LDN - Business

Soaring airline customer complaints push global legislators to act

[May 26, 2023] By Joanna Plucinska and Allison Lampert

LONDON/MONTREAL (Reuters) - Nikoleta Dodova is among a growing number of dissatisfied airline customers. Having bought her mother and niece airline tickets from Sweden to Macedonia last year, their flight was cancelled and they ended up at an airport over two hours away. She is still waiting for compensation.

Official data from regulatory agencies shows complaints against airlines have reached, or neared record levels in countries like Canada and Germany over the last year since COVID-19 restrictions lifted and travel restarted.

Rising numbers of disputes between travellers and airlines globally are driving fresh legislation and calls for tougher enforcement of existing rules to protect consumers.

"If they (airlines) haven't paid, they're not following the law," Dodova said. "They need to be accountable."

The sharpening of rules for payouts could add to pressure on air fares from energy, labour and other rising costs.

Lufthansa's payouts alone rose to 331 million in 2022 from 25 million euros in 2021, the German airline group told Reuters in previously undisclosed figures.

Legislation is under review in Canada, while the U.S. government is writing new rules and the European Union is pushing for stronger enforcement of its existing regime.

Pressure to act is building as summer travel is expected to break records in some regions this year following long airport lines and piles of backed up baggage last summer.

Airlines fear a mish-mash of conflicting rules and want those responsible for services out of their control in the industry to help shoulder the compensation costs.

European airline group Airlines for Europe (A4E) said compensation has become increasingly burdensome and existing rules leave too much down to interpretation. It is calling for reform of the legislation.

While higher fares have helped carriers offset a variety of rising costs "it's in the airline's interest to keep passengers happy even if there are disruptions," aviation analyst James Halstead said.

Lufthansa said in a statement it has no backlog of customer claims and refunds are generally paid within the statutory seven days that applies to airlines operating in Europe.

Global airline body IATA called on governments to help avoid fragmented regulations and improve services, "instead of singling out airlines, as recent proposals in Canada and the USA have done," director general Willie Walsh said.

Canada is promoting shared accountability by providing new access to performance data that airlines can use when negotiating service agreements with airports, Transport Minister Omar Alghabra told Reuters.

Some consumer advocates agree with Dodova that rules aren't properly enforced.

"The law is not a problem," said John Oberlin-Harris, a British Airways passenger also still waiting for a refund almost a year after a delayed flight caused him to miss a connection at India's Hyderabad airport, forcing him to return to England.

British Airways said it works extremely hard to resolve cases in a timely manner when claims are raised. UK law sets out when compensation is due depending on whether any delay was the airline's fault.

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A screen showing cancelled flights is seen at Los Angeles International Airport as more than 1,400 American Airlines flights over the weekend have been canceled due to staff shortages and unfavorable weather in Los Angeles, California, U.S., October 31, 2021. REUTERS/Carlos Barria

Sweden's national consumer dispute body decided in March that Dodova is owed 800 euros compensation from Hungarian budget carrier Wizz Air. The airline said it was in touch with her and was doing more to improve customer service.

RECORD COMPLAINTS

Traveller complaints are clogging courts and regulatory agencies in Germany, Britain, Canada and the U.S.

In Germany, the arbitration board at the Federal Ministry of Justice, which mediates between consumers and airlines, said it was dealing with 46% more complaints than in 2019, pre-pandemic.

German courts reported an increase of around 40% to more than 70,000 cases involving traveller complaints last year.

One industry official said airlines in Europe are losing a larger proportion of those battles.

In Britain, county court judgments against airlines piled up to more than 4.5 million pounds ($5.68 million), according to consumer watchdog Which? citing an official register of judgments in March.

In the U.S., the Department of Transportation (DOT) saw airline passenger complaints rise 55% in 2022.

The U.S. is writing rules that would be proposed by year's end requiring airlines to compensate passengers for lengthy delays or cancellations in their control.

After two successive summers of travel chaos, U.S. airlines are going all out to prevent large-scale flight disruptions this summer in the face of rising demand.

North of the border, the Canadian Transportation Agency, a quasi-judicial tribunal responsible for enforcing existing passenger refund requirements, has a record backlog of 47,000 complaints. It's so high Canada wants to charge airlines a fee if they pass on unresolved complaints to the agency.

In Europe, intermediaries like AirHelp, that assist consumers with getting refunds or compensation, have boomed in popularity. AirHelp said active claims were around three times higher in 2022 versus 2019 and that number could grow with strikes expected this summer, AirHelp CEO Tomasz Pawliszyn said.

SHARING COSTS

Airlines have balked at footing the bill for cases that aren't their fault.

The European Union has long enraged airlines with its comprehensive consumer protection legislation, offering payouts of up to 600 euros for delays of three hours or more, or cancellations.

"As a passenger, all you know is that the airline cancelled my flight," said Jeff Morrison, president of the National Airlines Council of Canada, which represents Air Canada among others.

Morrison said the cost of air travel in Canada could well rise due to new fees and compensation requirements.

($1 = 1.3372 Canadian dollars)

($1 = 0.7923 pounds)

(Additional reporting by Ilona Wissenbach in Frankfurt and David Shepardson in Washington, editing by Ben Klayman and Elaine Hardcastle)

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