows our review into airline refunds earlier this year. The CMA has been leading on a broad range of issues arising during the coronavirus pandemic and we will continue to work closely with the CMA in support of this investigation.”
This defensive stance from the CAA makes the regulator appear ridiculous. As the CMA states, it has the same enforcement powers as the CAA. But the CAA has done nothing to enforce anything since their review earlier this year. Airlines continue to flout the law and the CAA appears to have done nothing to ensure that airlines have kept to their June commitments.
CAA compared with other regulators
No other regulatory body needs another organisation to step in to support their enforcement work. The other regulators, such as Ofgem (Energy), Ofcom (Telecoms) or the Office of Rail and Road (Transport) are able to enforce the law themselves.
Future for the CAA and ADR
So, why does the CAA need help? Because it is ineffective and unwilling to take on the airlines face to face. Has CMA simply had enough of watching this farce unfold?
Hopefully this action by the CMA will shame the CAA into taking further action by itself.
It is the job of the Civil Aviation Authority to investigate airlines but it has continued to take no action. The CAA has told me in the past:
“Should any airline fall short of the commitments they have made, we will not hesitate to take any further action where required.”
However, time and time again it has not done so. The CAA has shown itself to be not fit for purpose. Instead it is finding in favour of airlines and continuing to allow them to behave illegally. The CAA has shown itself to be not fit for purpose. The CAA needs to use its enforcement powers to revoke airline operating licenses where airlines do not comply with the law.
A new Chairman started at the CAA on 1 August 2020. But unfortunately the new chair, Sir Stephen Hillier, has been ineffective in tackling airlines that are continuing to break the law on consumer refunds.
CAA launches consultation and tells no-one… launched a consultation on Alternative Dispute Resolution (ADR) but didn’t tell any stakeholders, as Which? calls for a single Ombudsman in the sector.
Getting help for Coronavirus cancellation claims and shopping help and advice for getting refunds and redress