Archive

Jet2.com Calls for Compensation Reform

Jet2.com

February 22, 2019 at 19:32

The Founder and Executive Chairman of Jet2.com, Philip Meeson, has written in the Daily Telegraph about the need to reform the compensation system for delayed flights, to make the system fairer for all.

You can read the full text of his article, which appeared in print on Saturday 23rd February, below:

From time to time, well-meaning regulations intended to protect consumers have perverse consequences. A case in point is the regime put in place by the European Commission to compensate airline passengers whose flights are delayed.

How can it be fair, for example, for one passenger on a delayed flight to be recompensed for the inconvenience, but for the person across the aisle to have their claim denied? Surely it would make more sense to make decisions flight-by-flight, rather than passenger-by-passenger. And why is it reasonable that a payout for a delay can be four or five times the price of a budget airline ticket?

Airline delays are a nuisance all round – to passengers, to staff, to the carrier itself. I speak from experience: for the last 16 years, we’ve built Jet2.com to become Britain’s third largest airline – this year, we’ll carry seven million holidaymakers to beach and city break destinations.

To customers, a flight is a way to get from A to B. It’s not that simple, though, behind the scenes – each journey requires multiple organisations to work together: airline crew, airport colleagues, security staff, air traffic control. Occasionally, things go awry and if it’s the airline’s fault, it’s right that the airline should recompense passengers. 

The European Commission has fixed compensation levels for travellers held up by three hours or more: for a short flight to a destination such as Paris, it’s €250 per passenger, but for further afield – Spain, Greece or Italy - it’s €400. These sums were originally designed for cancelled flights but have, over time, been applied to delays, too.

For a holiday airline, these amounts are high. Our typical fare is £80. There is no link, under the EU’s rules, between the price paid for a ticket and compensation for a delay, which seems very unfair. For a delayed flight of 189 people, the bill for us is around €75,000. If that aircraft’s return leg is disrupted too, that’s a bill of €150,000. But the law is the law and we, of course, respect it.

The law is complex – it states that if a delay is caused by “extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken” then compensation is not payable. Interpreting this has made the legal profession a lot of money – the courts have arbitrated, for example, on whether an airline is required to pay out if a plane has a technical problem (we do), or in the event that a “bird strike” damages an engine (we don’t).

For the vast majority of claims, Jet2.com pays straight away. But for a handful, there’s a disagreement. The way in which these disputes are handled is problematic. This is a technical area of the law which needs to be applied consistently. 

The Civil Aviation Authority, in the past, has used an in-house team to adjudicate, a system which works well. However, in recent years the CAA has been urging airlines to sign up to Alternative Dispute Resolution (ADR) schemes, where it has appointed two third-party providers.

These two bodies – called Aviation ADR and CEDR – sometimes struggle with the weight and complexity of claims.  They use various adjudicators, often without full legal qualifications, to assess very technical issues. There is an imbalance of fairness in that rulings are binding on the airline – but not on passengers, who can go elsewhere to challenge an outcome if they don’t like it.

ADR schemes of this genre are unsuitable for resolving issues running to six-figure sums around a poorly drafted piece of European legislation. And it is concerning that under its proposed aviation strategy, Aviation 2050, ministers are considering making them compulsory.

A few principles ought to come into play. At present, adjudications are made on a passenger-by-passenger basis, which sometimes mean two people on a flight get different outcomes. It would be far more sensible for the first ruling on each flight to be a “reference” one that then applies to all the other passengers on board. 

Impartiality goes both ways: both the consumer and the airline should be treated equally with equivalent rights of appeal on a ruling. Finally, we need to resolve these disputes without the involvement of ambulance-chasing “claims handling” firms which take up to 40% of passengers’ compensation. 

The EC’s regulation, drawn up in good faith, has given rise to a cottage industry for chasing compensation. It’s time to revert to common sense with a simple, fair and effective mechanism for resolving complaints. If we are to use ADR providers, their decisions must be consistent, hold sway flight-by-flight and, if dubious, be subject to appeal.